Why Customer Relationship Matters More Than Advertising

3 Reasons to Focus on Your Customer Relationship Process Over Advertising

When businesses start to see significant income from sales, they start to wonder how they can use that to improve the business further. After all, you have to spend money to make money, right? Absolutely true, but spending money wisely is the key. Knowing how and where to spend it matters. In marketing, a lot of people fall back on advertising, but is this really the best way? Your customer relationship process might matter more than any other aspect of marketing.

Here’s Why Customer Relationship Matters More Than Traditional Advertising

1. It’s More Expensive to Get A New Customer than Retaining a Current One

There’s a thing in business called the Customer Acquisition Cost, which is how you figure out how much it costs to get a new customer on board. While you do have to bring on new customers to keep your business going, at a certain point, the cost of getting new customers tends to outweigh the value of the customers you already have. While many business gurus are debating the exact value, especially with the internet challenging all of our base assumptions, it’s said that the cost of onboarding can be 5-7 times more than the cost of retention.

Consider the information summarized by this infographic.

To summarize the findings, it costs a lot to get a new customer. On average, your efforts to get a new customer will result in a sale between 5% and 20% of the time. Even when it does net you a sale, only 20% of those customers are likely to come back. On the other hand, once you’ve made a sale, if they come back again, it’s much easier to keep them coming back. Loyal customers find the stores they go to comforting and it takes very little effort to keep them coming back.

2. Loyal Customers Spend More Money

Did you know that up to 80% of a company’s profits will end up coming from 20% of their existing customers. Loyal customers will spend an average of 33% more than new customers. With this in mind, having a plan to retain loyal customers is extremely valuable. A mere 5% in customer retention can increase profitability by up to 25%. Moreover, loyal customers are willing to tell others about their experiences with your business, even give you positive reviews online, which is the most effective way to get new customers.

3. Most Businesses Lack Effective Customer Support

Customers always have choices about where they shop, so if a customer isn’t happy with their experience in a business, they will go somewhere else. It’s only once they find an experience they’re happy with that they start building loyalty to that business. You want to make sure that you’re the one they settle on. Most loyal customers aren’t loyal because they like the initial service – though it certainly helps – but because the follow up support was good.

I can verify that one myself from my D&D days. Back when there was a shake-up at Wizards of the Coast, leading to the founding of Paizo Publishing, what made me switch to Paizo after years was the willingness of Paizo to answer questions, even ones that didn’t relate to them making sales or explaining their products. I could ask Paizo’s customer service just about any question I wanted and if they had an answer, they’d give it. WotC, on the other hand, never answered a single inquiry I made to them. Which company to go with seemed an obvious choice at that point.

With that in mind, it’s amazing how so few companies out there put any time or money into customer service. Since not many businesses bother, you don’t have a very high bar to clear. It takes so little effort to put yourself leagues ahead of most of your competition.

Why Don’t More Businesses Put More Work Into The Customer Relationship Process?

Given its importance, you’d think more businesses would put effort into managing customer relationships. From what we’ve heard from businesses around Cache Valley, it’s mostly a lack of training and tools.

For tools, that’s easy! There’s tons of software out there to help you manage it, such as project management apps like Asana, support ticket systems, and various other follow-up tools. These apps will provide tools to assign complaints to team members, create checklists to see what issues have been resolved, and automatically remind people of tasks they’ve been assigned. This will help you avoid missing on customer support tickets.

As for training, that’s up to you. Once you have the tools to manage it, you need to train people in how to use them. It’s tempting to try and save money and manage it yourself, but it’s very easy for things to slip through the cracks when there’s just one person responsible for it. It’s better to have a team of people. Once they’re trained on the tools, it’s just a matter of weekly meetings to keep the team up to date. Accountability plans and follow-up training can keep people sharp so your customers have the best support experience possible.

There’s No Reason Not To Start Now

For businesses with established customers and steady income, it’s much easier to see why you should start in on this. Don’t let that fool you, though; for small businesses, you shouldn’t overlook this. If your business is small and doesn’t have a lot of employees, you can probably manage the customer support angle yourself. It’s much easier to build a team to service your existing customers if you’re already familiar with the tools. You’ll find you retain more customers early on, improving your business growth. If you’ve gotten to be a bigger business without it, then you have no time to waste. There’s more work to put in, but you’ll see the benefits of that work much quicker.

Other Customer Relationship Plans

While resolving customer support issues is a big matter for any business, there are other simple things you can do to gain the loyalty of your regulars. Consider customer loyalty programs. If your customers come in regularly, why not allow them to sign up for a program that can give them special discounts, or gifts for longtime customers? They’ll feel rewarded for their loyalty and you’ll make more sales as a result. Special newsletters updating customers with special discounts can help them plan on when to come in to get the best deals on things they need. If you start thinking about your customer relationship first, you can come up with all kinds of ways to build on it.

Need Any Help?

Here at Atlas Internet Marketing, we specialize in customer relationship management. Our primary focus has always been reputation marketing, focusing on building up your online reputation to attract new customers over standard advertising campaigns. Online reviews are our biggest bread and butter. We are also familiar with many tools and can help you learn them so you can build up teams to manage your customer support services.

If you’re looking for help growing your business, we definitely advise focusing on your customer support and we’re here to help you do just that. Get in touch with us today to schedule an appointment for a free consultation today!

Cover photo by Jopwell