Hudson, Ink


It’s always all about the customer. You could write the most persuasive ad, create the most expensive design, purchase the most expensive media – and, no matter what, it always comes back to the customer. Only the customer can see the value in your offer, make the decision to follow through, and stay with you after the sale.

Sales come from customers. The stronger your relationship with your customers, the better your chance at sales.

With existing customers, studies show, you’ve got a probability of 60 – 70% to make the sale. But that number gets comparatively small when you realize you’ve only got a 5 – 20% chance of selling to a prospect. I’d quickly argue that the difference between those rates of success are related to how willing you are to make a relatively small investment in retention marketing.

In their book, Leading on the Edge of Chaos, authors Emmet C. Murphy and Mark A. Murphy make some important points about the value of your current customers:

  • Acquiring new customers can cost five times more than satisfying and retaining current customers.
  • A 2% increase in customer retention has the same effect on profits as cutting costs by 10%
  • The average company loses 10% of its customers each year
  • A 5% reduction in customer defection rate can increase profits by 25-125%, depending on the industry
  • The customer profitability rate tends to increase over the life of a retained customer

The other side of demonstrating the value of your current customers is that customer retention marketing is the most cost-efficient marketing you can create. Seriously. Retention programs are about communication, keeping your name in front of customers, reminding them that you care. This is not an expensive concept. 

The most basic elements of communication to customers involve thank-you cards, follow-up phone calls, reminder emails, customer newsletters, reactivation letters and referral requests. So, how much will all of this set you back? Less than six dollars per customer maybe?

How much is that investment going to pay? You can figure that out by knowing that  repeat customers spend 67% more than new customers.

Now ask, how much will you pay if you don’t do any of the above?  That cost comes from lost sales and lost referrals that go to competitors actively working to keep their customers.

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