Marketing Is More Than Leads

Even fictional characters know this.

When we talk "marketing" we usually talk about generating "leads", that is, new customers to our business.  It's where we spend the most of our time and energy.

This can be a huge, huge mistake.

There are more studies than I can count that show that retaining customers is cheaper than going after new customers.

Here's just a few I found with a quick search - check 'em out (but come back, will ya?)

http://www.customerforlife.com/blog/salesforce/2013/03/26/retention-vs-acquisition/
http://www.cmo.com/articles/2013/7/18/customer_retention.html
http://www.camfoundation.com/PDF/Cost-of-customer-acquisition-vs-customer-retention.pdf

The numbers vary slightly, but they all show a retained customer is cheaper than a new one.  I verified this myself in my days in the corporate world, so I know it to be true.

So what does this mean to you and your marketing plan?

While yes, you obviously need to chase leads and plan accordingly, you also need to plan and budget for a retention program for existing customers.

So what do you do with them?

GROW THE EXISTING CUSTOMER RELATIONSHIP

Also known as upselling, there's several ways to incentivize customers to buy more:

• Perhaps they can grow the dollar value of each transaction but not change the frequency of purchase.
• Or, they can do the opposite - they can increase the frequency of transactions but the value remains constant. 
• Or, they can do both.
• Or they can increase frequency but reduce value per transaction (but grow overall revenue from the single customer).
• Or they can decrease frequency and increase value per transaction (which can also grow overall revenue).

You can try a variety of tactics - sometimes it's a loyalty program where you give a reward for increasing business.  This is the foundation of loyalty marketing and the real purpose of every loyalty program that exists.

USE THE EXISTING CUSTOMER BASE AS A REFERRAL SYSTEM

Most commonly, you'd see this as a "bounty" system, where a reward is given for so many referrals given to you by your existing customer.

If you use such a system, make sure the "hurdle" for rewards is easily reached and has enough value to be attractive (but it doesn't have to be crazy huge).  You can have more than one level or you can keep it very simple: "For (x) amount of referrals, you get (y) rewards".

You can up the ante for referrals, and if the referral becomes a paying customer, the reward is greater.

But there are lot of other ways to get your existing customers to sing your praises to new potential customers.  Ever heard the term "brand evangelism"?  This is a holy grail of marketing and advertising - think about the Nike customer who buys their branded gear and wears it out.  That's free advertising!

THE BEST RETENTION TACTIC OF ALL

Provide excellent customer service.  I've ranted on what this means before (here, here, and the saga of epic fail starting here) but just remember - it's your job to solve your customer's problem.  Do it promptly, with value, and with respect, and your customer will love you, buy from you again, and refer you.

So, as you're working your plan, do not forget to build in marketing tactics and processes to grow your business using your existing customer base.  It's cheaper, it's easier and you'll find it pretty rewarding.

Do you have a great can't-miss tactic to grow revenue and referrals from your current customers? Let me know!