Archive for June, 2014

Current Customers Are Vital To Adding Profits, Generating New Revenues

June 14, 2014

Generating new revenue is an important component of small business growth.

But there are other avenues to generating added profits.

One route is through the current customer base.

In our surveys at Information Strategies, Inc., it is apparent many companies focus their marketing efforts on identifying, selling new customers through outside media such as advertising, social media, public relations.

At times, this process leads to companies putting the majority of their resources into this effort while ignoring current clients.

Yet, adding to current customer’s average sale and gaining referrals to new customers is an economical way of improving profits.

Retaining current customers is cheaper than finding a replacement client. Ipsos cites that acquiring a new customer can be 12 times more costly then retain an existing one.

Therefore, there is much to gain to putting emphasis on good customer relations with current customers.

Upselling new products/services is economical, easier, and more profitable.

A good profit generator and one often overlooked is current purchasers can be upsold into other products/services.

It is easier to sell new products/services to an existing customer than it is to market to potential clients.

Having set an upsell program in place, insure current customers are more than satisfied with the company’s products/services and particularly customer service.

Referrals from current customers are more profitable and longer lasting.

There are other compelling reasons for viewing these efforts as critical elements in the drive for increased revenues and profitability.

Current customers are a mouthpiece in the marketplace. According to McKinsey, word-of-month generates 2 times the sales of paid advertising.

As MePlusYou points out, trust in personal recommendations is at 92% and growing.

Finally, Deloitte claims customers referred by other loyal customers have a 37% higher retention rate.

Current customers are perhaps the best single source of new clients.

Therefore, it behooves small businesses to devote resources to enlist current customers as allies in new business efforts.

Some referred customer marketing tactics to employ are:

· Build customer referrals into the total marketing plan and set targets.
· Train, reward staff to ask for referrals.
· Provide incentives to encourage customer referrals.
· Identify customers who are vocally positive and amplify their message.

In summary, often the focus on new clientele leads companies sometimes to neglect current customers.

To ignore current customers is to put the company at risk.

Properly managing, better serving, encouraging current customers can lead to additional sales, referrals and significant profit gains.