This article is about how to retain existing customers and how to acquire new customers.
Marketing customer loyalty
Customer retention is 5 times cheaper than acquiring new customers. Or vice versa: acquiring new customers is 5 times more expensive than retaining existing customers. And very importantly: the cost is many times higher when it comes to winning back a lost customer!
Your existing customers are very valuable and form a valuable part of your company's capital
- Existing customers usually buy from you more or less regularly, already trust you and are less price-sensitive.
- Existing customers are not so quick to switch to a competitor.
- Satisfied and loyal customers buy in larger quantities and more frequently.
- You no longer have to convince existing customers of your quality.
- They already know the payment behavior of their existing customers.
- There may also be personal contacts.
- Existing customers usually recommend your company to others and you will receive new customers through these existing customers.
Bind your customers to your company: Keep in touch with your customers and maintain the connection
If you now realize that customer retention costs only a fifth of new customer acquisition, then the question arises as to why customer retention does not receive sufficient attention. Most companies concentrate primarily on acquiring new customers. As a result, resources are not used in a targeted and liquidity-conserving manner.
If an (existing) customer approaches you with a special request that you do not want to realize due to high costs, you should think about how much more it would cost to acquire a new customer. Under certain circumstances, the additional cost of realizing the special request would have further increased the customer's loyalty to your company. In addition, this customer may recommend you to others and indirectly acquire new customers in this way.
Customer loyalty marketing is indirect customer acquisition
The more intensive you are or remain in contact with existing customers, the higher the probability that these customers will firstly remain with you and secondly that they will recommend you to potential new customers. Customer loyalty is therefore indirectly also an interesting instrument for acquiring new customers.
How to bind customers to your company
E-mail marketing
Use e-mail marketing. Tell your customers what's new at your company, for example, or simply thank them for being your customers for so long.
Vouchers / coupons / vouchers
If it fits in with your corporate philosophy, send customers vouchers for their next purchase.
Competition
Hold a competition with your customers and inform them that this competition is only for existing customers. In this competition, you can, for example, give away a voucher for their next purchase or for something completely different that is very useful for customers. Many are happy to receive an Amazon voucher, for example. I'm sure you have even more ideas. You know your customers better than we do.
Event
Organize an event for your customers. For example, a vernissage or similar.
A customer who wants to leave you ...
A customer who wants to leave you has a reason to do so. Ask why the customer wants to leave you. You may be able to keep him. And a good piece of advice: don't use any recognizable automatism at this moment. If you only send a survey to the customer, you will most likely not find out the reason and the customer will leave you. Send the customer a personalized email with a specific question about what you could do better to keep the customer. If sufficient resources are available, call this customer.
A customer who wants to leave you and eventually does so because you are unable to retain him will generally not be a positive advertisement for you - quite the opposite.
If it is already 5 times cheaper to keep existing customers, it is many times more expensive to get a lost customer back and to compensate for any negative word-of-mouth propaganda that this customer then carries out.
Customers you can keep despite complaints are the best advertising!
See everything as an opportunity. Even a conflict with a customer. If a customer complains to you, this is an opportunity for you to keep the customer after all. Take the customer seriously. Have a conversation with this customer. If you still manage to keep the customer, then you have a "customer for life", so to speak, who will be good advertising for you!
Selected measures for customer retention
Gifts promote friendship
Christmas is coming soon. Send your customers a gift. It doesn't have to be a big present. Just show that you are happy to have won over this customer. As a retailer, you can put a small gift in the customer's bag the next time they shop. Or even better: give the customer a gift during the current year, without any special external occasion. In this way, you are acting anti-cyclically. Depending on how many gifts the customer receives at Christmas, it may be that yours goes under. It is therefore better to choose a time during the year.
Active contact
Depending on the type of business you run, it can also make sense in this day and age to simply pick up the phone and call the customer to ask how they are doing. The customer will certainly be pleased, will remember you and perhaps there will be an order or a recommendation or you will learn something about your competitors. A personal call to the customer is definitely worthwhile! It shows that the customer is important to you.
Special promotion week for long-standing customers
Organize a promotion week for your long-term customers and repeat buyers or, if possible, offer them subscriptions that are only available to long-term customers.
Obtain feedback
Get feedback from customers. Firstly, you receive important information, and secondly, you show that the customer is important and is taken seriously.
