The importance of customer retention

As a small business marketing consultant, I can’t overstate the importance of customer retention. Before you spend a PENNY on advertising – make sure you’re keeping your current customers happy.  Why invite new people to the party which is your business if they’re not going to stay?  It’s well known that a happy customer will tell on average three other people, while an unhappy customer will tell on average 15 – and that’s assuming that he/she doesn’t have access to a blog!  In short,  customer satisfaction’s role in marketing can not be overstated.

There was a business model a generation ago that had limited opportunity to make follow up sales to customers – it was called encyclopedia sales.

Back in the days before the internet, families with school aged children were the target audience for encyclopedia publishers.  Door to door salesmen would canvas neighborhoods, selling these essential reference tools to families who wanted their children to have the best education.

The problem – once a family purchased an encyclopedia set – they weren’t in the market for a second or a third set of encyclopedias.  As a business model, everything was downhill after the first sale.

Of course, the internet has pretty much destroyed the market for home encyclopedia sales, but there’s an important lesson to be learned from the business model – that a business that doesn’t have repeat customers won’t be in business for the long haul.

Let’s face facts, customer acquisition is expensive. Selling to a repeat customer is ALWAYS much more cost effective.  Not only are repeat customers already educated about the benefits of doing business with you, they are also willing to give testimonials, and customer testimonials build trust.

The time to invest in advertising is when you’ve got as strong portfolio of customer testimonials – and  not before.

There’s no doubt about it, effective advertising can and will bring new customers to your business.   However, if you invite new customers to the “party” which is your business – you’d better be ready to delight them.  It’s a well known phenomenon that a satisfied customer will tell 3 new people about your business – while an unhappy customer will tell on average 15 – and those figures were compiled in the days BEFORE the social media explosion.

The first step to marketing a small business …

Identify your target audience.  The second step is to DELIGHT them when they choose your business.     Want to learn more… pick up a copy of ,Beyond the Niche: Essential Tools You Need to Create Marketing Messages that Deliver Results.

If you need a step by step guide to creating truly effective marketing messages for your small business- pick up a copy of my book Beyond the Niche: Essential Tools You Need to Create Marketing Messages that Deliver Results.