It costs way more to get new customers than it costs to keep existing customers.
Any argument so far? I didn’t think so.
But, do you know who your best customers are? Most businesses don’t. They think they do but they really don’t. They think they can name their best customers but these are usually the customers they hear from or see most frequently. They may well be good customers but they aren’t your best customers because they are more expensive to service.
Lets define what we mean when we say, “best customers.” Best customers contribute a disproportionate percentage of your revenue and profit. Yes, of course they do, but there’s more. They have been with you for a while and they pay full price because they see the value in your product or service. They are more likely to purchase additional services or products from you. They cost less to service. And, they tell their friends and colleagues about your business.
When you look at all your customers through this lens your real best customers become apparent. This is the group your business is built on and this is the group that will sustain your business in a challenging economy.
- Analyze your customers in terms of the criteria described above to identify your best customers.
- Flag best customers for special attention. A small reduction in attrition among this group will lead to huge gains in revenue and profits.
- Understand their unique needs. Their understanding of your product or service is rich and deep, it comes from long experience with you. They are likely heavy users of the category as well, so their perspective of the marketplace is richer than the norm.