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Customer Loyalty

How to unlock the potential value in your existing customer base

The majority of us want to build a loyal customer base. It makes commercial sense to our businesses and enables us to reduce our customer acquisition and marketing costs. It also brings reassurance and peace of mind to us to preside over a continually replenishing and healthy sales pipeline.

Despite real potential value in their existing customer base, many businesses still focus on new client acquisition in their marketing and business development strategies. Sometimes the focus on new customers becomes all-consuming and ends up being done at the expense of nurturing the customers who are already there. In this situation, there is a risk of disappointing those customers –  prompting them to leave and possibly sharing their negative opinions with others along the way.

So how can you foster greater loyalty within your customer base and how can you encourage customers to try out other aspects of your business offering?

Getting the basics right

When we buy something there are usually a number of essential outcomes we want from the experience. We want:

  • The quality to be what we expected and not a disappointment
  • The purchase and delivery of that product or service to be done efficiently – we don’t want lengthy time delays once we’ve finally made the decision to buy
  • The people who we’re buying from to keep in contact with us – not plaguing us every minute, but keeping us informed at the key stages.  That communication should be clear and easy to understand – preferably via the communication channel we prefer, say email, phone, text, letter.

Finally we want to pay a price that is clear and reflective of the product/service quality we’re buying. Ideally it is one that is fixed unless we make changes to our order. It is certainly not one that grows in cost without us knowing or consenting.

It is interesting how many businesses fall down on these basic elements. All the rants on all the forums, blogs and social media usually stem from one or more of these elements underperforming or causing disappointment. Too often customers are over promised by businesses keen to seem agreeable and secure the order. The business concerned is in fact setting itself up to fail and, whilst they may win this one piece of business, it’s unlikely they’ll get any more from the customer.

A while back I wrote an article about how to under-promise and over-deliver.  The tips in it still ring true and guide businesses how to really delight their customers and gain their loyalty.

Make it personal

The more tailored and relevant your product/service feels to a customer and their situation, the more loyal they’ll become. We like buying from people who understand us and our preferences. To achieve this sentiment from your customers you need to develop your knowledge of them. Consider what they buy from you, why they buy it, when they buy it and also what they don’t buy from you but could.

With this information think about ways to package up certain services/products (perhaps with one of the components they haven’t tried yet) to add greater value or help to them. Be proactive like an oven cleaning company I use – they remind me how long it’s been since I used them and offer to book someone in. If seasonality affects your customers’ buying patterns, then put together diary reminders to get in touch. Create special offers or share information to help them with that particular time in their calendar.

Reward their loyalty

In sectors such as insurance and energy you often find it is better to switch provider frequently because the incentive to stay loyal is non-existent. There are bigger discounts to collect as a new customer. Those companies then have to work hard to keep replenishing their customer base. If they were able to instead reward loyalty, they may find their marketing and sales costs reduce and over time greater profitability is achieved.

It is worth thinking about how you can reward the loyalty of your customers. To help you calculate what reward you could afford, consider the current cost of customer acquisition to you (factor in your marketing, the time/effort in the sales process, the discounts needed to compete with other providers etc). If you could incentivize your customers to stay loyal and bring new ones to you – how much would that cost of sale reduce by? What incentives could you offer which would be affordable and not adversely affect your profitability?

Depending on your customers and your budget, there are different reward options  you can consider. For example,

  • A % discount year on year
  • A free unit of a product range they buy, each year
  • A cap on your fees/cost for another year – or holding this year’s price.
  • Providing additional features/enhancements/ insight and information free of charge
  • A gift or small thank you token for referring other customers to them
  • Giving them discounts on new products they’ve not yet tried
  • Rounding down the cost of an order

Don’t forget to tell customers what reward you’re putting in place so they realise that you appreciate their custom. Do though be careful in your choice of reward – it has got to be perceived by your customer as worthwhile.

Some other ways to add value

You can add value to a customer in other ways and these include using their own products or services, helping them out in some way (say on a business or personal basis) and keeping them informed about relevant offers. If you want them to try a new aspect of your offering consider sending them an example or ‘taster’. Pick your moment for this wisely and don’t continually try to ‘sell’ the customer something new at every point of contact. If you do they’ll soon migrate to another supplier. Be guided by your knowledge of them to pick the right moment. Recording their purchasing patterns, interests and any other customer data you can collect will help to expand that understanding.

Summary

It’s hard work acquiring new customers so do see if there are ways to maximise the value from your existing fan base. Consider their preferences and nuances and play to these. Make customers feel you are the only supplier because of what you understand about them and demonstrate. The easier you make their lives and the more benefit you bring, the harder you will be to replace.

We’d love to hear in the comments below how you unlock the potential in your existing customer base!

Share this article if you found it useful! And leave a comment in the box below. We hope to connect with you soon.

About Michelle Daniels

An experienced and effective business development and marketing strategist, Michelle has built a successful career increasing top line growth for service businesses and organisations. She helps her clients turn their marketing, business development and thought leadership plans into reality with her ‘hands on’ support and practical advice. A prolific writer, Michelle also combines creative flair with business nous to produce highly effective results. She has written (and ghostwritten) for many professional and business publications and is a member of the Chartered Institute of Marketing and professional services marketing group. Extended Thinking is a hands-on marketing and business development consultancy. Bringing together great minds and great ‘doers’, we help our clients devise and implement plans that achieve real business growth. Our clients come from a wide variety of backgrounds and sectors, but invariably are those who are too busy or lack the resources to action their marketing and business development plans. We roll our sleeves up and muck in to free them up to do what they really want to do and are good at doing.

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