It’s a well-known fact that the cost of keeping an existing customer is much less than trying to attract a new one. Still, many businesses refuse to listen.
Businesses that don’t understand the long-term value of customer loyalty tend to spend incredible amounts of money on marketing and advertising to attract new customers, while neglecting their existing customer base.
Especially when your business is going through tough times, focusing your efforts on existing customers is critical to your success.
It is consistently found that 60% to 80% of a business’ lost customers are either ‘very satisfied’ or simply ‘satisfied’ right before they take their loyalty elsewhere, according to a recent Business Week Tip.
Here’s how Richard D. Hanks, Tip author and president of Mindshare Technologies, differentiates between a ‘satisfied’ and ‘loyal’ customer:
- Focus on price
- Shop around for bargains
- Run to a competitor if you mess up
- Don’t provide critical word-of-mouth advertising
- Buy less and test your competitor’s products and services
- Are easily lured away by competition
- Focus on value
- Reward you with loyal patronage
- Are forgiving of an occasional slip-up
- Shout your praises and recommend you to their friends
- Buy more and sample across product and service lines
- Are resistant to competition
Hank’s advice on customer loyalty: “Since drivers of loyalty are different across industries, I suggest you invest the resources to determine which parts of your product service mix are the key drivers of loyalty for your business.”
How does your company work to improve customer loyalty? What advice do you have for businesses looking to attract new customers while trying to still focus on existing customer loyalty?