A 5% increase in customer retention compounds so that you can almost double your company’s profitability! Discover why customer loyalty is so important.
This is step #02 of our proven 8 step ‘Business Growth Series’ to grow your business through your website by 200% to 1000%+.
See The Power Of This Digital Sales Funnel
Getting In Front Of More Customers & Customer Retention
Remember at the start I mentioned that in business school 101, there are 3 ways to grow your business?
- Get more customers.
- Get each customer to spend more.
- Get each customer to spend more often.
And that I said that it was the combination of these that leads to exponential growth?
There are many ways to get in front of new customers. However, this is not your problem.
You see most businesses think that they need more customers, and they spend a fortune on marketing to get those new customers. While it’s important to get new customers (which is expensive), it’s more important to focus on your existing customers first and improving your customer retention.
(Source: Bain and Co)
What? Such a small increase in customer retention can have such a massive impact on a company’s profitability? That means that if you give a 5% improvement to your customer retention you can almost double your company’s profitability.
I want to ensure you’ve read that stat about increasing your customer retention at least 3X! It’s so powerful!
Please share this customer retention stat as so few people are aware of this very easy way to grow their company!
Where would you rather spend your money?
- On acquiring a new customer
- Or cross-selling & up-selling to existing customers
To help you answer this question, let’s take a look at…
Your Growth Strategy Starts Here
Growing Your Business Online Requires a Clear Strategy, Follow These Steps to Success.
What’s The Cost Of Acquiring a New Customer?
There is no definitive answer to this question, but most sources say the answer is that it costs between 4 and 10 times more to acquire a new customer than it does to keep an existing one. Some sources say cost of acquiring a new customer is over 30 times that of keeping an existing one. So you can see why a little push to improve your customer retention can make such a big difference!
So if in your industry each customer is worth on average £100 profit to your company (I’m using simple numbers here!) you can spend up to £100 on marketing to get that customer, otherwise you’ll make a loss.
Now, if I work on a very conservative figure that it costs 5X to acquire a new customer as opposed to retaining a customer, then by cross-selling, up-selling, and increasing the frequency of customer purchases, each new customer will no longer just be worth £100 to you, but rather somewhere between £500 and £1000 and even more if you use our system!
If You Do This Your Competitors Don’t Stand a Chance
While your competitors can only spend up to £100 to get that customer (at which point they break even) you can spend £500 per new customer before you’ll break even.
So while they’re limited to £100 in marketing, if you’re spending £100 you’re still making anywhere from 400% to 900% profit per customer.
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And at this rate, you can outbid any competitor in your market for traffic.
There Is a Surplus Of Traffic Suppliers.
It’s Just Costly.
Industry publications, Facebook, Twitter, Pinterest, LinkedIN, Google, to name a few. View our lead generation module for more info.
Almost every website out there has an opportunity to partner with. You can pay people to post, tweet, and reach their audiences. Traffic is not the issue, it’s how much is it worth to you.
You see so many companies are just waiting to sell you and your competitors traffic.
Then I can use other techniques, like Social Media, Search Engine Optimization, Guest Posting, Content Marketing, Email Marketing, and Blogging to get even more traffic.
As long as you are earning enough per customer, you can beat your competitors and get as much traffic as you like.
So if you’re doing better cross-selling & up-selling you can get 4 to 10 times more per customer
Remember I talked about the gap between ‘Before‘ state and ‘After’ state and that by increasing this gap you can increase the value and what you can charge?
I then gave you 4 critical aspects to use in your marketing communication (communicating the ‘Have‘, ‘Feel‘, ‘Average Day‘ and ‘Status‘ to your visitors) and explained how most companies only use 1 of the 4, and that by using all 4 you should get at least a 2X conversion improvement.
Combine this with the cross-selling and improved customer retention and you’re getting a very strong compounded growth effect.
(5X From Existing Customers) x (2X From Better Communication) = 10X Growth.
And you haven’t made any structural changes!
I know it sounds simple but you’ll be amazed at how many companies don’t get these basics right, especially regarding customer retention!
When I used to do on site growth consulting for a large multinational company, within 2 weeks I’d quickly identified £14 million of lost growth annually, just by applying some basic business principles.
Let’s Look At Traffic
As mentioned above, there are many many sources to get traffic.
Before you can look at traffic you need to do this ONE thing.
Once you’ve got your value proposition sorted you can then focus on traffic.
You can use:
- Industry publications
- to name a few.
Or you can use other techniques like:
- Social Media
- Search Engine Optimization
- Guest Posting
- Content Marketing
- Email Marketing
- and Blogging to get even more traffic.
Before you start attracting traffic…
You’ve got to understand:
- How to measure what traffic is worth.
- How to extract value from that traffic.
With all these traffic sources and strategies, it’s pivotal that you choose 1 to start with and focus on that one.
Master it. Conquer it. Dominate it. Then branch out.
How to optimize each of these traffic sources is a course in and of itself and takes a lot of work, but the KEY goal of this traffic is one thing.
and one thing only….
To make contact with the visitor and build your first trust signal.
We’ve taken a brief look at the importance of customer retention and it’s impact on growth.
Read our next article in the 8 step business growth strategy series!
I realise there’s a lot to building a strong web presence and it needs a clear strategy. If you need a little help with your strategy, take a look at our Strategy Session app or if you would like a mobile-optimised, cutting-edge website with all of the tools required for the above steps, take a risk-free trial.