Here are two important facts.
- It costs up to seven times more to acquire a new customer than to retain an existing one.
- The probability of selling to an existing customer is 60-70%, while the probability of selling to a new prospect is only 5% to 20%.
It makes therefore good business sense to make every effort to, first of all, retain as many existing customers as possible and then focus your cross- and up-sales efforts on them before addressing the wider market.
As far as retention is concerned, you could of course wait until a customer decides to leave or their contractual commitments come to an end before making any attempt to persuade them to continue with you. The problem is that by that point it’s usually too late.
The customer has already made up their mind and even if you somehow persuade them to stay, the inducements you may need to provide may make the whole thing economically unviable.
When it comes to sales, the marketing efforts and the cost associated with the generation of qualified prospects and leads, not to mention the difficulties of converting these into customers in a fiercely competitive market are considerable. On the other hand, you have at your disposal a list of people who already trust your organisation sufficiently to use your products and services already. You know quite a bit about them as well. They are your customers. However, if they feel ignored and taken for granted, they will not be there for long.
“Warm-calling such as cross- and up-selling to existing customers has grown considerably, substituting cold-calling which is far less popular or cost-effective.”
ContactBabel – 2022.
The key to both retention and up-sale is communication. This comes in many forms. Regular proactive communications including product updates and special offers for instance are some of the many ways of keeping in touch with your customers. However, there is a major difference between talking ‘at’ your customers and talking ‘with’ them.
Nothing can replace a genuine conversation.
Having regular conversations with your customers will not only ensure that they stay with you in the long term, but will also give you a chance to hear from them how they feel about the service or product they bought from you. This will provide you with invaluable information on improvements you can make as well as opportunities to offer them additional goods that they will willingly purchase from you in the future.