It is hard to both retain and acquire customers if they are not paying attention to your business. Therefore, increasing your retention of customers or acquiring new ones is very much about keeping a good connection with them. And there are several good reasons for doing so.
Existing customers are more likely to buy more
If you spend a bunch of resources acquiring 1 new customer that in the end costs you 1 existing customer, the deal is not worth it. At least not if you could have retained the existing customer by paying attention to his or her needs.
Why? Because in the end you end up with the same number of customers that you started out with – only you spend more resources attracting new customers than you would have spent on making existing ones buy more.
Established connections with existing customers requires less “selling” to make them buy more, than if you would have to try to establish a connection with a potential customer, whom have never heard of your business before. This is all common sense.
Now, do not rush out and scrap all your marketing campaigns targeting new customers. That is not the point. What is the point, however, is that you cannot focus solely on gaining new customers, if you want to increase sales – you need to balance the resources spend on retention of existing customers with the resources spend on acquiring new ones.
Customer involvement creates loyalty – and loyalty creates referrals
You can increase your customer retention by involving your customers. Your customers will let you know exactly what they expect from your products and services – and as long as you are aligned with them, you will have their loyalty. And we love loyal customers.
Not only because they come back to buy more, but also because they create referrals for your business. Actually 1 happy customer will, on average, tell 9 people about your product or service. And since customers say that positive word-of-mouth is the most likely way to make them try out doing business with a new company, referrals could, in the end, be very rewarding for your business revenue.
If these arguments are not enough to convince you of the importance of customer involvement, here is a little scare: Though loyal, satisfied customers will recommend your business to 9 of their family and friends, unhappy customers talk even more.
On average, 1 angry customer will give your company 16 anti-referrals – so more than twice as many people will hear about your lack of service or insufficient solution. If this is not an argument for focusing on customer satisfaction, then what is?
This makes so much sense, but how do I get started?
Be aware to balance your resources between acquition and retention of existing customers - and focus on the value it can create for your business.
1. For acquisition of new customers through customer involvement, you need to align yourself to your potential customers. Customers will prefer a company that in some way “resemble” them – also called implicit egotism. This means that to create value for the customers that you want, you need to know and fully understand who they are.
In our experience, companies will often tend to have an inside-out approach to developing processes. By looking outside and in, you can fill an existing gap in the field, rather than creating one – which is much harder. Offering a relevant solution to your customers that in some way give them value is a way to stay ahead of competition.
If you are aligned with your customers, and they are satisfied with your solution and service, they have no reason for going elsewhere.
2. Maintaining the relationship with existing customers is a team effort. Not only between you and your colleagues, but between your entire business, your customers, and a third party whom can spot the gaps in your existing processes. Your customers will, after all, most likely not pay your business any attention if you are not attentive towards them and their needs.
Remember, 70% of all marketing campaigns fail because they are never tested on the target group and thus fail to target the right people. After conducting 15.000 customer sessions, UserTribe has experienced firsthand the effectiveness of customer involvement. Avoid failure in your projects and business. Click the button below to learn more.
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Within 48 hours we validate your idea, product or campaign with your target group - in any market, in any segment and at any stage of your project cycle. Watch video evidence of what real people think, say and do when interacting with your solution, and get prioritized recommendations for co-creating, developing and optimizing.
Customer Empowered Business™ means reaching your strategic goals, based on real needs of real people.