We live in a world that focuses on the shiny and new, rather than the old and reliable. Business executives are a prime example of this mindset: “We need more customers!” they say. “We must acquire new customers at all costs!”
Unfortunately, this type of reasoning often backfires in a big way. I’ve seen it happen myself many times. The fact is, getting new clients is important; but keeping your existing clients should be the priority. There’s an old saying: “You don’t know what you have ’til it’s gone.” Don’t let that happen to you. Don’t seek out new clients at the expense of your current ones. It’s just bad business.
“Why?” you may ask. Let’s dig a little deeper to find out.
The Costs of Neglecting Your Existing Clients
Research has actually attached a specific number to the cost of customer acquisition versus customer retention. It can cost a company up to five times more to attract a new client versus keeping an existing one. In other words, you could focus on keeping a current customer and only pay $20, or try to find a new customer and wind up paying $100! If it comes down to such a choice, which entrepreneur in his right mind would pick the latter option?
And yet, that’s exactly what some businesses are doing. They’re throwing all of their efforts into attracting new clients while neglecting and ignoring their existing clients. It happens all the time! An insurance company raises the rate on its long-standing policy-holders while offering special promotions to new prospects. Cable companies give new customers a year of discounted service while doubling the prices for old customers. I could go on, but I think you get the idea.
It’s crazy when you think about it. Sure, any company needs an influx of new customers – but at what cost? The bottom line is that these companies may be shooting themselves in the foot when they sabotage their current customers’ goodwill in an attempt to acquire potential customers.
The Power of Happy Clients
Now let’s look at the other side of the coin. Why are happy clients and satisfied customers so important to a business’s success? Simply put: because loyal clients are the best marketers you’ll ever have.
It’s called referral marketing (or “word of mouth” marketing). It’s a thing, and it’s powerful. For instance, did you know that 83% of consumers view recommendations from friends, family members, or even colleagues as either somewhat or completely trustworthy? And that 74% of consumers cite “word of mouth” as a key influencer in their purchase decisions? Referral marketing works because it’s not coming from a faceless corporation or a paid spokesperson. It’s coming from the consumer’s next-door neighbour; from his business associates; from her shopping buddies – and so forth.
When your clients are happy with your service, they’ll talk about you with others. And their favourable recommendation may do more in the way of advertising than all the billboards, display ads, and commercials that money can buy.
How to Leverage Your Existing Clients as Brand Advocates
Granted, just because your clients are happy doesn’t automatically guarantee that they’ll spread the word within their social circle. It’s not enough to simply hope that your satisfied customers will promote your business to their friends and family members. So here’s the million-dollar question: How can you ensure that at least some (if not most) of your clients will advocate for your brand?
In the old days, the primary answer would be referral requests – especially verbal requests. In fact, one study found that a spoken request for a referral can result in a 32% success rate. One out of three clients referring others to your company? That’s huge!
Of course, the nature of your business may not lend itself to face-to-face referral requests. That’s where lead forms, follow-up emails, and shareable links come into the picture. You want to actively encourage your satisfied customers to publish their positive experiences as widely as possible.
Your rapport with the client, and their appreciation for your company’s top-notch service, can go a long way. But what if you’re still not seeing the desired volume of referrals? In that case, there is another option to increase your leads generated by “word of mouth” – namely, a referral program.
A referral program offers tangible incentives for your existing customers to advocate for your brand. Phone companies do it all the time: Get $25 for referring a friend! The more friends that join our network, the more money you’ll get back! Still, the same concept can work equally well no matter what industry you’re in. Whether you’re a restaurant owner, a sales rep, or a real estate agent, there’s always a way to incorporate a referral program into your overall strategy.
Do referral programs work? The numbers answer with a resounding Yes! For instance, consider the following statistics:
- 78% of B2B marketers state that referral programs generate leads of good or excellent quality.
- 60% of marketers say that such programs generate a high volume of leads.
- 54% say that referral marketing has a lower cost per lead than other forms of advertising.
What’s the point? Simply this: a referral program is an excellent way to turn your existing clients into de facto marketers for your company. It will result in more leads for your business, some of which will turn into new customers. At the same time, it will make your current clients even happier, since they’ll have some extra cash in their pocket! It just makes sense all the way around.
Granted, it takes some effort to develop a winning strategy for referral marketing. There may be some bumps and bruises along the way. But if you take the plunge and really give this technique a chance, you’ll almost certainly find that the return more than justifies the investment.
If you need assistance in crafting a referral program, or with any other aspects of referral marketing, then our team of experts can help. Reach out to us today for more information – I can guarantee you won’t regret doing so.