It seems that when times are tough businesses go looking for new customers; the cost of acquisition can be quite high. If you want to know how much it costs, just take the cost of your ads and your commercials and divide by the number of people who buy from you. Don’t fool yourself by counting the ones that come in your store to say hello, count the ones that actually buy. This is called your acquisition cost.
The statistics are that it costs 5 times to get a new customer than it costs to keep an old customer. It has also been said that in the average business you need to bring each customer back at least 5 times before you begin to profit.
I love this example from Action International. If a bakery spends $300 per week on advertising, and then as a result gets 30 new customers, their acquisition cost per customer is $10. Now if each new customer spends $5 when they come in, and $2.50 of the sale is profit and $2.50 is hard cost, the bakery has actually lost $5 on each new customer. If of those 30 new customers, 20 never came back, the bakery has actually lost $100 on that marketing campaign. No wonder businesses are always asking, how much should I spend on advertising?
Of course businesses need new customers but getting them through advertising is the hard, expensive way. What’s the answer? Spending time advertising and marketing to your existing customers so they will bring their friends back.
I don’t think this is a new concept, I’m not the only one talking about this for years. The question is why don’t businesses go after their existing customers?
Could it be that a business can go broke because of too many new customers? It would appear so.
There’s gold in those old customers. I think businesses know it but they still hunt, beg, scream, give-it-away or anything to get new customers. How about finding ways to get them back?
A cup of coffee? It’s been said that a cup of coffee is a powerful way to keep your customers coming back. How about “I would like to espresso my thanks for your business?” I don’t know where I read it but I think it’s powerful. You can also follow up and see who uses your coffee coupons.
By now everyone must have heard of Groupon. If you sign up in your area you get coupons for everything. This week there was a discount on a wine tour. Check out Groupon in your area; maybe this is a good way to market to new and existing customers.
Have fun. Remember the Beanie Baby craze? McDonald’s was overwhelmed with customers for their “Teenie Beanies.” They were such a hit that McDonald’s had people and cars all over the place. How do I know? I was in the line waiting for the new introduction. Hey I heard it may be back.
The most important thing is to stay in touch with your customer. Price Chopper supermarket has a program called Fuel Advantage with Sunoco. Launched in 2009, consumers can accumulate their points received for buying groceries at Price Chopper across a 90-day time frame and cash in on their gasoline discount for up to 20 gallons at their convenience. Last week gas cost me $1.60 a gallon!
I received $2.00 off on my purchase at Payless, entered into a sweepstake at Olive Garden and Marshalls. Who wants to miss the BOGO at Payless?
I also got 10% off at Petco because I have 1670 accumulated points from putchasing cat food and kitty litter. I also got $5.00 off at Staples that I used to buy a printer cartridge. I’ve gotten very coupon conscious lately; everything seems so expensive. I can’t be any different than your customers. The most important thing is to find ways to keep in touch with your customers. Many of you are using send-out-cards; a clever way to stay in touch with your customers using direct mail and others are using video email. I love the video email, I use Talkfusion because it’s easy and fun and has a video conferencing feature and links to Facebook. Check out both of these links.
Tomorrow I fly to Coverings trade show for tile and flooring. If you’re attending, visit me on Wednesday, March 16th, for my seminar, “Customer Retention Strategies” for some new tips. And by the way, I’m flying Southwest because they don’t charge for luggage and they’ll feed me! In case you haven’t noticed, they’re not cheap anymore.
“Loyal customers, they don’t just come back, they don’t simply recommend you, they insist that their friends do business with you. He profits most who serves best.”
Lisbeth Calandrino is an award winning author, trainer and blogger. She is author of the book, Red Hot Customer Service, 35 ways to heat up your business and ignite your sales. Lisbeth can provide customer service and sales training using the principles of her book at your place of business or through video conferences.