Did you know that “only 6% of [the small] businesses [surveyed] are focused on retaining customers.”? That’s the finding from a survey conducted by The Manafest. 94% of your competition is focusing more on new clients, instead of nurturing the ones they have. And, that’s a mistake you can use to grow faster than them.
According to Small Business Trends, 60 – 70% of existing customers are likely to buy from you again. In contrast, the success rate with new customers is 5 – 20%. Think about it. You are 3 to 15 times more likely to get a sale, and you have to spend nearly nothing to get it.
94% of small businesses are spending their digital dollars inefficiently.
Customer acquisition can be an expensive endeavor. It takes money and time to generate interest, direct people to your website, and then motivate a customer to buy one of your products.
– The Manafest
While all these spends are important to brand building, they aren’t as likely to yield the return on investment like focusing on your current customers. Therefore, you grow faster than your competition by allocating your spending more wisely.
You can’t focus solely on existing customers. 30-40% of them will not buy again. So, you will have to replace them. Thus, it is important to understand your marketing/sales funnel. Building a solid marketing plan can help you map out each step.
For instance, let’s say we have 1,000 customers. We want to grow by 20% so we can grow faster than our competition. What should we be thinking about in our marketing plan?
Let’s walk through this example. First, we want to grow by 20%, so we need to have 1,200 customers.
1,000 exiting x 120% = 1,200
Next, if we make a solid effort with our current customers, we should keep 700.
Repeat: 70% x 1,000 (existing) = 700
Therefore, all we need are 500 new customers.
1,200 (goal) – 700 (repeat) = 500 (new)
Now, let’s assume we have a sales success rate of 10%. Therefore, we would need 500 divided by 10% or 5000 new prospects.
While 5,000 new prospects might seem like a big number, it’s a lot less than if we had to try to get 1,200 new ones.
1,200 / 10% = 12,000
In fact, it’s 40% less!
It probably costs you and your competition about the same amount to get a new prospect. Consequently, by focusing on existing customers, you could grow faster than your competition and spend significantly less.
In summary, having the right balance between focusing on your current customers and gaining new ones is the best way to grow faster than your competition while spending the same or less.
Therefore, having a repeat strategy is a key element to any successful marketing plan.
Brian Cairns, CEO of Prostrategix Consulting. Over 25 years of business experience as a corporate executive, entrepreneur, and small business owner. For more information, please visit my LinkedIn profile