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On the surface it may be tempting to go after new customers to generate new business. However, it is just as important to retain existing customers and drive new business out of them. Some companies opt to participate in group buying sites to sell products and services at large discounts and special offers. Group buying may do more harm than good as it may give your company complex of being sub-par to the competition. The following examines reasons why it is important to retain your current customer base.
Your current customers are already familiar with your products and services and may be willing to upgrade their service or try out your other products. Marketing trends have discovered that the probability of selling to new or potential customers is between 5% and 20% however, that number jumps to 60% with current customers. So, in the same amount of time and effort your sales and marketing staff spend on up-selling and cross-selling, their rate of success is much greater with current customers.
Word of mouth spreads fast and if your customers are happy with your products and services they will most likely recommend them to friends and colleagues. By making customers happy and offering special prices or even using them as test cases for new products and services before launching them publicly, you enhance the customer experience which can go a long way. Happy customers are inclined to share their experiences with your company and are likely to influence others.
It is several times more expensive to find new customers than it is to provide excellent service and sell to current customers. You don't have to spend time, money, and effort in developing new marketing strategies, cold calling, or distributing campaigns to target audiences. When you target new audiences you have to spend time telling them about your products and services whereas your current customers already know what they are getting. By centering attention on retaining customers and building your company's brand and reputation, your customers will most likely want to try out new offerings which greatly offsets the costs of finding new customers. This doesn't mean you should halt all advertising campaigns to find new customers all together however, it is a recommendation to shift attention to your customers.
Your loyal customers may see lower prices and different services from your competitors however, if they are already happy they are most likely to stay. Loyalty offers you protection from losing customers to competitors especially if you focus on retaining them. When and if you must raise your prices, loyal customers will likely stay with you as long as you offer incentives and other attempts to retain them by passing on savings without sacrificing quality.