3 ways to grow through new and existing customers
It’s often the case that customer loyalty isn’t prioritised – you’ve got customers, and so you just want to find lots more new ones, right?! Wrong! Companies can be so focused on winning new business; it’s easy to forget the value of your existing customers. But if you make customer loyalty a priority, you’ll quickly see the benefits – because it costs a lot more to find new customers than to serve your existing ones as well.
Whilst researching this topic, we discovered that around 63% of companies don’t know who their ‘high value customers’ are, and how many of them they have lost or why they leave. Worse still, 65% of companies don’t even bother to thank new customers! “When you understand which existing customers are profitable, you can then establish what characteristics these customers have – so you can set out to find more like them, and grow your business!” says our MD Darren. But you do need to put in a little work to gather these insights…
1. The 80/20 rule
Understanding who your top customers are is important, because you can identify what makes them so great and use this for targeting new customers with similar characteristics. The 80/20 rule is a popular bit of business jargon, whereby your best 20% of customers deliver 80% of your profits. Be honest with us – do you really know your customers that well? Do you know how frequently or recently they buy from your business?
It can be difficult keeping up with customer habits, but knowing who are the largest and most profitable customers to your business helps in lots of ways such as:
- You can make sure you’re really looking after them and making them happy
- You can understand what it is about them that makes them profitable
- You can use this insight to find and nurture other customers just like them
- You can then gradually start to increase the number of profitable customers and reduce less profitable ones
2. Gather insight
“To build the necessary insight into this crucial group of customers, analyse specific areas of your marketing activity” says our Business Development Director, Gavin. He suggests looking at your:
- Sales per customer
- Profitability of customer accounts
- Sales (and margins) of products or services
3. Understand customer habits
“Once you’ve looked over your data you may see patterns emerging, such as what distinguishes your high value customers from low value customers, seasonal buying patterns, average spend and so on”, says Gavin.
You can then use questions to create a strategy that focuses on your highest spending group. Here are some examples:
- Are they advocates for your brand? For example, do they use word-of-mouth? Should you incentivise them to buy?
- What is their buying behaviour? For example, how long have they been buying from you? When do they buy? How do they buy? (in store, online, through distributors etc)
- How do you track their spend?
- What products/services do they buy? Is there an opportunity for you to cross sell or upsell other services and products?
- How much profit do they generate for you over a given time period (for example a year)?
- What are you doing to keep them loyal?
It’s really important to understand your existing customers well and find out who your best customers are, so that when you do set out to find new customers, you can be more focused with the type of customer you want to attract, concludes our Marketing Manager Hannah, who says that “This more targeted approach will make your marketing communications activity much easier to plan and implement, as you’ll have a much clearer target audience in mind – which in turn makes marketing activity more effective and likely to convert prospects into new customers”.
And finally, don’t forget to think about what to do if your existing customers reduce their spend or decide to leave you all together. You need to have a constant dialogue and customer satisfaction feedback progress to track how happy your customers are, and to rectify any problems if they arise!
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