Treating your current customers like prospects - March 19, 2008
All of us have heard the observation that it costs five times as much (up to ten times, depending on your industry) to acquire a new customer versus retaining the one who has already done business with you. Yet many marketing organizations treat existing customers just like potential ones – they rely on general marketing efforts to bring them back in.
A smart way to dramatically improve your marketing success is to allocate a portion of the marketing budget to customer retention. There are innumerable ways to accomplish this. However, the easiest and highest-ROI way is to keep an ongoing communication with customers. This should be done via a regular email program, using direct mail to target only those who don’t have email. Use the data you have on your customers to talk to them about things that interest them. Make the emails as personal as possible (use a database to automate this). You will find that simply talking to your customers as regularly as once per month will make a huge improvement in customer retention.
This will allow you to focus the rest of your marketing budget on acquiring new customers, which is where it should be.