There’s a big marketing fallacy that exists in the mind of many business owners. They believe that they should always be marketing to new customers.
Obviously there is some truth to this, as it’s important to be in front of potential customers, however it’s a mistake to make this your sole focus. Spending too long focusing on trying to win new customers means you could end up losing track of your existing customers. The people that already know, like and trust you.
You may have heard of the Pareto Principle previously, if not here’s a quick summary. The Pareto Principle states that for many outcomes roughly 80% of consequences come from 20% of the causes. If those numbers sound familiar, that’s because it’s also referred to as the ‘80-20 Rule’.
We can use the Pareto Principle in business. Many businesses will find that 80% of their revenue comes from just 20% of their customers. In some cases, the percentage of revenue can be even higher, from even less customers.
If this was true for your business, constantly trying to focus on new customers would be a mistake as they’re not going to create a big revenue shift for you. Yet, if you were to spend more time building stronger relationships with your existing customers, you could have a greater impact.
Your existing customers already know, like and trust you. They saw the products or services that you offer and they were inspired to purchase from your business.
Unless you offer a single product or service that will only be purchased once, then you always have an opportunity to generate repeat business from your customers.
Let’s imagine you own a furniture store for a moment. A customer comes in one day to purchase a new bed for their master bedroom. You sell them the bed and they leave happy. One of two things could now occur:
- The customer enjoys their new bed, never hears from your business again and goes elsewhere when they’re ready to purchase additional furniture items.
- You build a strong relationship with the customer. They returned to purchase new furniture for their living room - an entertainment unit, 2-seat sofa, 3-seat sofa. They purchase their new dining table and chairs from you. They purchased nursery furniture for a new child. Finally, when summer came along, they even purchased outdoor furniture for their patio.
There’s quite a big difference between the two options above isn’t there? Both customers were happy when they purchased from your furniture store, but there was a very different after sales experience.
The second customer’s relationship with your business was nurtured. You stayed front of mind by communicating with them regularly. They loved the attentive nature of your business, so as soon as they needed more furniture they were never going to look anywhere else.
The difference in the total value of the customer in the above example could be 10X or more. That’s why it’s so important that you take the time to nurture and build better relationships with your customers.
It costs money and time to win a new customer. If you don’t build a relationship with them, you’re losing out on the opportunity of winning repeat business.
Nurturing and building relationships isn’t a difficult process. You can do this through email marketing, sending out valuable tips and advice weekly or monthly. You can even add in promotions and offers to your emails which is another great way of generating additional income.
What type of customers do you want in your business? Do you want a customer to purchase once and disappear, or would you prefer someone to come back time and time again?
