Many businesses are so focused on gaining new customers they often fail to maintain, and develop, the inherent potential in their existing customers. Here are a few statistics you might find interesting:
- 5% increase in customer retention can increase a company’s profitability by 75% (Bain and Co)
- 80% of your company’s future revenue will come from just 20% of your existing customers (Gartner)
- 5x more effort is expended in attracting new customers rather than retaining and developing existing customers (Lee Resource Inc.)
- 80% of companies surveyed said that they offer superior customer service, but only 8% of their customers agreed with them (Bain and Co)
- When a number of companies were surveyed as to the reasons they thought their customers followed them on social sites, a majority of companies listed discounts and purchases among the least important reasons. But when the customers themselves were surveyed, they listed discounts and purchases as the major reasons for following a company on a social site (IBM)
The word customer derives from “custom”, meaning “habit”; a customer was someone who frequented a particular shop, who made it a habit to purchase goods there, and with whom the shopkeeper had to maintain a relationship to keep his or her “custom”, meaning expected purchases in the future.
We can learn a lot from industries where there are high volumes of customer interactions. Businesses in these industries have to work particularly hard to give their customers a compelling reason to use them and to come back for more. They also learn and incorporate improvements to their customer satisfaction levels much faster than business in slower moving industries
Since 1992 Starbucks stock has risen 5,000%. One of its key differentiators in a heavily saturated and competitive marketplace is its ability to create a highly personalized customer experience. Starbucks recognizes that its customers expect them to respond to routine requests but that when they “color outside the lines”, they will respond with loyalty and increased sales. One customer recalls calling into a local Starbucks an hour before opening time by mistake and was resigned to a long wait in the car park. The door opened and he was offered a coffee, as he put it, “Starbucks gets it”.
These same disciplines can and should be applied to any business. How often do you pull out all the stops and roll out the red carpet to a potential new customer but fail to do this each time an existing customer visits. Like any relationship we tend to take people for granted over time but you can bet that your competitors will be rolling out that red carpet when they visit!
Starbucks treats each customer interaction as an opportunity to delight their customers, win repeat business and perhaps motivate their customers to tell their friends how good they are. It is really important to drive this same behavior across your business to deliver a great experience and encourage your customers to spread the word. Make every visit special and your sales team will have a much easier time driving more business from your existing customers and having a great reference for new customers.
I will end this article with three more quotes that will hopefully help inspire you to think a bit more about how this could be applied to your business:
- “A business absolutely devoted to service will have only one worry about profits. They will be embarrassingly large.” (Henry Ford)
- “There’s only one boss, the customer, he can fire everybody from the chairman on down simply by spending his money elsewhere.” (Sam Walton)
- “Build a great experience, customers tell each other about that. Word of mouth is very powerful.” (Jeff Bezos)