Regardless of whether the business is a professional sports team or an appliance dealer, the existing customer base is a very important asset that can deliver unit sales that are more cost-effective than those derived from new customers. This is not to say that companies shouldnâ€™t strive to be adding new customers, but that retaining the existing customer base should be prioritized as a source of revenue growth. The value of a businessâ€™ existing customer base is supported by numerous statistics including:
* Acquiring a new customer costs 5 times more than retaining an existing one â€“ Forrest Research
* Reducing the attrition rate of your existing customer base can increase profitability by 75% - Bain & Co.
* 80% of a businessâ€™ sales will come from 20% of its existing customers â€“ Gartner Group
With these statistics in mind, here are three tips that can help to reduce attrition and grow this valuable asset known as your existing customer base.
* Focus on the customer, not the sale â€“ Appliance dealers with a customer relationship management system in place can â€śmineâ€ť all sorts of customer information to develop data sets, with the best use of the information going toward providing a personalized customer experience. As products become more commoditized, the one aspect that will build customer loyalty will be the level of service they experience when dealing with your business.
* Go social â€“ Communicating with your existing customers via social media platforms adds another form of engagement, but there is a degree of risk as well if communications arenâ€™t conducted properly. That being said, catering to existing customers through these venues adds another facet of personal interaction that can facilitate retension.
* Run targeted promotions â€“ With the bulk of an appliance dealerâ€™s revenues coming from existing customers, rewarding them with valuable and targeted promotions can deepen the relationship and keep them doing business with you over the long term. Running promotions via email and/or social media sites can also increase engagement while keeping costs at a minimum.
Gaining new customers is great but donâ€™t neglect the people who have already made purchases from your business. Remember, it is this group that will make up 80% of your appliance sales at a fraction of the cost of selling to new customers.