We’ve all heard the expression that it costs less to retain an existing client than it does to attract a new one.
Marketing efforts should be focused on your existing members, donors and clients. This means that your time and energy should be put towards building lasting relationships with the people who are currently loyal to your organization.
So often, businesses are focused on marketing to a cold prospect while ignoring the immense opportunities that lie in your existing database. Let’s take a look at client value and I hope you’ll be able to agree with me that nurturing existing relationships will pay huge dividends in the long run. Your existing member spends $1000.00 annually for their membership. Perhaps there’s some dissatisfaction that member has voiced they leave. Will the association lose $1000.00 in revenue? We’ll no, not really, you’ve actually lost much more than that. Does the average member belong to your association for 5 years, 10 years, perhaps event 20 years? When that’s the case, we need to examine the lifetime value of the membership which means that an unhappy member reflects a loss upwards of $5000.00, $10,000.00 and $20,000.00!
Your donor who typically spends the same amount each year and choses to go with another charity will result in a similar loss.
For entrepreneurs, we often think “oh well that was only a $500.00 loss” but how many times would that client normally purchase from you? Is it three times a year? Ten times a year? If it were ten times a year at $500.00 and the relationship has been severed and perhaps that client had a ten year potential that $500.00 would actually be more like $50,000.00 in lost revenue.
That’s a staggering number and that doesn’t even include the typical amount of business that client may have referred you over the years. So enough of the doom and gloom, I put those numbers there to illustrate the importance of relationship building in business and appreciating the lifetime value of the people we serve.
Spend your time and energy nurturing the relationships from your current client base. Make sure that they know how much their patronage means to you. Do small inexpensive things to remind your clients just how important they are. Send a personally handwritten note, set up a quarterly meeting intended as a discovery session. Check the temperature of their account. Are they pleased with the service you’re providing, could you do anything to improve your service. This meeting is not a sales call, you’re letting your member/donor/client know that you don’t want to become complacent and value their business.
Proactively spend your marketing budgets and efforts on your existing relationships and think of each client’s lifetime value. This will significantly impact your day-to-day dealings and the way in which you handle each transaction!