Sounds obvious, right? Well, based on the way many businesses operate, it is anything but obvious. There is an infinite amount of material on the internet about customer acquisition costs; how to calculate them, minimize them, optimize them and so on. There is much less written about how to drive more business from the customers you already have, for whom there is zero incremental acquisition cost. Let me give you a few examples to illustrate.
One of my clients was conducting a search for a new financial advisor for their employee retirement plan. They reached out to several well-known advisory firms in the area and selected one of them to provide this service. Soon after this selection became public knowledge, my client received an irate call from their bank, wondering why they were not offered the opportunity to bid on this lucrative piece of business. My client’s response: “We didn’t know you even offered this service – had we known, we would’ve been happy to offer you the business!” The bank lost out on an important piece of business by not staying close to their customer.
Another of my clients had a long term relationship with their local CPA firm, who would show up every year around tax time, collect documents, ask a few questions, file the tax returns, and then disappear like a bear into the woods for the winter, not to be seen again until next April! One particular year the client needed help with a very complex tax situation, but the local CPA firm was nowhere to be found. The client ended up engaging a high priced national firm for a very large fee, which they were happy to pay because it solved their tax problem. The local CPA firm lost out on a profitable piece of business by not staying close to their existing customers.
The final client I’ll tell you about is in the online education business. Many of their customers sign up for courses in advance, but drop off before the course actually begins. Many others actually make it to the course, but drop out later for a variety of reasons. This pool of lost customers represents a very large source of potential revenue – enough to buy the owner a fancy new European sports car with falcon wing doors (because conventional doors are so basic) every year! By not staying closer to these customers, my client is missing an opportunity to keep them engaged and ensure that they complete the course, and is thus losing out on a large pool of business.
Folks, the moral of the story is that you have already paid an acquisition cost to obtain these customers. Before (or in addition to) looking for new customers, first make sure you are fully addressing your existing customers’ needs. Stay close to them, build a relationship, inquire about additional services you can provide. Remember that they like you enough to do business with you – they will be happy to expand the relationship as long as you provide value. These are the cheapest customers you will ever acquire, because they are already yours.