Your existing customers already know you are legit and able to serve their needs. Not only are they pre-disposed to buy, but research shows that repeat customers tend to buy more than new customers. And they are easier to serve because you already know how to work together. So they cost less to get, they spend more and they tell their friends. This makes them a partner in your marketing efforts. When your customers’ friends show up, they have already been softened up by a credible and unbiased review from a raving fan. That makes them easier to close.
Rave reviews, repeat business and referrals (whether they come from personal contact or by email or social media) are the key to sustained profitability. That’s why it’s so important to be hyper-focused on customer experience — you need your customers to stay. So one important mind-shift you need to make is thinking not just about the profitability of an individual transaction but also about the lifetime value of a customer.
It is very natural, and important, for us all to understand the profitability of each sale or transaction in our business: Did I make or lose money on this sale or this project? But sometimes your view of your business can change dramatically when you think beyond the immediate transaction to the lifetime value of a customer.
Not many businesses I talk to think much about Lifetime Customer Value – I think it comes more naturally to some business models than others. Think about your business:
• Do you know the lifetime value of your customers?
• Do you know how many of them have bought from you multiple times?
• Do you know who has referred you to others?
Almost all of the businesses I have spoken with over the years rely heavily on repeat sales and referrals to drive their business. But very few of them do much ongoing customer communications (in the form of email marketing or social media marketing, for example) and relationship-building to stimulate repeat business and referrals. When you stay in touch with your customers, you build stronger long-term relationships. That, in turn, creates a greater Lifetime Customer Value and ensures repeat business and referrals now and into the future.