The principle of security in business refers, among other things, to sales and cash flow. You must therefore safeguard and protect against the loss of your top customers in every way possible. Once you have made a sale and captured a customer, you must do everything possible to ensure that you keep that customer indefinitely. The cost of acquiring a new customer is ten to fifteen times as much as the cost of servicing an existing customer. Repeat sales from your existing customers have the lowest cost of acquisition and represent the highest profit per sale of any business that you do.
Make it a policy to do everything possible to secure against the loss or disloyalty of your best customers. Many individuals and organizations spend an enormous amount of time and energy to get a customer for the first time, but then they just assume that the customer will stay around. They spend less and less time and energy to keep that customer loyal.
The natural tendency in all relationships is toward entropy, a running down of energy and increased disorder. Entropy in sales and marketing refers to the tendency to take your customers for granted once you have acquired them. This can be fatal. Many companies have actually gone out of business as the result of losing a major customer, or customer group, that they stopped paying attention to.
You should spend a full third of your advertising and promotional expenses on your most recent customers. These are the ones who are the most likely to buy again and to tell their friends.
Two Types of Customers
There are always two groups of customers in your market. There are, first of all, those customers who know you and like
you. They have bought from you in the past and are happy with the way you have taken care of them. These are the customers who buy from you again and are the best sources of references and referrals. These are the lowest-cost, lowest-maintenance, highest-profit customers you have. They are the mainstays of your business.
The second category of customers is those people who have never heard of you and have no idea or knowledge of what you do or why they should buy from you. The mistake that many companies make is that they focus most of their advertising and sales efforts on those customers who couldn’t care less about them rather than aiming their efforts at those customers who already know and like them.
Secure Your Main Customers
When you ask yourself “What is the worst possible thing that could happen in my business?,” think in terms of your customers. What would happen if you were to lose one or more of your main customers? What kind of impact would it have on your sales, your income, and your cash flow? If the loss of one of your major customers represents a serious danger to you, what steps could you take immediately to assure that you do not lose that customer in the first place? Be aware of any potential weaknesses in your marketing strategy. Often you lose a customer because your basic assumptions are wrong.