How To Build Your Business
With Existing Customers
By Tom Egelhoff
 One of the oldest rules of
business says that it takes six times more effort and expense
to develop a new customer than to keep an existing one. It just
makes good business sense to make the most of the customer base
you already have than to focus all your attention and resources
on finding new customers.
Of course you need a constant flow of new customers because
people move or leave your business because of other changes in
their lives. If you were in a large city you'd have a larger
raw customer base to work with.
But in smaller communities the customer pool is much smaller
and you need to make the most of the ones you have while part
of your time is spent on attracting and developing the new ones.
The value
of a strong customer base
The life blood of any business is, of course, customers. Without
them there is no business. So the development of a strong customer
base is imperative to every business. What is the real opportunity
to grow your business with existing customers? Existing customers
present three opportunities for strong business building.
First, they purchase your products or services over and over
again. For the most part you can count on their repeat business
over time. Second, you have the opportunity to cross-sell your
products or services.
An example of cross selling might be selling a camp stove
to someone who just bought a camping tent. Third, you have the
opportunity to up-sell. Move your customer to a better and usually
higher priced, more profitable product or service.
The value
of information from your customer base
If you've every bought a toaster or vacuum cleaner you've
seen a warranty card. You fill it out and return it to activate
the guarantee. The warranty card asks for specific information
about you and your lifestyle. Age, education, income, marital
status, children are just a few of the categories of information
collected.
What does the parent company do with this information? It
helps evaluate their target markets for future advertising. They
also use it to decide if future product or services would be
of value to you. And last but not least it provides the information
for future contact by phone, direct mail or other methods.
How valuable is customer contact
Did you see a McDonalds ad on TV today? Chances are you did
if you watched any TV at all. Is there anyone in this country
who doesn't know about McDonalds? It would be very difficult
to find anyone who has not heard of this hamburger giant. If
that's the case why do they keep advertising on every station
every day?
Because they need to re-enforce that customer contact. If
they don't the advertising that Wendy's and Burger King will
begin to take over your perception of where to go for your next
hamburger. What does this mean to you?
It means that it's really nice that some customers find you
on their own or through word of mouth from other customers. But
remember, you're loyal customers are constantly being exposed
to your competitors advertising and their message.
Let's suppose your business had about 10,000 customers per
year, each customer averaged six purchases per year and the average
ticket of each customer was $20.00. The business would do about
$1,200,000 per year.
To do a direct mailing to each customer six times a year would
run about $30,000. But if that mailing could generate just one
more sale per year per customer that would produce and additional
$200,000 in revenue.
This is truly the kind of example where advertising is an
investment not an expense. I don't think anyone would have any
problem spending $30,000 for a return of $200,000.
The last
word on business building with existing customers
Just so there is no mis-understanding I don't want you to
totally ignore efforts to cultivate new customers. Every business
needs new blood on a regular basis. But a loyal, solid customer
base will keep your business afloat during the tough times.
Also, don't forget the value of getting referrals from your
existing customers. They are your best source of new customers
but you must communicate with them to get those referrals.
If you have employees, don't forget to impress on them the
value of keeping customers happy and satisfied with your goods
and services. Good customer service, good products, and good
customer contact will keep the business strong and profitable.
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This article may be reproduced for your non-profit
group or organization provided it is not altered in any way and
the following is attached:
©1998 - 2004 Eagle Marketing PO Box 271 Bozeman, MT
59771-0271
http://www.smalltownmarketing.com - (406) 585-0219 - Toll FREE
(888) 550-6100
email: tommail@smalltownmarketing.com
Based in Bozeman, MT, Tom Egelhoff is the author of How To Market, Advertise & Promote Your
Business Or Service In A Small Town, and The
Small Town Advertising Handbook: How To Say More And Spend Less.
He is also a seminar and workshop presenter
and trainer. He may be reached at 888-550-6100 or PO Box
271 Bozeman, MT 59771-0271
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