I routinely talk with small business owners looking for proven ways to attract and keep customers. If you have limited marketing dollars, and need cash paying customers THIS WEEK to insure you can make payroll and pay the mortgage, it’s critical that you know exactly how to “make it rain”.
Customer reactivation campaigns are still one of the best and most reliable ways to create ‘cash-on-demand’ in almost any small business.
It starts with a basic understanding of salesmanship. The rule is, ‘people buy from people they know, like, and trust’.
- KNOW – this really deals with whether or not prospective customers and/or clients are AWARE of your presence. Consumers must know you exist, and what value you deliver to the marketplace.
- LIKE – much like it sounds, are you (and the people who represent your business) likable? There are some people who light up a room just by walking in. Their attitude and overall disposition seems to brighten up the day for everyone they touch. They strive to add value to others, and therefore — people like them because of the affect they have on people around them.
- TRUST – do prospective buyers perceive you as competent in the area of their need? Are you positioned as an expert? Do you have social proof of satisfied clients who sing your praises via reviews and testimonials? It’s necessary for a business owner to sound like they know their stuff. What’s 10x better is… satisfied customers who communicate how you’v added value to their lives.
If you’ve standing on solid ground in the above three areas, consider this.
A previous customer of yours had a great experience doing business with you. They even rated you 4 out of 5 stars because the experience was that good.
Herein lies the reason to prioritize a reactivation campaign over a customer acquisition campaign (although you should engage both). Research shows it’s always more costly to acquire a first-time customer when compared to re-engaging a previous customer.
Here’s some data taken from an article written by Ian King will on LinkedIn:
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. A key element in the cost is probably the industry or market sector your customers are in.
The sources below list various figures for the cost of retaining a customer vs acquiring a new customer. The ‘cost’ in the sources listed here ranges from 3 to 30 times.
“It is generally recognized that acquiring new customers costs between 4-to-6 times more.” This article includes a lifetime value calculation formula.
“It’s often cheaper to market to existing customers as it can cost between 5 and 8 times more to attract a new customer than it does to keep an existing one.”
“65% of a company’s business comes from existing customers, and it costs five times as much to attract a new customer than to keep an existing one satisfied.”Source quoted as Gartner.
“We know that it costs more to acquire a new customer (roughly seven times) than it does to sell to an existing customer, so it makes sense to spend much more of your marketing effort with people who know you rather than with absolute strangers.”
“It’s generally accepted that it costs three times more to find a new customer than it does to sell to an existing customer.”
“Conventional business wisdom contends that it costs 10 times as much to obtain a new customer as it does to retain an existing customer.” Pricing for Profitability: Activity-Based Pricing for Competitive Advantage By John L. Daly (2002), p85. Published by John Wiley and Sons. ISBN 0471221597
“The commonly quoted ‘average’ being “it costs 7 times more to sell to a new customer than to an existing customer.”
“Attracting a new customer can cost as much as 15 times more than retaining an existing customer.” Winning New Business in Construction By Terry Gillen (2005), p89. Published by Gower Publishing Ltd. ISBN 0566086158
“Statistically speaking, the cost of acquiring a new customer costs five to ten times more than retaining an existing one. Not only that, but repeat customers spend, on average, 67% more.”
“The lifetime value of a customer includes everything they will ever buy from you today, tomorrow, and in the years ahead—and the cost of acquiring a new customer is estimated to be 20 times greater than keeping an existing customer happy.”
“Research shows that it can cost up to 30 times as much to get a new customer as it does to keep an existing one. It pays to stay very close to your customers, so you know their exact needs, today and tomorrow. Your aim is to be irreplaceable as their supplier.” Mike Johnston The Chartered Institute of Marketing
“Acquiring a customer costs 5 to 10 times more than retaining one (eMarketer, 2002)
A 5 percent increase in retention yields profit increases of 25% to 95% (Bain and Company, 1990)
That research makes it pretty clear. We will spend less and profit more when seeking to re-engage with previous customers.
Not to mention. I much prefer going somewhere I have a relationship and a track record of trust has already been established. Wouldn’t you?
7 Tips to Successfully Reactivate Your Previous Customers
- Identify Your Target Segment
- Have Clear Goals and Objectives
- Answer the question, “Why did they stop buying from us?”
- Use Data to Create Relevant Offers
- Make it Easy for Customers to Come Back by Removing All Barriers
- Maximize All Media Channels
- Split Test Offers to Past Customers
Customer reactivation campaigns are a proven way to re-engage previous customers, and increase the lifetime value of your client base. If you haven’t taken this approach, you may want to make it a priority.
Have questions or comments, please leave them below!