THINKing

My New Business Secret Formula

We’ve talked here often about the fact that there is no marketing magic bullet. But there is a new business magic bullet, and I’m going to tell you the secret formula. Only a handful of those who read this will successfully implement within their business because it is not shiny and new.

Like most businesses, you are probably spending up to 80% of your marketing budget on bringing in new business because that’s exciting. It’s not as much fun implementing my new business secret: do great work for current customers.

But Harry, you are saying, I’d rather go out and bring home the new business buffalo than focus on my current customers. Where’s the benefit?

Let me disabuse you of the notion that there is no benefit in this hyperfocus on current customers.  Doing great work for current clients spawns so many good things for your business.

Even if you have the best salesforce in the world and they can sell anyone anything once, if your company doesn’t wow them with your service they aren’t going to buy from those superb sales folk again. Some estimates show that if you cut customer churn by just 5%, you can increase profits by at least 25%.

If that’s not reason enough, then consider these stats relating to customer retention:

• 91% of dissatisfied customers won’t return
• 96% of dissatisfied customers won’t tell you the real reason why they won’t be back
• it costs 10 times more to replace a customer than it does to keep him
• repeat customers spend 33% more than new customers

But how is doing great work for current customers the secret to my new business program, Harry?

I’m glad you asked. Here’s the key statistic that you need to internalize: referrals from repeat customers are 107% higher than from non-customers. Loyal customers talk you up to others who are like themselves. In other words, they are targeting the right customers for you and you don’t have to spend a dime.

Are you doing great work for your customers? Maybe it is time to reevaluate.

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