We recently did some work for a funeral home client who was always on the prowl for new business. They were a frequent advertiser, and their PR program got them visibility far beyond the budget they invested. In fact, they had – we’d like to think, with our help – massively improved their local visibility on so many fronts. But when it came to their own home front, they completely missed the boat.
What I mean by that is that they ignored the single greatest source of new business, and that’s old business…families and individuals who had done business with them in the past. You’d think this is a no-brainer, but every time we’d suggest a marketing program aimed at their own data base, the energy would drain right out of the room. Why so? They felt that it was wrong to “pester” a family one year, two years or five years after the service. They didn’t want to be seen as selling anything! Besides, they had allowed their database of many years to become obsolete. Only the last two years were even computerized.
Ah, what a missed opportunity.
There are so many reasons why existing customers are your very best prospects. Here are a few statistics that drive the point home:
- The probability of selling to an existing customer is 60 – 70%. The probability of selling to a new prospect is 5-20% – Marketing Metrics.
- A 2% increase in customer retention has the same effect as decreasing costs by 10% – Leading on the Edge of Chaos, Emmet Murphy & Mark Murphy.
- It costs 6–7 times more to acquire a new customer than retain an existing one – Bain & Company.
Why would you not want to focus your marketing efforts on current and older customers? There is so much to be gained. Consider the following five reasons why they are your absolutely best prospects for future business:
- There’s more water in that well. Families like to stay together and tend to trust the services that other family members have used. This is especially true with respect to a business that provides deeply personal family services, such as a funeral home or memorial park. You’ve developed your business around the values of trust, care, respect and service. These are the very things the family will want to rely upon from you in the future. But if you let too much time slip away between contacts, that emotional tie will eventually fade, leaving the door open to competitors or other alternate solutions. Stay in touch through newsletters, email, or even a personal phone call or letter. Let them know that you have a new service or feature, what’s going on with your staff, how you’ve helped out in the community, and how important it is to make plans now for their future.
While that may be the most obvious reason, here are others you might not have thought about:
- They’ll tell you how you’re doing. While it’s not always comfortable to ask customers how they like or dislike your services or products, nobody can give you a better report card and the straight dope on your service delivery than those on the receiving end. Listen to them, but also ask them. Whatever you hear, good or not, will guide you in what you bring to future customers. At the same time, your seeking out their opinions tells them you’re interested in them, which can only strengthen those relationships.
- They’re your best referral source. But only if you are doing all you can to keep your firm in their sights. Once they forget about you, you’re back to square one, especially when it comes to their circle of contacts. Also, while they still have a positive memory of working with your firm, you should actually ask them to pass the good word along. Encourage them to share their experiences on sites like Yelp, Google Places, Angie’s List, Yahoo! Local, and of course the Social Media outlets like Facebook, Twitter, and so on.
- They’re models for others just like them. Pay close attention to who is buying from you, how they’re finding you, what their product or service choices are, and where you can find more of the same. Remember the old 80-20 rule (80% of your business comes from just 20% of the marketplace). Learn precisely who that 20% is and it will be easier to grow that segment. But you can only do that by really understanding the customers you already have.
- They may actually turn against you if you ignore them. Funeral care is already highly emotionally charged, and if you did anything that wasn’t 100% to a family’s satisfaction, a little slip-up can fester becoming the source of negative social sharing. By staying closely connected, you give the family an avenue to express any upset, hopefully diffusing any issues, but at the same time, you are reminding them that, for you, they’re not out of mind, even if they’re out of sight. Who doesn’t want to feel that they’re thought-about every now and then? Customers are like teeth, ignore them and maybe they’ll go away!
So, the answer to “Who is your absolutely best new customer?” is of course…your old customer. Especially when marketing dollars are tight, prospecting to them is, without a doubt, the best money you can spend.
Dan Katz is president, creative director of LA ads. To discuss your thoughts with Dan on this blog or any marketing matters, email via this link, or visit www.LAadsMarketing.com. You can also connect with Dan on LinkedIn. See agency work via this link.