5 Reasons Why Repeat Customers Are Better Than New Customers
What’s the first thing you do when your business needs to quickly increase revenue?
A somewhat generalist question with the typical answer found in “customer acquisition”
There are only 2 or 3 ways of growing revenue anyway – find more customers, sell more to existing customers or charge more for everything you sell to both existing and new customers.
The last one can be a bit of a tall order and so the seemingly easier path is through finding new customers.
It is logical to see the need in new clients – it suggests progressive thinking and it’s a seemingly logical strategy.
What is often overlooked is the existing client database and the opportunity for growth that it represents – here are a few reasons why the old can sometimes be better than the new.
1.Acquisition costs more than retention
Consider the base cost of a business development function and then factor in the time it takes to build a relationship and the costs start to add up.
Depending on the length of the sales cycle, the maturity of the market, the “intelligence” required, the cost of acquisition could be a factor of 10 times the cost of retention.
2. Retained customers are more easily persuaded.
You will already have some deep water with your existing clients and so demonstrating value will be an easier job – you will spend less time and effort on moving the customer through the sales journey.
3. Existing customers spend more money
Retained clients will spend more money with you. They trust both your business and the relevant business development executive you have deployed to manage their account and depending on the industry sector and the length of the relationship, they can spend up to 300% more than a new customer will.
4. They are Advocates
Business development “Nirvana” is when your satisfied customers do all the selling on your behalf. Your accountant will never let you forget the cost of marketing – as an expense and not an investment, so if you focus on your existing clients they are more likely to create referrals and promote your business subconsciously.
5. Try building your business on acquisition alone
Most B2B businesses should enter a new financial safe in the knowledge that 85-90% of what they need to do in the next 12 months is already taken care of by existing customers.
Imagine if it wasn’t.
Shift Control is a business growth consultancy based in Belfast and specialising in marketing, brand strategy and sales training.
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