Friday, June 17, 2011

Shifting From Customer Acquisition to Customer Retention

One important shift to take which is often neglected online is moving from acquiring new customers to retaining your current customers.

Its about basing your businesses revenue off an existing set of loyal customers instead of acquiring new customers.

Our research has shown that repeat sales account for approximately 70% of the average businesses revenue. That means only 30% of your revenue is probably going to come from new customer acquisition over the long term.

However the fallacy that most businesses make is focusing their efforts and advertising dollars on acquiring new customers -- instead of strengthening the relationship with their current customers.

Of course in the beginning when you have no customers you must acquire them.

However it is important to be ready to make the shift to focusing primarily on retention instead of acquisition to strengthen your marketing.

Retention is often less expensive and makes more liberal use of mediums such as customer service, rewards programs, and other low cost retention strategies.

Furthermore selling to your existing customer base is less expensive than acquiring a new customer, so your profits are also higher.

You must purposely create and manage your relationships with your customers.

You can take everything away from a company and it can still succeed as long as you do not take away its customers.

Employees can be replaced, buildings can be rebuilt, but without customers you do not have an enterprise.

Your goal in managing your customer relationships is to increase customer loyalty. Think of it as a scale

Not loyal at all ------------> Intensely loyal

What you want to do is move your customers as far as you can from the left end of the spectrum over to the right end.

One of the ways you can do this is through the creation of customer communities.

These are deliberately designed communities of your customers that create a social aspect to your business, and raises the loyalty.

For example if you sold cereal you could create a breakfast club where parents and children could meet up and play games along with sampling the lastest creations from Kellogs.

This is one of many ways you can apply communities to your brand.

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