The simple truth is, as important as getting new customers or clients is, that activity is the second most costly thing you can do to grow your business.
The real money sapper – the SINGLE MOST EXPENSIVE THING YOU CAN DO in your business – is to lose a customer. I promise you, the easiest person to sell to is an existing customer.
Instinctively, when you think about it, you know this to be true, but let me make the situation even more stark in your mind by sharing some numbers with you. I’m well aware that the figures I’m about to use to illustrate my point here will not apply to your particular business or indeed the products or services you sell, but to dismiss them because of that would be a gross error on your part. That this illustration demonstrates is that even if you don’t add any new customers to your business, you can still grow massively by keeping in contact with and taking care of your existing customers and creating additional value for them to do business with you. Here goes…
Scenario 1
You start the year with 1,000 existing customers. During the year, 100 of them go somewhere else or at least don’t buy from you. Your average profit value per customer is £200. Therefore your income at the end of that year is 900 x £200 = £180,000 Nice and simple, yes?
Scenario 2
You start the year with 1,000 customers – just as you do in Scenario 1.
However, during the year, you only lose 50 of these customers. Through the introduction of some premium products and other activity, the average profit value to you per customer goes up by 10% to £220.
However, because of you doing such a great job, each of your existing customers introduces just one other customer to your business.
Your revenue now is 950 customers x £220 = £209,000 of profit…
But it doesn’t stop there because if each of them really did bring in someone else then your customer base would double (because you’ve looked after them all so well) and your profitability would rise to £418,000.
In essence, this is a 230% uplift in profits brought about simply because you plugged the reasons that people were no longer buying from you and you tweaked their spend by just 10%.
As I said before, I know these figures don’t apply to your business and, looked at literally, they’re not that helpful. But imagine if you only did half as well as the illustration I’ve shown you here. It’s still more than a doubling of your profits.
If you’re not convinced by that, do half as well again and it’s still a very sizable number.
My point here is that with so much competition in every single market and with very little difference between individual products and services, it always comes down to the little things that make the difference.
The good news for you here is that most of the players in your market are paying no attention to the little things.
If you properly understand your customer better than anyone else, they will stay with you and keep on coming back. They’ll also tell others.
If you get closer to each of your customers than anyone else in your market they will stay with you and not go anywhere else. Because, I promise you, hardly anyone is bothering to try to properly understand and get close to them. Including you.
Oh, I’m not suggesting that you set out to blatantly disregard the needs of your customers, to misunderstand them or push them away. Oh no, I know that’s not what’s happening.
But what is happening is that the businesses that are flourishing and growing – massively – are the ones that the customers feel a connection with. And those connections come from the little things.
It’s the way they’re spoken to. It’s the little touches on the packaging. It’s the ease with which problems are dealt with. It’s the speed of response, whether by email or phone. It’s the remembering of the details about them and their families and their lives.
You can’t process map all of this. What you can do is recognise that every single time you or a member of your team engages in any way with one of your customers, it is an opportunity for you to strengthen your relationship and to forge a closer connection with them. Just doing what they’re asked is no longer good enough. Not making mistakes is definitely no longer good enough.
There are hardly any businesses in our country that could not grow significantly this year by getting better at looking after their existing customers. If all they did was strengthen those relationships and get to properly know and understand their customers better, their business would grow as a result.
Ignoring this really is the single most expensive thing you can do in business. Just because you’re not writing a cheque, doesn’t make it not the case.
I could run an entire one-week workshop on this because it matters so much.
If you are a true entrepreneur then you’ll instinctively relate to what I’m saying here and you’ll know that it makes sense – even if the numbers I’ve used in my illustration don’t apply to you. If that is the case, then you’ll be stopping reading this Circular now, picking up a pen and paper and starting to think of the little things you can do that, cumulatively, will make a big difference to how your customers think of you – and how often, in turn, they’ll come back. It is a worthy thing to pursue.
