Farming vs. Hunting?
When it comes to customers, where should a business invest its time and money? Should a company aggressively pursue new customers with exciting marketing activities and promises or concentrate its efforts on retaining the loyalty of the existing customer base?
Of course it depends on the company and the business sector it operates in. Some products and services inevitably have a high turnover of customers, making loyalty very difficult.
However, in the vast majority of businesses, it is vastly more cost effective to focus on loyalty. On average, across a wide variety of businesses and markets, it costs a company 6 times as much to attract a new customer as it does to keep an existing customer!
A company that can increase customer retention by just 10% can increase its profits by as much as 25%.
If your company is investing heavily in winning new customers, perhaps you could be getting better returns by re-directing some investment to increase loyalty of your current customers.
For help with this and any other marketing challenge or opportunity, contact Aardvark Consulting for a no-obligation initial consultation.
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