When focusing on sales growth, your existing customers are your greatest asset.
Many businesses focus on enticing new customers instead of encouraging their existing customers (who already know, trust and like them) to spend more, more often.
The probability of selling to existing customers is 60-70%, whereas the likelihood of selling to a new customer is only 5-20%. The opportunity with your existing customers is huge, so why not focus some more attention here instead of prioritising chasing new leads?
By building rapport and forging deeper relationships with your customers, you'll also get clearer on what they really want and how you can give it to them.
Tapping into added value
There are hundreds of ways to build stronger customer relationships to increase your retention rate and average transaction value. Focusing on your existing customers provides the highest return on your investment - it’s cheaper to target them and has a higher likelihood of success.
Here’s an example of how several strategies can make a real impact.
Let’s say your sales currently sit at $1,250,000, and your current retention rate is 70%. You review your customer relationship management (CRM) system and set-up a customer loyalty programme. You send an email to announce the programme and offer a small discount code for using within the next 7 days. You keep tabs on what your customers are buying and send targeted emails at appropriate times. By the end of the year, your customer retention rate has increased to 80%, giving you almost $40,000 more cash in the bank and $55,000 more profit.
In addition, you up-sell and cross-sell complementary products and services to increase the average number of times your customers buy from you from 2.5 to 2.6 and the average transaction value by 5% to $686. These key things alone result in an increase in cash of $76,317 and a profit of $105,995.
We can run your numbers through our Value Gap Calculator.
Would you like to see the impact of making some small improvements on your profit and cash? Making small changes to retain and delight your existing customers can result in a much higher return on investment than spending on attracting and converting new customers.
Good old-fashioned customer service is as important today as ever.
Providing a great customer experience and managing customer expectations by under-promising and over-delivering is essential to delighting your customers.
Get in touch to find out what returns you could achieve by increasing your customer retention rate, number of purchases, and transaction value. We’ll help you identify the strategies you can implement to better serve, delight, and retain your existing customers and positively impact your bottom line.
Contact the team at Beyond Your Numbers to unlock your business's untapped potential and set goals for the coming year.