May 6, 2011 1 Comment
Market your current customers now. The goal for any business is to create partnerships with their clients. A business must build long-term satisfying relationships with their customers. These relationships are what build brand equity. Eventually, 90% of profit will come from repeat customers (Arens, Schaefer, & Weigold, 2009). This may seem counter-intuitive to the goals of marketing, which is generating clients; but studies show just how powerful marketing is to your current customers. The way to market to your current customers is through relationship marketing.
Relationship Marketing is more than just making a transaction; it is about creating and maintaining a relationship with a customer over a long time period. It begins with a volley of neurons located in the part of the brain responsible for cognitive thought, the prefrontal cortex. It is amazing how the different areas of the prefrontal cortex overlap each other when we humans make decisions. This can be stressful, even though we may not perceive the environment as stressful. Positive social interactions reduce stress hormones and release the chemical oxytocin into the brain (Cacioppo, et al., 2007). Oxytocin is the “Whew,” relief feeling we get after responding to a stimulus. Creating trust within the customer now is possible with the reduction of stress.
Some important facts on repeat customers are:
- No amount of advertising will win back a lost customer. Poor products and services will kill a brands reputation. Mistakes happen; but if handled correctly, the customer will not be lost.
- It is 5 to 8 times more expensive to gain new customers. Utilize this direct channel of communication. Your customers want to know what is going on in your business. Let them be a part of decisions made in the company.
- 90% of pure profit comes from repeat customers. These customers are more likely to pay premium prices for services or products, tell their friends, and continue to make purchases.
Outside advertising remains important; but factor marketing efforts to 20% outside and 80% current customers. The results will not show up tomorrow, it takes at least a year; but this fan base will create a successful venture.
Arens, W. F., Schaefer, D. H., & Weigold, M. (2009). Essential of Contemporary Advertising. Boston: McGraw Hill.
Cacioppo, J. T., Amaral, D. G., Blanchard, J. J., Cameron, J. L., Carter, C. S., Crews, D., et al. (2007). Social Neuroscience: Progress and Implications for Mental Health. Perspectives on Pychological Science , 2(2), 99 – 114.