Have you ever thought about who you should focus on – new or existing customers?
If you run a business such as a bridal boutique, you probably don’t want to spend too much effort trying to sell again to the same customer who has bought from you once. But for businesses that can offer their products or services more than once to the same customer, it can be harder to decide whether they should focus on customer acquisition or retention.
Of course, both groups of customers are extremely important and you shouldn't only focus on one while completely ignoring the other. However, let’s have a look at them in more depth and find out which one can be more beneficial for your business.
Pros of focusing on new customers
You can increase brand awareness
If your goal is to attract new customers, you will likely use different marketing tools to reach as many people as possible. While not every person that sees your ads, social media posts or flyers will convert into a customer straight away, they’ll become more familiar with your brand and might buy from you later – when they actually need your product or service.
Brand awareness is the first step to building trust. When your prospects recognise your brand (remember your business name, colours or logo and what you do) they will be more likely to choose you over your competitors they’ve never heard about. This works in exact same way as we trust other people. For example, you wouldn't share personal stories with a complete stranger. But you would feel more comfortable doing so with a person you recognise. This could be because they’re a friend of a friend or you follow each other on social media even if you don’t personally know them.
Attracting new customers is always a good idea, as they bring more sales. And increased sales usually mean more profit. Increased profit not only means you earn more money but it also means you can invest more into your business to develop new products or services, hire more staff or improve your business in another way.
Moreover, if they are pleased with your product or service and you provide excellent customer service, you have a great chance to turn them into loyal customers who come back again for more!
Helps you maintain your business
If you only focus on your existing customers, what will happen if they decide to leave and there’s no one to replace them? Well, the answer is your business will fail.
When you constantly try to reach new audiences and attract new customers, it allows you to be sure that even if a few of your current customers leave, you won’t lose any profits as you’ll have new people buying from you.
Why focusing on existing customers is actually better
Every business tries to save money where possible and not everyone has a budget to run expensive marketing campaigns.
But did you know that it can cost five times more to attract a new customer than to retain an existing one?
When you’re trying to attract new customers, you need to increase your brand awareness, introduce your brand and what you offer as well as what benefits your product or service has and what problems it can solve. You also need to build trust and answer any questions your prospects might have.
Doing all these things can be not only time-consuming but also expensive. While you can attract prospects by using organic content, to reach a bigger audience that includes people that are actually interested in what you offer, you might want to run targeted ads. However, often one advert isn’t enough to convert a prospect into a buying customer. You need to create different ads, use different content and experiment with media types and calls to action. And this can get very expensive very quickly!
When you focus on the existing customers, you can skip those first steps. This is because customers who have already used your product or service know what to expect from you and trust your brand.
Your existing customers are more likely to buy from you
The study has found that the probability of selling to an existing customer is 60 – 70%. While the probability of selling to a new prospect is only 5-20%!
Sometimes, all you need to make your existing customers buy from you again is a little push. This can be an email with an exclusive discount, a new loyalty programme or a reminder to buy again (this works if you sell products that people usually finish within a specific period of time, for example, vitamins).
If you start selling a completely new product or service and want to promote it to your existing customers, it might take a bit more effort. However, a previously mentioned study has also revealed that even then existing customers are 50% more likely to try new products and spend 31% more compared to new ones!
Existing customers bring new ones to your business
Your loyal customers are your best customers. They don’t only love your brand and buy from you all the time. They also spread the word about your business! Whether it’s telling someone about their positive experience in person, leaving a review on your website or sharing what they’ve bought from you on social media, these are all great ways your existing customers might bring others to your business.
And what could be better than free advertising?! Well, it’s not only free. It’s actually one of the most credible forms of advertising! People trust other people’s reviews more than they trust any promotional content made by a brand.
However, it’s only possible if you take care of your loyal customers and make sure you always exceed their expectations.
How to retain your existing customers
To continue a great relationship with your loyal customers, you can introduce customer loyalty schemes and provide discounts or options to collect points to get rewards. This will not only help you retain your exciting loyal customers but will also help you convert more prospects!
However, the most important thing – you need to take an extra step when providing customer service. If they have any complaints or suggestions, they are the people you need to listen to the most. After being your customers for a long time, they know what they love about your business and notice when something is not right.
To learn more about how you can use customer service to retain your customers as well as how to upsell to them, join our Above & Beyond Customer Service Course.
By taking this course, you will not only learn the right techniques needed to improve your customer retention. You will also learn how to:
- Turn a negative customer experience for one customer into a positive experience for another
- Understand the importance of the first step of the customer journey with your company.
- Deliver customer service to challenging customers
- Understand the value of converting customers compared to marketing and finding new customers