How to Increase Revenue from Existing Customers for Your Small Business: The Ultimate Guide
While new customer acquisition is vital to your business, your existing customers actually mean more to your bottom line.
The probability of selling to an existing customer is 60–70%, while the probability of selling to a new prospect is 5–20%, according to the book, Marketing Metrics: The Definitive Guide to Measuring Marketing Performance. So it’s important to not take your existing customers for granted — and to maintain focus on retaining and increasing their business with you.
These strategies, in addition to those we’ve already covered, will help develop loyalty that will keep your customers coming back:
Get personal. Send thank you notes and seasonal greetings, and tailor your services and communications to meet your customers’ unique needs and interests.
Reward customer loyalty. Give discounts or hold sales exclusively for your existing customers. Offer rewards such as gift cards or a free item to those who refer their friends and family, or who spend a certain amount of money with your business.
Send out a monthly or weekly newsletter with news of sales, business updates, and valuable tips and ideas. This is one of the most effective ways to stay in touch and keep your customers thinking about you in between purchases and sales calls. If you encourage your subscribers to share your newsletter with friends and family, it can also be a lead generation tool.
Host customer events as a way to show your appreciation and build deeper relationships. These can be times to socialize, such as a sit-down dinner at a restaurant, virtual programs or a golf outing. You can also use them as opportunities to offer training or share news about your business, your product line, and advances in your industry. Your customers will appreciate the attention, and the connections you establish may pave the way for upselling products and services.
Critical Components for Marketing Success
Choosing the marketing vehicles that will bear fruit for your business is critical: The right choices will pay off with more customers. The wrong choices will cost both time and money.
To identify the vehicles best suited to your business, these steps are essential:
Know Your Unique Value Proposition
This is a short statement that summarizes the most persuasive reasons why people should do business with you versus your competition. Clearly articulating your UVP gives direction to your business and increases the effectiveness of your marketing efforts.
Create a Customer Profile
Describe your ideal customer in detail, including age, gender, marital status, earnings, and location, as well as lifestyle. This will guide your choice of marketing vehicles and their placement, and help you compose messaging that will resonate with your target audience.
Evaluate Your Marketing Options Throughout the Customer Journey
Will you advertise, host an event, or vend your wares through an eCommerce marketplace? To answer these important questions, map out your sales cycle and begin by identifying where your prospects go for information about the products and services you sell. Decide how you will convey your value proposition at that point and at all later points through final sale and customer retention.
Create a Marketing Budget
The Small Business Administration says that small businesses with revenues less than $5 million should generally allocate 7–8% of their revenues to marketing, but every business is unique. Small business expert Gene Marks advises small business owners to start small: “Marketing is another form of gambling,” he says. “Don’t bet the farm — an amount greater than you’re afraid to lose. Marketing is about failure, learning, and getting better.”
If you’re just starting out or experimenting with new marketing venues, start small. Test out various options and evaluate the results. Increase your spending in those areas where you achieve success.
Create a Marketing Plan
Put in writing your unique value proposition, customer profile, and the marketing options you’ll employ to reach your target audience(s). Include your budget. Remember, this is a guide and not set in stone. Once you’ve had the opportunity to put your marketing plan to the test, re-evaluate your plan every six months or so and make any necessary refinements.
Get a Customer Relationship Management (CRM) System
A CRM allows you to consolidate and organize the information you gather about all your new and existing customers, and then use that information to manage your relationships. This will help to ensure a positive experience for all.
Marketing is a constant process of trying new tactics and assessing their cost and effectiveness. By knowing your business’s capabilities and limitations — and evaluating your marketing plan on a regular basis — you’ll be in a good position to make informed decisions that yield results. Just never stop marketing.