This is the weird thing about marketing and selling in general. New Customers are highly prized – probably because they are harder to get, it’s expensive and difficult work. 7 times the cost to get a new customer than it is to get an old customer back.
The most highly prized and paid skill in the world of copywriting is copywriters who can write profitable/cost effective customer acquisition direct mail.
Why? Because there are so few copywriters who can do it. And there are so many companies who want and need copy that can do exactly that. So yes it should hold it’s place in the pantheon of direct marketing and everywhere – the person who can bring home fresh meat is absolutely essential to the business.
However, there is a backdoor solution.
There is a far more easier way to keep your business growing without going out and paying top dollar for the star producers in your business.
Ready for it? It’s Customer Retention.
Say it costs you $100 to get a customer. (It makes the maths simple and it’s easy to type. Play along at home… with your own numbers)
Now why on Earth would you not spend another $100 to keep that customer for as long as possible. (Spend any more and it is cheaper to go and get a new customer.) Once they are an existing customer that old cliché kicks in “7 times cheaper to sell to new customer vs. get a new one” – so that $100 spent on retention will have 7 times the effect on customer retention than the $100 you are spending for the new one. Long term, it’s far better use of your money than buying two customers.
7:1 Leverage! Where Else can you get that?
Here’s the thing about retention – every customer you keep for another year is a customer you don’t have to pay $100 to replace.
There are many things you can do in order to retain customers. To be honest, it is beyond the scope of this article to even begin to explain the complexity of keeping a customer loyal to you for longer. It’s a completely different kettle of fish to getting one.
The psychology is the same but the application is a little different.
The lazy business owner will just ignore this idea and just go and spend their $200 on getting two new customers and if they luck out perhaps they can get it down to $90 or $75 or $50.
However, the smarter people will look at how to make retention work harder for them – they will grow faster and more easily than their competitors ever will.