One of the most effective ways to grow your business is to develop your existing customer base. It’s cheaper to work your own customers for repeat business and referrals than to go after new customers. Studies show that the majority of customers stop doing business with you not because they have had a bad experience, but because the company appeared to be indifferent to their business. You need to do whatever you can to make customers love doing business with your company.
Unfortunately, too many companies rationalize the loss of customers by saying that their new advertising and marketing program will bring in new customers to replace them. This was covered in an excellent article by Jim Palmer we published in our September 2012 issue:
“Think of your company as a giant bucket of water. The water in your bucket represents your customers—the lifeblood of your business. Every drop of water that leaks out of your bucket is a lost customer and lost sales, including all future revenue. Ouch!
If your company is like a leaky bucket—and every business is to some degree—then it is paramount to your survival that you continuously fill your bucket with more water. After all, no water, no business!
So the question is: How leaky is your bucket? How many holes does your bucket have that are letting your customers constantly pour out?
Be honest—does your bucket simply have a few leaks around the seams that let customers occasionally seep out, or is it riddled it with holes, and customers are gushing out from every one of them?
If I can be blunt, my guess is that your bucket has more holes than you even know about. But don’t be too embarrassed; most businesses do.
There are two ways to keep the water level in your bucket full, and therefore, customers in your business:
1) Constantly add more water, new customers, while existing customers continue to pour out.
2) Plug the leaks in your business, and keep the water you’ve already got in your bucket.”
He goes on to say that marketing to new customers is tough and much more expensive than working at keeping more of your current customers coming back. In other words, fix your leaky bucket so you’re not always working to get new customers.
The first step is determining how big of a problem you have. Run a sales report by customer for this year and compare it to the same report for the prior year. Analyze each lost customer and determine why they left. If you’re not sure, call a sample of them to ask or mail a survey to all of your lost customers.
Once you have armed yourself with the biggest reasons your customers have left, you will be able to design systems and programs to plug those leaks. Then you will know that your sales efforts will lead to incre