We all know the old adadge that selling to new customers costs a lot more than selling to existing ones, so perhaps we should just stop chasing new ones – in these austere times that might make sense.
However, as I’ve mentioned here before (Customer Acquisition vs Customer Retention), it does seem that going after these expensive new customers is much more attractive than some boring direct marketing to exisiting ones. However, this blog is not about urging you to spend more time on your existing customer marketing (I’ll leave that for another day – as Chad Bauman says, “Want to get into trouble? Concentrate on new audiences” – so we’ll come back to that), but about how you should approach your new customer acquisition.
Just marketing to exisiting customers is a non starter – old customers go away or die and if you didn’t replenish the existing customer pot, you will soon run out of people to sell to. Remember, your existing customers were new customers once.
Part of the problem is that we think of marketing as a cost, something we have to spend money on and as such something to cut when times get tough. Marketing, done properly, is an investment. You are using some of today’s money to generate an income stream in the future. And that is the key and like all investments it needs analysis and decisions.
It is not enough to compare the cost of a sale to an existing customer to one to a new one. On a campaign basis that is always going to lose. What we need to look at is the lifetime value of a customer and use that information to identify the best source of future exsiting customers.and what ongoing activity is going to maximise the return. So get out those spreadsheets and start looking at your best existing customers and where to get more like them.
Lifetime Value is the key to good new customer marketing.
… oh, so I was talking about marketing to existing customers after all