How much money does it take to get a new customer? How much does it cost to keep an existing customer? Marketing textbooks will say the ratio is 6:1 (in other words, it costs six times more money to get a new customer than it does to keep an existing one); however, in reality, the ratio is closer to 10:1.
Marketers and sales professionals around the world focus on, and prioritize, new business. Compensation plans are usually built to reward those that bring in ‘new’ business.
Unfortunately, rarely is their attention focused on keeping old customers happy and increasing their ‘wallet share’ marketing with new or expanded products or services. And – this is big – rarely do we look to existing customers for testimonials, references, and referrals.
Let’s break this down. All buyers go through a sales cycle that requires marketing planning to move customers from and to:
What about utilizing the power of testimonials, references, and referrals? All human beings have a psychological need to reaffirm their purchasing decisions. We all do it by telling friends and family about a great deal we received or all the ‘features’ of our new purchase. What we are looking for in exchange is our friends and family to say: “Wow! What a great deal!”
Help your customers fulfill this mission by giving them the chance to give a testimonial, reference and/or referral. You will get warm leads at a fraction of the cost!
Robert Murray is a Vancouver, BC based Business Strategy Consultant, #1 Best Selling Author, International Keynote Speaker, and TEC Top Speaker of the Year for 2018. For further advice, insight and inspiration on how to unlock your inner leader, follow Robert on Twitter, LinkedIn, and Facebook.
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