Contact person
Offer your customers fixed and personal contact persons.
Greeting cards
Send greeting cards to your customers on special occasions, such as birthdays, anniversaries, etc. Of course, this assumes that you have this information.
Customer coupons
Hand out coupons with discounts to long-standing customers. They will certainly make repeat purchases from you and recommend you to others.
Friendliness
Friendliness should actually be a matter of course. But it is not. Train your staff to be friendly. Friendly and competent staff stand out and are remembered positively.
Admitting mistakes
If something has gone wrong, admit your mistakes and say thank you for drawing attention to them.
events
There are many occasions for events, e.g. a company anniversary. How about combining your next customer event with a vernissage by an artist from the region?
Types of customer loyalty
Define unique selling proposition and use recognition value - Build relationships
Priming creates proximity and customer loyalty not just through the quality of your products - which may not even differ greatly from a competitor's offering - but through the emotionality and intensity of the customer experience. If you succeed in making customers associate a product with an emotional and positive experience, the buyer will not only ask for your product again, but also the positive feeling that the purchase or the salesperson has triggered in them. Therefore, address your customers personally and build relationships through small gifts.
Suitable for this:
- Individualization of your website and brand presence,
- Gadgets as a gift for a purchase,
- Logo products and leads - for example, multi-part training courses and courses for which you provide the first part as a teaser free of charge via download,
- Possibility to personalize products with design or lettering.
Services that impress
Guarantees and the promise to solve any questions or problems that arise after the purchase of a product professionally, quickly, free of charge or at a reduced price increase confidence in the expertise of a provider. Such service promises help customers to remember who they purchased a product from and to return to the provider. For example, if the customer redeems the offer of free returns if they are not satisfied, you have the opportunity to place new products and offers as soon as the customer visits the website again. You can also make your service promises exclusive for existing customers and thus strengthen their loyalty to your company because they feel they are being given "preferential treatment".
Suitable for this are:
- Discounts and benefits,
- Coupons for subsequent purchases,
- Customer club and customer card,
- Exclusive offers and discounts.
Expand cross-selling potential and strengthen synergy effects of networks
If you include products from existing B2B contacts and networks in your own product portfolio, you give your customers even more opportunities to get in touch with you. This opens up more opportunities to maximize profits and at the same time build viable, sustainable customer relationships and enter into win-win collaborations with other companies.
- Discounts, rebates and benefits for purchases in the partner network
Track satisfaction and personalize customer contact
Many companies have precise data on when a foreseeable follow-up purchase will be made for a purchased product. This makes it easy to track when the buyer of an inkjet printer will purchase the first replacement cartridge. Align the timing and content of your newsletter mailing or your satisfaction survey by e-mail ("How satisfied were you with our service?") to the respective customer needs. This allows you to meet your customers where they are on the customer journey.
The following instruments are ideal for this:
- Feedback surveys,
- Mailings for birthdays or holidays,
- Good accessibility of the service with fixed contact persons known by name.
Tip: Evaluate all your customer loyalty measures regularly so that you can continuously adapt and optimize them depending on the success of individual communication channels!
Types of customer loyalty: The website
Your website as a customer loyalty tool
What if you could communicate and interact with your customers directly on the website? I'm not talking about real-time chat. Why not build a community of interest with your customers and offer your own platform for exchange?
Form a "community of interest"
You can create groups, discussion groups and forums on your website. Depending on the desired activities, you can also enable customers to get in touch with each other and discuss your company and products, for example. As an entrepreneur, you can also use this platform as a year-round in-house trade fair. Wouldn't that be great?
This does mean that you have more work to do with the website, because after all, you are working with it! But this work is worth it!
Adverse environmental influences have not only existed since Corona. They also exist, for example, when a bridge is closed or roadworks are being carried out. In all these cases, customers cannot reach local businesses or can only do so with difficulty. This is what happened to the Airport Bistro in Speyer, for example. The bistro is located near a bridge over the Rhine that connects Baden Württemberg and Rhineland-Palatinate. The bridge has been closed for construction work since January 2019 and will remain closed until March 2021. Naturally, this closure was already having an impact on the company's figures before Corona.
If you have not intelligently linked analog communication with digital communication by the time an adverse environmental event occurs, you will inevitably suffer a loss of sales. But if you haven't done so before, you can change this at any time and start communicating digitally right now. This will allow you to stay in contact with customers at almost all times. Even if external influences speak against it!
