Customers are what keeps your business running. In order to continue growing your company, you need your customers to book your services. There are two types of customers that drive revenue for you. Current customers that rebook your services, and new customers. The question most business owners run into is who you should focus on. Should you go after new customers, or focus on keeping existing customers happy?
Naturally, we feel the need to focus on both, but that may not bring you more growth. If you focus too much on customer acquisition, you might end up neglecting your existing customer and lose them. On the other hand, if you focus too much on customer retention, you limit your growth potential because you are not gaining fresh customers. While getting a new customer can be five to seven times more expensive than retaining an existing one, new customers are crucial for businesses that have not built a big customer database.
So which should you choose? Here are some helpful strategies to help make the decision that’s right for your business.
Customer acquisition vs customer retention
Customer acquisition drives growth
The entire focus of a new business should be on growth, which means acquiring customers and making them loyal. The first step in customer acquisition is properly identifying your target audience and deciding the most effective marketing methods to reach them.
Once you know your audience, you’ll need to set a budget to determine how much content you can post, how often to post, and on how many channels. You want to aim to hit a sweet spot where you are acquiring customers at the lowest cost possible, and you might need to get a little creative.
Social media platforms have become the best way for businesses to share content that resonates with their audience without breaking the bank. Live video streaming, short video tutorials and lead magnet offers are low-budget/high-yield marketing strategies that can quickly build your customer base.
Customer retention offers stability
If you have been in business for a while, and you have a solid customer base, then retention may be the best strategy for your business. While a lot of businesses might think that marketing to their current customers is redundant, it’s actually the more cost-effective way to go.
Marketing to existing customers is less expensive because they don’t need to be warmed up to who you are and what you offer, so you’re paying a lot less than when you are trying to acquire a brand new customer that’s never heard of you.
Just because they’ve done business with you before doesn’t mean you don’t have to continue reaching out to them. It’s important to still make your existing customers feel valued, which means marketing to them in different ways.
Offer frequent discounts/gifts
A great way to show your appreciation is to send them a discount or a gift in return for the business they’ve given you. It doesn’t have to be anything big or expensive, even a small discount will be appreciated and will keep you top of mind for when they need to book you again.
Send ‘thank you’ emails
Retention marketing can be as simple as saying thank you. Your customers are giving you their hard earned money for your service. A simple way to do this is to always follow up every job with a ‘thank you’ email, leaving them with a positive memory with you. There are even some tools out there that automate this process for you.
Host exclusive live video events for customers
If you have a Facebook or Instagram account you know what I’m talking about here. Live videos have taken over social media, making them a great way to remind your customers who you are and the service you provide. Make your video fun by giving them behind the scenes look at your business. You could even do a live “how to” video with tips and tricks from your industry. It’s a great way to maintain the relationship with your customers.
Another great way to gain more profit from your current customers is by upselling. An upsell is when your customer hires you for a service and they end up booking an upgraded or additional service from you. For example, if you’re cleaning someone’s carpets and you convince them to add an additional room or a more advanced treatment.
So which customer marketing strategy should you focus on?
One misstep that some businesses make is that they want to acquire new customers but forget to keep their existing customers happy. That is a losing strategy, because what good is spending money on acquisition if you end up losing those customers because of poor retention strategies? You have to remember, you don’t own your customers. They may book a service with you one day, but the only thing preventing them from going to another company is the relationship you build and the quality service you provide them.
When you’re just starting out, of course, you’ll need to focus on acquisition. However, as your business grows, you will need to focus on your relationship with your current customers. You’ll find that by building those relationships you’ll gain new customers through good reviews and referrals. The truth is you will need to acquire and retain well to succeed. The key is knowing when to push more for new customers, and when to throttle it back and maximize the customers you already have.