According to new data from marketing platform Klaviyo, 60% of 1,000 decision makers in small and medium-sized businesses (SMBs) in the UK reported that their marketing budgets will remain static or be slashed in 2023. Yet, 67% stated that their main priority will be to acquire new customers this year…
Acquiring a new customer can cost 5 times more than retaining an existing one. And, studies have shown that even a 5% increase in customer retention can lead to an increase in profits of between 25-95%. The success rate of selling to a customer you already have is 60-70%, while the success rate of selling to a new customer is 5-20%. Given the data, surely the SMBs looking to boost sales through new customers should be rethinking their priorities?
Re-focusing your sales efforts on customers who have already purchased from you, trust your brand and might consider buying more from you, is not only a more effective way to boost sales, but a more affordable one. This approach will also save you a lot of time and energy (which is always good when you have a business to run, right?).
The cost of living crisis and inflation rates have resulted in the majority of businesses having to adopt a more tactical approach in order to make budgets stretch further. By focusing on nurturing existing relationships with your customers in more personalised, agile ways, you’re giving your business the best chance to boost sales, as they’ve already made the decision to trust and purchase from you.
So, how do you encourage additional sales from existing customers, without breaking the bank?
1. Gather and analyse your customer data
What do they buy? How much do they spend? Do they take advantage of any offers you run? Have they been in touch with you before? Have they left you a review, which highlights what they value most e.g. fast delivery, quality? The more data you can collect, the more effective your personalised outreach will be.
While this process sounds time-consuming, it doesn’t have to be if you implement a customer relationship management (CRM) system. This software is designed to help businesses collate, store and use data that relates to customer experiences. You can use a CRM to give the customer the right information at the right time in order to drive leads, sales, loyalty and retention.
There are a number of CRM systems available, many of which are tailored to small business requirements. For a more detailed guide, take a look at What is a CRM database and does my business need one?
2. Don’t go silent
Don’t be the date that doesn’t follow up with a phone call. As part of your customer courtship, it’s important to stay top-of-mind via regular communication. Email newsletters are a great way to keep in touch without being too intrusive, but make sure to add value to this communication. Whether it’s insights, important company information or exclusive rewards, regular communication will benefit your bottom line.
But tread carefully, as communication deemed too frequent can lead to unsubscribes. Be mindful of your customers and what they deem as too much – rather start with 1-2 emails a month and increase to one a week, if you have something of value to say. Test and refine as you go to see what communication (and frequency) works best, and ensure to segment your email list by specific parameters to ensure you’re sending your customers the content and offers that are most relevant to them. (A CRM will help with this.)
Regular communication will serve as an ongoing reminder of your business, with the added bonus of alerting customers to new products, services and offers that they might not have been aware of. (Don’t forget customers must opt-in to receive marketing emails from you).
3. Follow up after a sale
Following up after a sale isn’t just an exercise in polite service – it’s a tested and proven practice that has a measurable and profound impact on the experience your customer has with both you and your business as a whole.
This tactic works well with B2B customers, service businesses or large purchases, such as home renovation, landscaping or luxury products. At an appropriate time after the sale (anywhere from two weeks to a month, depending on what you sell) contact the customer to see how they are doing with the product or service. This gives you the opportunity to answer any questions or concerns, solve any problems, make your customer feel valued and ideally sell the customer on complementary or related products or services. It’s also a great way to understand how you might be of further use to your customer, as this could influence future product / service planning.
4. Customer loyalty programmes
Customers are driven by their goals – if you can help them achieve them, they will be loyal to you. However, this loyalty isn’t a given. Even if they value your product / service, and think highly of your customer service, they can still move to a competitor if their offer is better. As a result, true customer loyalty isn’t easily earned, or even guaranteed.
One of the ways you can build a following of loyal customers is by implementing a customer loyalty programme. Not only does it reward customers for spending more with your business, but it offers an additional incentive to stick with you over a competitor. Rewards can range from exclusive discounts and offers, to VIP access to new product launches or events (subject to your type of business). In a nutshell, it’s a smart way to reward loyal customers while encouraging repeat purchases.
As well as better customer retention, customers who enjoy and engage with your programme are more likely to share it with their friends and family. This word-of-mouth marketing draws in new customers at no acquisition cost and can generate even more revenue for your business. Loyalty programmes can also incentivise reviews and ratings, increasing your user-generated content and helping to promote your business to prospects.
Start by analysing your customer data to create a loyalty programme that your customers will enjoy and value the most. For example, you could focus your rewards on their favourite products / services. Your loyalty programme needs to speak to their interests and keep them engaged with your business.
Some of the most effective loyalty programmes use a simple tiered system, which rewards small purchases with small rewards, and bigger purchases with bigger rewards.
For example, travel gear brand, Tropicfeel, offers points to customers who engage with their social media channels and share their content. Known as Tropicfeel Nation, the more points customers earn, the greater the rewards. Offering tiers based on points earned (Tourist, Adventurer, Explorer, Traveller, Nomad, Changer), the brand asks customers to ‘join the nation and level up through the tiers to earn the ultimate passport and become an official changer’. Not only can customers access exclusive discounts and offers, but they can ‘define the future of travel gear’ by helping to ‘choose, innovate and design our next products.’ A clever approach to not only rewarding loyalty, but a great way to channel customer feedback into refining future releases, as well as encouraging your customers to play a part in your social media marketing-!
Another approach is to implement loyalty cards (free coffee, anyone?). This sales tactic is a much more affordable and profitable way to encourage repeat business through existing customers, compared to the higher costs involved in generating the same amount of sales through new customers.
Don’t forget you can also offer incentives for customer referrals – a great way to acquire new customers while looking after your existing ones.
No matter what, make sure your loyalty programme is simple and easy to understand. The more fine print you include, the more confusing and off-putting it becomes.
5. Get them involved
Show your regular customers just how much you value their opinion and feedback by involving them in the development of any upcoming products / services. By inviting them to provide their input during the development stage via focus groups, surveys, or even letting them test a new product, they’ll feel even more personally connected to your brand and could be more inclined to purchase and promote when you officially launch it. This process also helps you avoid missing the mark when it comes to launching a new product / service that resonates with your customers.
While there are a number of ways you can boost sales with your existing customers, try not to look at it as something that you implement in hindsight. It’s important to build trust through every step of your buyer’s journey. Also, reframe your thinking from ‘retaining’ customers to ‘delighting’ them, as this is the sort of experience that customers will stick around for, and shout about.
