Look After your Present and Recent Customers and they'll Look After you

by Chaun Soh

According to Jay Conrad Levinson, the founder of guerrilla marketing, you should spend 60% of your marketing budget on present and past customers and 30% on finding new ones. The remaining 10% can be allocated to prospecting selected groups.

The reason for this uneven split is very simple: it's easier and less expensive to sell to those who have already bought from you. They are the key to repeat business: the lifeblood of your enterprise.

Here are 3 low-cost, high-impact ways to help you realise the potential of this valuable group:

1. Work that database!

The more information you mine from your customer database (constantly updated, of course!) the better you'll be able to put together effective, profitable marketing programs — even in the toughest economic climate.

Ask yourself these questions:

How much do your really know about the customers who buy from you now?
Who are the most profitable? Why?
How long do you usually keep a customer and how much do they buy over that period?
How much does it cost you to win and keep a customer?
What are your most effective marketing programs (in terms of sales per dollar spent)?

This research is well worth the time spent. It helps you pinpoint the people and organisations that deserve your top level of care and attention.

Make them an offer

You only have to think about the promotional material you receive.

To get your attention it has to be relevant. To make you respond, it has to give a reason: an offer that's too good to ignore. And remember: it has to be something the recipient wants or needs — rather than what you simply wish to shift.

For example, if you run a restaurant, offer your best customers a bottle of wine, a special dessert or a chance to win a prize.

If you're in the service sector, offer your customers an incentive such as a special pricing or extended terms to stay with you — so they won't be lured by a more promotion-conscious competitor.

People buy benefits - not features

Anyone who gets your message only cares about what's in it for them, end of story.

All they want to know is why you sent the message and what they need to do about it. And how they will benefit by responding.

Make sure your offer is clear and easy to understand — instantly. You can't afford to lose the momentum of your message by being unclear. Decide what you're going to say and get right into it.

Win back lost customers

Your analyses will also turn up valued customers who are starting to disengage.

Typically, they spend less than in the past. They've probably stopped referring business to you. Another major danger sign is a slower payment pattern: they may be shopping around for a better deal or feeling the pinch in the current economic climate. Others simply disappear, having been won over by your competition.

But all is not lost. Reach out to these important customers to determine why they do less business with you or have left.

Start a conversation, do a survey, have a discussion and be open to their feedback so that you can fine-tune your marketing mix to entice them back.

2. Ask for a referral

Just ask customers to introduce people they think may be interested in your product or service. It's that easy.

Nothing is more powerful than a personal recommendation and nothing generates recommendations more effectively than a referral program.

It can be as simple as a specially designed card they can pass on to friends and contacts, perhaps with an incentive for them to do so.

For example, you could offer a referrer 20% off their next purchase after a successful recommendation or an incentive from another business totally unrelated to yours — such as movie tickets, a gift voucher or a meal for two at a restaurant.

There is really no limit to what the incentive can be, as long as it has been well thought out to make sure it is appropriate.

3. Up-sell and cross-sell

Up-selling and cross-selling cost little or nothing yet provide a powerful way to develop customer relationships and dramatically increase revenue.

If you are a service provider giving a customer a quotation, include prices for related services and explain how these will be of benefit. For example, if you offer a standard maintenance contract for a year, up-sell by offering a discount for taking out a longer contract.

If a customer is at the checkout, show them related products for a discounted price or, if they buy in bulk, offer a saving of say 20%.

Do not assume your customers know all about your products or services or that they've read every page of your beautifully crafted brochures or website.

And never assume the client always wants the minimum spend or cheapest deal when they would be happy to pay more — if you show them the value in doing so.

Educate customers about your products and services

No matter how well you look after them, customers have short memories and are unlikely to be constantly thinking about you and your products or services. So you have to keep bobbing up with new and interesting reasons to be top of mind again.

Include a special offer in your e-mail signature or a short blurb about your company including services your customers might not know about.

For example, you might offer 10% off all products in a given category for a limited time.

And if you've created a new brochure or catalogue, send one to all your customers — present and past. Even cheaper and greener, e-mail them all a PDF of it.

In conclusion, don't be afraid to suggest complementary services to your existing customers, even in casual conversation.

You'd be surprised when you realise how little your customers know or care about you — until you demonstrate how much you know and care about them.

THAT'S where the sales are!