What is more important to you, growing revenues from the market you serve or reaching out to a new market that is completely opposite of your current core customer base?
Knowing your customers, what they want, and providing what they want are three imperative elements to building a profitable business and growing your brand.
Once you have identified the marketplace problem you solve and the customer base for whom you solve it, reaching that market and growing that base is important.
Let’s take a look at why retaining your customer base is so important:
-> Boosting customer retention by 5% increases profits by 25-95%.
-> Companies have a 60-70% chance of selling to an existing customer vs. a 5-20% chance of selling to a new customer.
-> 65% of a company’s business comes from existing customers.
-> It costs 6x to 7x more to acquire new customers than to retain existing ones.
-> A company’s top 10% of most loyal customers spend three times more per purchase than the other 90% of customers do.
So, the question of whether you really want new customers totally opposite of your base or focus on building sales within your base begs to be answered.
Of course, you need new customers. While new customers are needed and wanted, remember the benefits of keeping the existing customer while you seek new customers is vitally important.
A major beer brand lost sight of that in a recent campaign to capture a small percentage of the population while forsaking their core customer.
-> They made a business decision based on a political stance.
-> They didn’t understand the culture or values of their base versus those of the new customer being sought.
-> They failed to prepare properly for anticipating and handling unintended consequences
Good leaders ask questions that prevent self-made catastrophes while accepting responsibility for the mistake while seeking to resolve it.
Make it a great day and keep being awesome.
Brian Kennedy is an encourager who shepherds small business owners and entrepreneurs along the path of business success to preeminence by embracing time tested principles and executing the associated fundamentals daily.