In any sort of retail business, there’s always talk of either landing new customers or valuing existing ones. Which side is right? FeedbackExpress dives in deep with this debate, finding out once and for all what your business strategy should be.
Customer Retention
It’s impossible to ignore the benefits of retaining your existing customer base:
- Cost: Depending on what market you’re in and what the economy looks like, it’s cheaper to retain a customer than acquire a new one, with the latter costing 4 to 10 times more.
- Simplicity: You already have an existing marketing campaign in place, and tweaking it takes far less work than custom creating a whole new one.
- Ease of use: The longer you carry on a relationship with someone, the better you know them and what they like. Trying to figure out new people or customers is far more difficult.
- Existing base: Why go shopping for new business when you’ve already got a little goldmine right in front of you? According to CMO.com by Adobe, ’80 percent of your future profits will come from just 20 percent of your existing customers.’
It’s pretty easy to see why so many businesses focus on customer retention — working with an existing base and nurturing those relationships is often thought of as being incredibly fruitful. However, some more modern and risk-taking businesses are opting for something different…
Customer Acquisition
Customer retention, as attractive as it may seem, just isn’t the right strategy for every company at every point in time. This is especially true when you consider the following points:
- Expansion: There comes a time with every successful business that the status quo just won’t do it anymore. You’ve got to grow to keep getting better, whether it’s horizontal or vertical growth, and looking at new customers is one way to do that.
- Freedom: You’re not restrained at all by existing email marketing campaigns, and are free to go in just about any direction you want.
- Excitement: An aggressive approach to marketing will get you noticed, and being noticed tends to lead to sales — a win-win situation!
So far, we’ve outlined cases for why each strategy rocks, but which one should you be focusing most of your energy on? Let’s take a look.
Focus primarily on customer retention if you:
- have sales in the double digits each day
- sell high-end or expensive goods
- own a kick-ass loyalty program with a great reputation
- have perfected the art of customer support, such as offering live customer chat in a variety of languages
Focus primarily on customer acquisition if you:
- are just starting out
- average fewer than 10 sales a day
- sell reasonably-priced goods or services
- are still working out the subtleties of your marketing and loyalty campaigns
Final Word
You know the saying ‘don’t put all your eggs in one basket?’ That’s something that you should especially pay attention to here, as there’ll rarely be a time when you have to operate with solely one strategy or the other (exceptions being your very first days in business or when you’re a rock-star retailer).
Instead, you should be adopting these strategies on a spectrum so you can retain customers and attract new ones in the best way possible. It’s more a matter of dividing your time and focus among both methods than picking one or the other.
