Many businesses today struggle with customer management.
The main reason is that business owners are not certain whether to focus on attracting new customers or build loyalty with existing ones.
Of course, every business aims for profitability, and the more customers you have, the more revenue you’ll be able to generate.
However, things aren’t always as simple as they might seem.
Building a meaningful relationship with your existing customers can prove to be much more valuable than focusing on attracting new ones. This is especially true if you already have an established customer base.
If your business is just starting out, it’s logical that you’ll focus on customer acquisition strategies.
On the other hand, if your business has been in the market for a while, it might be wiser to focus on customer retention strategies.
With that in mind, here are a few ways you can capitalize on improved customer relations by recognizing the value of your customers.
The importance of retaining customers
As mentioned before, every company’s primary goal is profitability.
Therefore, companies determined the value of the customer by tracking various metrics, such as customer lifecycle value (CLV) and customer acquisition costs (CAC).
What they usually fail to realize is the value of retaining customers. As you may already know, it costs about 6 to 7 times more to acquire a new customer than it costs to retain one.
That reason alone is enough to convince you that it would be much more profitable to capitalize on establishing a relationship with your customers and building loyalty and trust with them instead of focusing on attracting new customers to your business.
Building customer loyalty
One of the things that usually go unnoticed is that loyal customers can mean more to a business than guaranteed sales.
Of course, around 80% of any brand’s profitability originates from just 20% of retained customers.
The main reason is that loyal customers tend to spend around 67% more than new customers.
But before you can capitalize on customer loyalty, you have to build one first. This isn’t all that difficult to achieve if your business has developed a customer retention strategy.
You’d be surprised what a simple loyalty program can do for customer retention. Once you’re able to build loyalty with your customers, you’ll discover that there’s more to them than just profits.
As a matter of fact, loyal customers can help you acquire new customers more seamlessly.
Their referrals and word-of-mouth promotions can be much more effective in attracting new customers than any other marketing strategy you can come up with.
Focusing on customer experience
Customer experience is of vital importance for both acquiring new customers and retaining existing ones.
The quality of your products or services is no longer that much important as long as the experience is right.
That being said, 86% of consumers are willing to pay up to 25% more for a great experience.
That’s why a lot of companies leverage customer relationship management tools (CRM) to nurture a great relationship with their customers and provide them with an exceptional experience.
For example, Gmail CRM can really help your customer service and support staff improve customer experience by improving their efforts.
The main reason this is important is that 60% of your customers will stop doing business with you if they receive bad service. Furthermore, 46% of those customers will switch brands if they receive bad support.
All in all, your customer won’t hesitate to abandon your brand if your customer service and support aren’t up to the task of ensuring a truly great customer experience.
Customer relationship leads to new opportunities
Nurturing a great relationship with your customers can open new doors for your business.
If you believe that the profit your company generates from loyal customers isn’t high enough, you can always step up your game.
However, this is only possible if you really have a great relationship with your customers and if they are truly loyal to your brand.
The strategies in mind are cross-selling and up-selling methods that encourage customers to opt for higher-end products.
Since your customers trust your brand, they are more likely to opt for such offers compared to new customers who don’t really know what to expect from your brand. What’s more, loyal customers usually don’t pay much attention to your prices.
You can increase your overall prices slightly and within reasonable levels, of course, and your loyal customers won’t mind it, nor will they abandon your brand because of it. New customers, on the other hand, may easily become outraged by your strategy and abandon your brand altogether.
That being said, by improving your relationship with your customers, it becomes much easier to capitalize on those relations. Even if you make a mistake and accidentally upset your loyal customers, it’s much simpler to own your mistake and make things right.
Loyal customers will have much more understanding of your brand than new customers.
To Wrap Up
Attracting new customers is more expensive than retaining them, but you cannot retain customers if you don’t have them to begin with.
Therefore, a business should focus on customer acquisition until they establish a solid customer base, after which they should focus on retention strategies.
The relationship you build with your existing customers can yield more profits than acquiring new customers.
I’m a London-born lover of technology, obsessed with online business, passive income and the digital economy. I love learning, researching and curating the most valuable resources to save you time, money and help you discover the truth on what it actually takes to achieve your goals.