Marketing Redefined – Part 4 of 7

Over the last several weeks, we’ve discussed the first three of The Seven Principles of Modern Marketing: Paid, Owned, and Earned media; building, maintaining, and investing in the strongest possible team; and finding a balance between short- and long-term marketing needs. These concepts are synergistic, each important in its own right, but together, forming a cohesive whole marketing strategy that is greater than the sum of its parts. Another key element to add to the mix: customer retention. By retaining existing customers, you conserve logistical and financial resources that can be better invested in other areas of your marketing while developing a positive reputation and reaping higher profits.

Retention Versus Prospecting
By focusing a significant portion of your efforts on client retention as opposed to prospecting for new customers, your marketing dollars will work harder and go farther. It’s that simple. Consider this:

• It is seven times more expensive to get a new customer than it is to retain an existing one.
• Increasing customer retention by 5% can improve profits by 25 to 27%.
• 80% of future profits will come from just 20% of your existing customers.
• Repeat customers will typically spend 33% more than new customers.

The question then becomes, “How do we retain customers?” First and foremost, people want good service and great quality. Sell products and services of value and stand behind them. Keep customers happy by remembering to under-promise and over-deliver; an early delivery, waived fee, or perceived bonus item or service will go a long way. Be honest in your business dealings, and customers will become clients for life.

In addition to helping you retain existing customers, showing your customers some love is actually a very effective way to bring in new customers. For instance, 93% of customers feel that a company’s reputation for fairness is important. Given that, if your existing customers are happy with you, they’ll recommend your service when asked. They may even leave positive online reviews or social media comments, all of which boosts your reputation as a fair, decent company.

On the flip side, when your service is lacking, it will cost you more than a single unhappy customer. On average, a dissatisfied customer will tell 11 people about his or her experience. That doesn’t begin to take into account the damage done, particularly for small, local businesses, when an unhappy customer posts, “I was ripped off by ABC Widget Company!!” on his or her Facebook wall. So remember: Love Thy Customer. It’s better for your bottom line.