by Tom Ruwitch
I recently watched The Wizard of Oz for probably the 50th time. This was the first time I gleaned marketing lessons from it. As I watched, I was struck by how small business marketers remind me of Dorothy -- searching in faraway lands for fulfillment while devaluing what they have right at home.
Before clicking her heels and declaring “There’s no place like home,” Dorothy said this: “If I ever go looking for my heart’s desire again, I won’t look any further than my own backyard…”
We small business marketers desire more sales. Yet we persist in ignoring current customers -- our own backyard. Instead, we hunt far and wide for new customers.
Of course, we need to prospect for new leads to grow our businesses, but we also can grow our businesses by selling more to our existing customers. In fact, drawing a new dollar from an existing customer costs much less than finding a new lead, cultivating that lead, and converting a new sale.
When we discuss marketing strategy with small business marketers, most want to focus their marketing efforts on acquiring new customers while exerting very little effort on maximizing the relationship with existing customers. We recommend that you reverse that formula. We recommend that you develop strategies and tactics to maximize the relationships with your customers.
Some call it lifetime customer value (LCV); others call it customer lifetime value (CLV). The acronyms may differ, but the principle is the same: Your business will prosper if you can increase the revenue you earn from each customer over the life of the relationship. Retain your customers to maximize the relationship’s duration and increase the dollar amount you draw each year from your customers. More dollars over more time means more sales and profits.
Here are a few ways to build an ongoing, lucrative relationship with your customers:
- When you acquire a new customer, express immediate gratitude -- by saying thanks in person, sending a note via email or print, sending a gift, or whatever feels most natural to you.
- Keep in touch with an email newsletter or a print newsletter -- or both. Share entertaining, informative, educational and interactive content.
- Send special offers, exclusives just for your customers.
- Encourage customers to connect with you on social media.
- The bottom line: provide value; don’t just pitch.
Finally, ask for referrals. Your existing customers are your best advocates and can be the best source for finding new prospects.
If you do this, customers will return. They will spend more. They will refer others. The revenue you earn over the lifetime of that relationship will far exceed the dollars you have spent to establish and nurture the relationship.
Like Dorothy, smart businesses know it’s less expensive to retain and sell to an existing customer than to acquire a new one. Focus on that first and then invest in customer acquisition.
Tom Ruwitch is founder and president of MarketVolt, a St. Louis-based interactive marketing firm and ESP. For a free e-book that offers more detail on email marketing best practices, go to MarketVolt.com/hero.
Submitted 10 years 82 days ago