Given slashed marketing budgets in the current economy, much recent industry talk has focused on CRM (Customer Relationship Management) and the potential return on investment from focusing on increasing revenue from existing clients versus the higher cost of acquiring new clients.
Now more than ever, every company should spend time taking a good look at sales and marketing budgets to determine the true cost of acquiring new customers and balancing that cost against how effectively your existing clients are being managed and potential for up-sell or new services. Each company has a different ideal balance between attracting new clients and extending existing client business, so there is no right answer unfortunately. But, I would argue that in this economy, many companies should be focused on better CRM and really lessen the focus finding new clients.
Ask your sales team a few questions:
- How many qualified leads did you get referred from existing clients?
- How much easier was it to close those “referred” deals?
- How much did current client case studies and testimonials affect your sales cycle?
If they answer “a lot”, “a ton” and “they were a huge help” then you just confirmed my point.
One of the first lessons of business is that it costs more to win a new customer than keep an existing one. But when every dollar counts and budgets are meticulously scanned, how much of a cost savings are we talking about? A study from Bain & Company found that acquiring a new customer costs six to seven times more than retaining one and that a five percent increase in customer retention yields profit increases of 25-100%.
So why are many companies throwing their money towards finding new customers when increased customer loyalty can be such a key to growth? Why not save money on the sales efforts and shift efforts to client satisfaction? It is time for companies to come up with new product offerings and innovative ideas for the clients that they have been doing business with for years. There’s nothing worse than getting a call from a current customer who heard about special opportunities or offerings promoted to new customers that aren’t extended to existing clients as well.
A recent Returnity study with tips on making e-mail marketing more effective could be applied to client-focused mobile marketing techniques. Engage your client database with targeted, relevant communications using creative mobile campaigns that offer a snippet or tease about new products and services and have a call to action that encourages a website visit to learn more.
It is easy to assume that in a bad economy, companies need new business to survive, but CRM might actually be the best, low-cost way to keep your revenues thriving.