Companies like Verizon and AT&T have millions of customers who have been with them for many years. These companies spend a lot of money in acquiring new customers. For example, they give new customers subsidized phones in return for them signing a 2-year contract. Many customers continue to remain with the company after the initial 2-year contract term is over. The reason they can spend money to acquire new customers is because they have guaranteed return for at least the initial contract term. This is what Seth Godin is referring to when he talks about embracing this concept of lifetime customer value.
Most small businesses, however, do not have luxury of asking customers to sign up for a contract. They have to do hand-to-hand combat with their competitors one customer at a time every day. For proof, download a report from your POS system showing how many customers have not ordered in the last 90 days. You may be surprised to find that more than 70% of your total customers have not come back to your business in the last 90 days. And you are not alone. Most small businesses have far less repeat customers than what their owners would like to think.
In spite of this, many small business owners spend considerable effort and money in acquiring new customers. Now, don’t get us wrong. You do need to spend money to continue adding new customers – partly to replace those who will leave you no matter what and partly to grow your business. But we believe that the small business owners need to spend equal, if not more, effort and money in keeping the existing customers as attracting new ones.
So, how can you make this happen? There are several approaches to this and they all start with providing excellent customer service that goes beyond customers’ expectations and delights them. We showed 7 step process to great customer service in an earlier post. In addition, here are additional tactics you can use to acquire and maintain lifetime customers.
- Do whatever it takes to hold onto existing customers. It costs lot more to acquire new customers than hold onto existing ones. We showed how you can do this in an earlier post.
- Explore subscription model for the products and services you are currently selling. There are several approaches to convert your existing products to subscription model.
- Find out how many customers have not visited your business in a long time and explore ways to get them back.
- Pay careful attention to what your customers are saying about your business and follow up on their concerns and complaints.
- Pamper your best customers with extra perks to make sure they keep coming back to you week after week. Not only will they continue giving their business; but they will also promote your business to their friends and families through word-of-mouth.
Every small business needs to attract new customers; however it is more important to pay attention to keep the ones you already have. What is your take on this?
