What do you prefer - a shiny new sports car or a used but dependable vehicle? 9 out of 10 of you most likely went with the sports car. Many (too many) local business owners set up their marketing efforts in the same fashion. They crave attracting new customers. They want more, more, more. It makes sense. The more customers you draw in the more money you generate.
Although attracting new customers is certainly important, it’s equally important to focus on the customers you already have. In fact, sometimes your repeat, loyal customers are more profitable to your business than the new ones you’re bringing in.
Here are 3 reasons why loyal customers are more profitable--
Why Loyal Customers are More Profitable #1: Loyal Customers are More Likely to Spend More
Yes, acquiring new customers will help increase your revenue. It’s simple mathematics. The more customers you have, the more potential spenders. Got it. However, what’s more lucrative: more customers with shallow coin purses or fewer customers who are willing to dig deep into their pockets?
Well, in many instances fewer, more loyal customers can = more $$$. Repeat customers are frequent flyers. They trust your business and they trust you. With that being said they are much easier to upsell or cross-sell to. Trust has already been established. That’s why it’s no surprise that many small businesses have found loyal customers spend close to 67% more per transaction than new customers.
Why Loyal Customers are More Profitable #2: Costs More to Acquire a New Customer
That’s right - not only do loyal customers have the potential to spend more, but they also cost your business less to acquire. Last year alone, it was reported that American businesses as a whole spent about 180 billion dollars in advertisements. Sounds like an insane amount, but think about it. You spend tons on televised, radio, mobile, digital, directory, and/or print ads with the hopes of attracting more customers through your doors. That’s why many small businesses have found that on average it costs close to 6 times more to acquire new customers over simply promoting existing ones to come back.
Why Loyal Customers are More Profitable #3: Loyal Customers are More Likely to Refer Your Business
Loyal customers are people who choose your business over all else. They jump over any potential obstacles to receive service from you. You’ve given them a sense of comfort. You’ve made them feel like part of the family… and with that, they can help you grow that family.
A loyal customer is 100% more likely to refer a friend over a new customer. People don’t just refer friends to any random business. They only make suggestions based on businesses they trust. So, if you’ve earned the trust of a customer, you’re potentially opening yourself up to their entire network of friends and family.
Convinced on why loyal customers are more profitable? See how Frederick can help you generate more!