This article is excerpted from an article that originally appeared in the inaugural online issue of The Rhode Island Small Business Journal.
I had an experience once that reminded me of something I preach constantly: it’s easier and less expensive to cultivate customer loyalty than it is to go after new customers…yet many businesses do not do that!
Here’s what happened: I signed my daughter up for soccer at a place we really like. The instruction and staff are wonderful. My daughter, son, and husband all participate regularly in programs at this facility, have been for years. (I don’t, because it’s sports, and I don’t “sport.”) So it’s fair to say that we have given this company a lot of business…hundreds, maybe thousands. We also talk it up like crazy, so it’s safe to say that we’ve brought in other customers.
A few weeks before, I had received a coupon in the mail from this company for $20 off a program. YAY, I thought. Just in time for soccer! Come to find out, it’s for new customers only. I asked, pleasantly, “So, what are you doing for your loyal customers who already love your programs and have already put hundreds–even thousands–of dollars into your business?”
Cue the crickets.
So my excitement about saving money and my grand plans about multiple purchases stopped cold. I did still sign my daughter up for the program—after all, it’s a great place and she loves it, and I’m not one to bite off my nose to spite my face—but it got me thinking.
When a company decides to put in place a marketing strategy to attract new customers, does that mean the old ones get left out in the cold?
Before you answer that question, answer these three:
1) How will my current customers react if they see this promotion? In my professional capacity as writer and marketing consultant, I usually advise people to avoid programs that only focus on new customers because it’s a surefire way to annoy regulars. Your regulars are your bread and butter, so why would you want to annoy them? Why should they feel like their business is less valuable to you?
2) How do I want to position my company? Many companies will resort to coupon programs and new customer bonuses because they are desperate to bring in new business. They think they have to send out discounts just to get people in the door. I call this the “warm bodies” approach. Anyone will do, just get some people in. I urge you to stop thinking this way. Any customer is not necessarily a good customer. So think more about your company’s value, and who will most benefit from that value. Numbers are important, but you can get more quality numbers by truly thinking about what type of customer you want…which brings me to the third question.
3) What kind of customers do I want? Because if you want customers who are like the ones you already have –similar socio-economic profile, family size, even personality or philosophy on life–the best way to reach them is through your current customers. Birds of a feather flock together—they also go out to dinner together, join clubs together, go on trips together. Then they start families around the same time and send their kids to the same camps, schools, sports teams, dance lessons together…are you getting this? So if, for example, your business caters to families, it behooves you to tap into a circle of friends who will flock together…to your program or product.
You are one step away from a pool of customers just like the ones you want to attract. If you are attracting the right customers but you just want more of them, don’t ignore your regulars. Now, if you want to change the makeup of the customer base you’re attracting, that’s another article entirely…stay tuned!