Balancing act: How to attract new customers while retaining existing ones
Andrew Gasper - Head of New Business, Ovato
The old adage that it costs five times more to gain a customer than it does to retain one is trotted out regularly, but all marketers are familiar with this balancing act. You need to grow your business, but you also need to keep those customers already part of your brand close.
Focusing on your existing customer base is an important element of your growth strategy as well. According to book Marketing Metrics success rate of selling to an existing customer is 60-70 per cent, while the success rate of selling to a new customer is only 5-20 per cent.
So, it makes sense that you’d want to balance these competing priorities. Let’s look at what you can do to make it easier to achieve.
Loyalty should be rewarded
In the past, many brands focused solely on acquisition, using marketing collateral like catalogues and TV/radio to saturate an area or audience. This got them in front of huge numbers of new customers, but neglected existing customer bases. Over time, it became clear that a relationship with existing customers is extremely valuable.
Enter the loyalty program. Suddenly, shopping at a particular store wasn’t just about convenience or price. Repeat customers were offered incentives to stay. Special sales events for VIPs and early access to new lines, goods and services kept repeat shoppers repeating.
With the bulk of their revenue coming from existing customers, brands had realised they needed to adjust the way that they advertised themselves. Instead of sending catalogues out on mass, they started sending them to their existing customers. They would then seed new customers periodically, but less frequently.
Marketing channels are now so diverse – from digital and experiential to print and outdoor – achieving this same balance is more complex. You have more data than ever on both existing customers and prospects, but personalising and differentiating your communication with them can be challenging. Here are our tips for getting there.
The VIP section
As we’ve said above, loyalty programs are a sure-fire way of retaining your big spending customers.
Customers feel special after when they’re a part of a loyalty program. Access to services, events and products that you get through programs such as the Adidas Creators Club, EB World membership and Myer One encourage customers to stay with you. When you’re offering them something great, why would they leave?
They’re even more appealing thanks to the advent of mobile wallet. They let customers declutter and keep all their store and loyalty cards digitally on their phone. More importantly, they allow you to engage customers with the content and offers they love, like coupons and tickets.
Tracking the big spenders, returning shoppers and unofficial brand ambassadors that love your brand gives you the chance to offer these VIP perks to the deserving, and make the relationships you’ve already developed even stronger.
Identify your unique selling points
What is it that brings customers through the door in the first place? Qualitative tools can help capture the ‘voice’ of your customers. And surveying customers after a purchase, either in-store, online or via a text (if they opt in) gives you a chance to really understand what appeals to them and makes you stand out.
You might be a niche supplier of a product. Maybe your customer service is second to none. Maybe it’s your low low prices, everyday. Whatever it is, identify your point of difference so you can build communications around this.
Then, make sure you can offer it to even more people. Exposing it to more customers affords them the chance to realise what a great job you’re doing, and gives them an incentive to jump aboard.
While you’re giving people a reason to stay, you also need to be reaching the people who aren’t part of your customer base yet. This both helps you to grow and to replace customers departing through attrition.
Present your brand as an authority in whatever you do. Content marketing that gets your name and product knowledge out to a wider audience pays massive dividends in this regard.
It’s important to keep your brand front of mind. Product sampling and the clever use of a distribution network can achieve that for a reasonable cost.
And it’s also worth considering working with the people that influence your customers. Influencers come in all shapes and sizes, and micro-influencers in particular have very engaged fanbases that look to them as experts in their field. Working with the right influencer can lend instant credibility and reach into new customer segments, for relatively little financial outlay.
Share the love
It’s important to appreciate that your valued customers are worth your time, effort and marketing dollars. The reality is that the people already with you are more likely to buy from you again, and spend more money with you, than new customers.
Nurturing your existing and potential customers is the key to marketing success. Both groups are equally important, and equally deserving of your attention. You need to speak to them when they want to be spoken to, offer them what they want and need and reward them when they consider you worthy of their hard-earned money.
Do you need help with retaining your customers and attracting new ones? Speak to us today.