Improve Profitability by Focusing on Existing Clients
During the holidays it is especially fitting that we focus on our current customers, those who have helped us grow and become successful. Yet, many businesses focus their promotional efforts on acquiring new customers, while ignoring a very obvious and much easier way to increase sales—existing customers. With just a 5 percent increase in customer retention, a company’s profitability can grow by 75 percent. Here are 5 ways you can start focusing on existing customers and make your business thrive.
1. Customer Retention
Have you ever wondered how tech giants like Apple or Nike got to be so big? They stand behind their brands and focus on customer retention. Customers buy from them again and again, year after year. When they come out with a new product, their customer base is already there, waiting to buy the latest product. They already perceive them as high quality, so they are less likely to look at the competition. Make sure you treat your customers like gold – because they will be loyal in return. Back up your product or service with outstanding support and quality to keep initial buyers coming back.
2. Tiered Pricing
Using a tiered pricing structure, instead of a one-size-fits-all approach, is a very effective way to increase your profit margins from existing customers. You’ve likely seen this with local internet, cellular, insurance, or banking services. These types of companies make a lot of extra money by upgrading customers to a higher tier package. If you run a service business and don’t already offer multiple tiered packages for customers, changing your pricing structure can put a whole lot more money in your pockets. Even if you don’t offer a service but sell physical or digital products, you can still apply this principle by offering premium versions, bundled packages, or add-on items to the mix.
3. Rewards Programs
Nearly everyone likes to get gifts, and rewards programs are huge for this very reason. Just look at the success of reward based credit cards or department store points programs. Offer your customers rewards for purchases or for referring others to your company. It’s human nature that people will more readily take action if there is a reward involved, than if there is not.
4. Packages, Coupons and Discount Codes
There are entire businesses online, for example Groupon, that do nothing more than give people coupons and discount codes. While these types of sites focus mainly on attracting new customers with these deals, you can apply this strategy to your existing business customers too. Offer package discounts for your servcies, send out special offers by mail, or email discount codes to your customer base as a way to say thank you, encouraging them to use your services or purchase your products again and again.
5. Promotional Freebies
Do you have freebies somewhere in your house or car from different companies? This is a great way to say thanks to your customers and give them something that will make them think of your business whenever they see it. When they need your particular product or service, they are likely to think of you. Pick items that your customers will use and see frequently, such as pens, refrigerator magnets, mugs, coasters, or car air fresheners.
The Bottom Line
Although there is no doubt that getting new customers is important for your business’s growth, don’t miss out on the massive opportunity for profit that focusing on your existing customers can bring to your bottom line.
6 Low Cost Customer Retention Activities You Should Be Doing Today
9 Ways Entrepreneurs Can Cut Costs Without Reducing Customer Satisfaction
How to Chase Late Paying Customers
Avoid Making These Customer Service Mistakes to Ensure Business Growth
About Universal Funding
Universal Funding is a private funding source that has funded thousands of businesses and more than $2 billion since 1998. We turn your accounts receivable into the funding you need through invoice factoring and can have capital in your hands in a matter of days.