New or existing customers? Which comes first? 🔍 Evolving Strategies

EVOLVING STRATEGIES

This week’s opportunity to evolve your strategy

Digital sales strategy of new and existing customer segments

Quick read:

• Stats show only 44% of businesses focus on acquiring new customers and only 18% focus on retention, you should put an equal weight on both.

• Your existing customers are just as important as your new customers, make them feel valued.

• Calculate your churn rate to understand how many customers you're losing, and aim to reduce this percentage to as low as possible.

The digital sales strategy of new and existing customers:

When you're building out campaigns and offers for your customers, do you provide the same focus to both your new and existing? Studies show that businesses do not put an equal focus on new and existing customers, 44% focus on acquisition and only 18% focus on retention.

Now have you considered the many years of loyalty your existing customers have shown you? The amount of products they've bought from you, to support your business? Existing customers want to feel valued for their loyalty. They want to know that businesses appreciate how important they are and make the effort to show it. It means something to them and therefore it should mean something to you.

Many businesses are so focused on new acquisition only they forget about their existing customers. Once they've become a customer they have to navigate the products and services needed on their own. This is not the best approach if you want long term growth for your business.

New customers also usually get the better offers, but it actually costs 5x more to acquire a new customer than it does to retain an existing one. Consider that you have to offer more lucrative deals to draw that customer in and that means less revenue from each sale.

How it impacts your business:

You should focus on new customers as they bring growth to your business, but also make your existing customers an important part of your strategy. It's not just about new, because happy customers continue to buy and refer others. Make sure you have a strategy in place to focus on your existing customers as well. The success rate for new customers is between 5-20% to get them to buy something. But this stat increases for existing customers, with the success rate coming in at 60-70%, more than double. If it's easier to get your existing customers to buy, why wouldn't they be a priority?

When you focus on reducing the churn, and retaining your existing customers you have higher success. Happier customers that value your products buy and give your business more sales. If you're business is able to increase the retention of existing customers by 5%, you can increase profits by 25-90%. That's more sales and revenue for your business.

Keep it mind it's not always just about the new customers. It's about the right customers for your business and that means both new and existing. When you have a high churn that could mean you're losing more customers then you're bringing in which results in a negative outcome for your business.

How to apply this:

What you should takeaway and apply to your digital sales strategy:

1. Calculate churn rate

2. Reduce customer churn

3. Equal focus on new and existing customers

Calculate churn rate

To calculate churn rate, it's identifying a specific period of time. Taking the number of customers who left during that period, and dividing that by the total number of customers in that period. That's your churn rate.

Now you want to also understand how many customers you brought in during that period, divided by your total customers. Take this number and subtract from the churn. This gives you an understanding of how high your churn rate is (how many customers you're losing) vs. how many new customers your bringing in. Keep in mind it's not as simple as bringing in more customers to offset who's leaving.

Reduce customer churn

Focus on reducing your churn rate, which are the existing customers who are leaving. You should be aiming to keep as many customers that fall within the existing group as possible. It's not always about giving them huge discounts and promotions to get them to stay.

Consider other tokens of appreciation that can be given to keep your customers happy and feel valued. Sephora for example provides a small gift for your birthday every year. You get to choose 1 of 3 gifts, and different members receive different gifts. There's also a point collection program that allows customers to redeem for gifts, offers, promos, discounts etc. based on how many points they've collected.

Equal focus on new and existing customers

Remember to focus on both segments of customers, new and existing. Existing customers allow you to build a strong relationship and loyalty for years to come. That allows you to maintain a strong business, and spend less on ads and continuously acquiring new customers to offset who's leaving.

New customers though do allow your business to grow, so continue to bring in new customers. Once they've bought your products though they move into existing customer group, so it's a different approach to keep them happy and a continued customer of your business.

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