In Search of the Elusive Customer

A recent survey sought to find out why customers stop shopping at a business. With over 2,000 people surveyed, here's what they said:

• 9% left because they moved out of the area
• 9% left because they went with a competitor
• 14% left because of unresolved complaints
• 68% had no reason for leaving...they simply forgot.

Imagine, a STAGGERING 68% didn't come back because they simply forgot. But that's not the customer's fault. It's OUR fault if we don't remind our customers to come back.

So the first thing we should have in place is a sure-fire way to collect our customer's information. That way we can follow-up with them regularly. Even just to let them know we're still here. Known by many names, "touch marketing" or "drip marketing," we need to constantly be in our customer's presence.

So our existing customers remain the #1 easiest target market in which to sell.

What market is the next best?

Well, stop and consider the last time you needed an accountant for your business. Or a new dentist or doctor, if you just moved into a new area. Or a new mechanic to fix your car. What do you do?

Do you pop open the Yellow Pages, or stop by the first one you see on the road?

Well, maybe, but probably not.

You probably asked a friend or relative or someone you trusted to suggest one that they use. And you ask them how satisfied they've been with their work and customer service.

In fact, studies have shown that only about a third of your "new" customers come to you because of your marketing and advertising.

The other two-thirds? Referrals.

Think about it. The referrals trust the people they are referred by, so you've already got your foot in the door with them. They are apt to be more relaxed and have their "sales shield" down, second only to your existing satisfied customers. You'll be able to capitalize on that fact.

And since you'll always need a fresh supply of new customers to replace the ones who have left, this is a very cost-effective way to do so. Because your existing satisfied customers send these referrals your way, your cost per lead goes way down.

And as an added bonus, they'll be more likely to refer others because they were referred. It's one of the most cost-effective ways to get new customers that I know of, because you're leveraging the lower cost of your existing customer.

Now, there's one other type of customer that I'm going to talk about in my next post. And bringing in this kind of customer is a lost art for many businesses. Can you guess what kind I'm talking about?

In the meantime, feel free to post some methods you use to encourage referrals to your customers. I'll take the best of the best, add some of my own and other ideas from other marketers, and compile it into a report for you all.

The Power of Repeat Customers

I was speaking on the phone with a client the other day, and he asked me about ways he could increase his business (he has a retail store). He started asking me about places he could advertise to try to attract new business.

Well, there certainly isn't a shortage of places to advertise, but it occurred to me that most businesses trying to grow frequently focus on one aspect: getting more customers.

The truth is, there are actually THREE ways to grow a business.

1) Get more NEW customers (this is what most businesses try to do).

2) Get your existing customers to spend more with you each time they visit.

3) Get your customers to visit you more often.

It seems simple enough, but everything you do in your marketing efforts will generally fall into one or two of these methods.

Now the problem with many businesses using the first method the most is that new customers can be expensive to acquire, compared to the other two methods. In fact, numerous studies show that it can be between 6 and 10 times as costly to get a new customer than it is to get a previous customer to return.

This is such an important concept, that I'm going to give you an example of what I mean. Let's suppose that you ran an ad in your local paper, and the ad cost you $500. And let's say the ad brought you in 20 new customers. So each new customer cost you $25 ($500 divided by 20).

Now imagine that you took that $500 and did a mailing to your customer list. On the lower end, you can expect between 6 times as much of a response than you got from the newspaper ad. That's 120 previous customers. Which would you rather have? 20 new customers or 120 existing customers who already know you and buy from you? Me? I'll take the 120 any day.

And it gets even better. Retail researcher and author Paco Underhill recently conducted research that showed a previous customer will spend on average twice as much as a new customer.

So it seems the easiest customer to get to come in your store is a previous customer. So how do we get them to come back? That's the topic of my next post.