I have recently been involved with a small business that was looking to put a fair amount of cash into an e–marketing campaign in an effort to scare up a whole bunch of new customers. Now let me get this straight; there is nothing wrong with this. This is a good thing. Without new customers we will die.
However – what I want us to bear in mind is that there is one common industry statistic that is referenced time and again is that it is … it is five times more profitable to spend marketing dollars to keep your best customers rather than acquiring new ones. Small businesses get this equation in spades. In fact, a Harvard Business Review study demonstrated that recovering only five percent of abandoning customers could increase profitability by 30 to 85 percent.
The significance of customer loyalty isn’t a new idea for small businesses, but understanding what loyalty means in this digital age is a new necessity. Small businesses have to comprehend how rapidly consumers are changing their conversations and other social actions to the online world. The taking on of social sites such as Foursquare, Yelp, Citysearch, Twitter, Facebook and blogs is increasing at an express rate.
As a result of this, a loyal customer doesn’t merely stand for a repeat purchase or infrequent referral business. Customers now have the capability to broadcast feelings about the businesses they visit and services they use to thousands of people instantaneously. This means loyal customers are a small business’s de facto marketing department! Maintaining excellent relationships with customers has reached a whole new echelon of significance in the digital age. With very little exertion and access to suitable digital tools, loyal customers can be motivated to give referrals, engender positive air cover, alter opinions, and even help soften the shock of bad reviews.
So, what I am saying is…before throwing money at acquiring new customers make sure that your existing ones are getting all of the attention that they both need and deserve.