Marketing new customer acquisition
Costs of acquiring new customers
The costs of acquiring new customers are many times higher than retaining existing customers. They can be broken down as follows:
Costs for
- Advertisements (online and offline)
- Radio + TV advertising
- Participation in trade fairs
- Sales employee
- and much more
Ergo: look after your existing customers. Even if a customer approaches you with a problem where you have to make a financial contribution. After all, this could be an important contribution to customer loyalty!
All the costs listed here involve a very high liquid investment !
Acquiring new customers / acquiring new customers is a fine art, we would say, and there are a wide variety of tools from the marketing toolbox. It all depends on the right and appropriate mix.
Classic advertising for acquiring new customers
The advertisement
Classic advertising initially includes
- Advertisements in print media
- TV commercials
- Radio advertising
Public Relation - PR
Whether you can differentiate between classic PR and "modern" PR these days is a moot point. The fact is: PR existed before the new media and is an important part of the marketing mix.
In the past, there was no Internet. It was harder to find people responsible in editorial offices. I can still remember that Zimpel used to make CDs, which were very expensive. Almost all the media and their contacts were stored on these CDs and you could make a targeted selection. Today, Zimpel is available as an online version and works together with newsaktuell (part of the DPA Group).
Good contacts with media contacts are and were important. In this way, it was and still is possible to be mentioned in newspaper reports. Nowadays you can even buy your way into various media. That used to be the case in the past. You would receive a call from a journalist or editor. You were asked whether you would be interested in the newspaper publishing an extensive article about your company and whether you would place an advertisement in return, which would cost at least xxxx euros. Today, this works without a phone call and is partially automated. Depending on which medium you use to distribute your press releases.
The classic sales department
The classic sales department still exists today. This department is made up of employees who actively acquire new customers. By phone call, personal contact at trade fairs and other events and much more. Nowadays, personal contact has become rather difficult. The working methods of the traditional sales department are currently severely restricted due to the coronavirus regulations. This means that the traditional sales department lacks essential tools for successful work.
Communication via new media for customer acquisition
Print advertising, TV commercials and radio advertising have been supplemented by other options in recent years. Google AdWords has been around for almost decades. Facebook and Instagram advertising were added later. The advertising opportunities on special portals such as LinkedIn, XING & Co should not be forgotten either.
The number of marketing tools has exploded. Nowadays, the art is to define the target group as precisely as possible. Only then can you decide on suitable communication channels.
It is interesting to note that classic advertising used to be a matter for the boss. Nowadays, people go around trying to pass this task on to interns. This is a point that we absolutely cannot understand. But the reason for this could well be that bosses don't know enough about it and think that the youngsters do.
If you let an intern do the work, then you can assume, with a few exceptions, that the whole thing will only be done half-heartedly. Such actions definitely do not lead to success in the end and are the reason why advertising in the new media does not have a good reputation. Let's be clear: this advertising is also a task for specialists if it is to be successful.
Acquiring new customers is cost-intensive and is definitely a matter for the boss!
By "a matter for the boss", we do not mean that you, as the boss, should necessarily be responsible for acquiring new customers. We mean that you determine the strategic approach.
All the measures for acquiring new customers that we have listed so far are extremely cost-intensive. This is one of the reasons why acquiring new customers is 5 times more expensive than customer retention. However, acquiring new customers is necessary for the growth of the company. The more customers, the more turnover. Logical.
B2B new customer acquisition via portals
There are various portals for acquiring new customers.
Public contracts can be found on evergabe.de, for example. Freelancers can find new customers on various portals such as Gulp, Freelancermap and others. B2B contacts can also be made on WLW(Wer Liefert Was?). WLW plays a role in procurement marketing in particular.
Even if we have already mentioned these portals indirectly, they must also be mentioned under this heading: LinkedIn and XING.
Employer rating portals, such as Kununu, play a major role in employee branding.
It is essential to create a paid account on all portals if you want to work with them in a targeted manner.
The marketing mix for acquiring new customers
It goes without saying that an individual mix of suitable measures for acquiring new customers must be strategically developed for each company.
Conclusion
Customer loyalty is important. Acquiring new customers is also important. There is no real priority here. It is also important that you know the different ways of customer retention and customer acquisition and how to approach them.