The end goal of every business is to make a profit. Many marketing studies show that a company’s resources are better spent by keeping existing customers than acquiring new ones. This may be true in some cases; however, for the vast majority of us, the reality is we need to continually add new customers to just stay even, let alone, to grow. How we achieve the goal of a profitable business depends upon the marketing approach or pricing scheme employed.
Let Happy Customers Create More Business For You
For the purpose of this article, we will focus on the benefits of seeking new customers through our existing retained customers. The fact is successful businesses are those which manage to enlist their satisfied customers to partner with them to develop new customers because customer retention influences your company’s profitability by lowering expenses and operating costs. There are a number of ways an increase in customer retention rate can increase profit, but, it should be noted, the person easiest to accept your offer is likely to be the one who is the quickest to defect. Price discounts are clearly an ideal means to obtain new customers; your challenge is to retain the customer. To be effective in retaining new customers, two factors, typically, considered as essential elements for retention customers are perceived service quality and customer satisfaction.
Many of our clients have explained to us how they, through the use of direct mail advertising combined with a strategy to generate customer satisfaction by providing quality services, have been able, within a years or two, to increase the number of customers as consistent, frequent users of their products or services. These customers have more than paid for the advertising costs. Further, marketing studies have identified significant benefits of retained customers, such as, they tend to prefer stable, long-term relationships, inherently spend more, pay promptly, and require less service.
We have found the most important benefit of a retained, satisfied, consistent customer is their ability to generate second and third generation leads by referrals to your business. The company’s return on investment in advertising cost will certainly be increased. The multiplier effect of one retained customer generating just one other retained customer who in turn generates another retained customer is very significant to the company’s bottom line. And, this is not even calculating the number of customers who are drawn to your business because of casual referrals by your retained customer. But, this is certainly how your business grows when you cultivate your customers through a business strategy that involves you and your employees in finding and recruiting customers by producing better products and services that have value to your customers and their referrals.