Do you want to learn how to get more customers for your business? Do you have a viable marketing plan that focuses on attracting new customers?
Persuasive marketing is the key to getting more customers. While Byron Sharp, the author of How Brands Grow, believes that marketing to new customers is the perfect solution to growing a brand, there’s also evidence that focusing on existing customers is beneficial for your business.
Here’s how to get more customers while also retaining your existing ones.
Market to New Customers
Modern marketers often profess that it costs less to keep your existing customers than to get more customers that haven’t reached your brand. Sharp explains that they believe this because it makes intuitive sense: If someone bought from your brand already, they’re more likely to buy from you again—they’re “your customer.”
Following this logic, your marketing is supposedly more effective on existing customers who are predisposed to spend a lot of money on your brand. For example, marketers may assume that it takes only one advertisement to convince an existing customer to purchase again, but five advertisements to convince a new customer to make a purchase. This makes the new customer five times more expensive to acquire.
However, Sharp insists that the data tells a different story: Marketing to existing customers is much less profitable than learning how to get more customers.
|Focus on Value Over Retention or Acquisition|
Some argue that Sharp’s perspective on retention versus acquisition is a false dichotomy: You don’t need to choose one or the other to devise a cheap yet effective marketing strategy. Instead, marketers should focus on retaining or acquiring whichever customers are the most valuable, using the metric of customer lifetime value (CLV). This figure is a prediction of the total sales you’ll earn from a specific customer.
In The Four-Hour Workweek, Tim Ferriss describes how calculating CLV helped him boost profits when he was selling brain supplements to distributors. Initially, he treated all of his clients equally, no matter how valuable they were. However, when he calculated his clients’ CLV, Ferriss found that five of his 120 clients were generating 95% of his profits. Thus, Ferriss began spending more effort maintaining relationships with his most valuable clients, increasing his chances of retaining them, and cut ties with low-value clients who behaved unprofessionally. He also studied his top five customers and used the commonalities he found to find new, equally valuable customers. Instead of relying blindly on either retention or acquisition, he calculated which customers were worth trying to retain and which customers to attract.
Arguably, if marketers pursue a CLV-oriented strategy like Ferriss’s, it doesn’t matter if marketing to these customers is initially expensive: Your most valuable customers—who could drive 95% of your sales, as in Ferriss’s case—are worth whatever costs are necessary to get them.
Gain New Customers by Serving Existing Customers
The fixed pattern of brand growth shows that all brands grow by knowing how to obtain more customers. However, this doesn’t mean that brands should ignore their existing customers. 93% of consumers admit to basing their purchasing decisions on online reviews, and 80% refuse to buy from businesses with negative reviews. Online reviews (and other word-of-mouth communication channels) therefore allow existing customers to attract or repel new customers. For this reason, even though customer service exclusively impacts existing customers, statistically, it manifests in increased acquisition.
In Raving Fans, Ken Blanchard and Sheldon Bowles give tips on how best to use customer service as an outreach tool—a means of getting more customers that are needed to grow. Sharp would argue that these strategies won’t help you retain more customers (even though Blanchard and Bowles claim that they will), nor will it get your existing customers to purchase more, but they may help get new customers through positive word of mouth:
- Dig into customer feedback. According to Blanchard and Bowles, when customers describe part of their experience as “fine” or “okay,” it indicates room for improvement. They may even be hiding their disappointment to avoid appearing rude or entitled. Aim to have your customers raving about every part of their experience.
- Keep your employees happy. Blanchard and Bowles see your employees as your “internal customers”—your job is to serve them just as much as your buyers. Happy employees are more likely to keep customers happy.
- Don’t promise your customers too much at once. If you set the bar for customer service too high and make promises your company isn’t equipped to keep, you’ll lose your customers’ trust. Instead, be realistic about what your organization can accomplish and make incremental improvements to your customer service.
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Like what you just read? Read the rest of the world's best book summary and analysis of Byron Sharp's "How Brands Grow" at Shortform .
Here's what you'll find in our full How Brands Grow summary :
- Why everything you know about marketing is wrong
- An unpacking of the unsubstantiated marketing myths that business schools teach
- The psychology behind consumers’ purchasing decisions