Most businesses spend a lot of time trying to attract new customers. Advertising, promotions, social media – you’re probably doing it all. It’s necessary, of course, and no organisation should neglect trying to attract new customers who might be interested in doing business with them. Here’s what they might be missing, though, in the headlong rush to attract new customers.
Try this exercise:
- Calculate ALL the costs associated with attracting new customers every year (advertising, online, etc.)
- Divide that number by the number of new customers who engaged with you this year.
- This is your new customer acquisition cost.
Depending on how much (or little!) a new customer spends in doing business with you, you may actually LOSE money on doing business with some of your new customers!
There is a type of customer, however, that doesn’t incur these costs: a returning customer. Every returning customer starts as a first-time customer, obviously, but an exercise like this one helps to focus the mind on exactly why it’s so important to build a relationship with each and every one, and keep them coming back!
Consider this: our sister company Customer Perceptions (you can find out more about them here) has reported on over 350,000 “consumer engagements” over the past 19 years of their existence: again and again, year after year, we are amazed at the vast investments made by the retail and service sector in premises, facilities, fitouts and furnishings, technology, stock and wages – all while ignoring the key factors that annoy customers and have them spend their money elsewhere, and that should be the key consideration. Remember, a returning customer isn’t arriving into your business with a negative euro amount hanging like a cloud over their heads!
The great Sam Walton probably said it best:
“There is only one boss and that is the customer… he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.”
A new customer is a great thing, folks, but a returning customer is better. Find out what they like. Find out what they don’t like. Find out what they want more of, and give it to ‘em!