Every company is in the business of making sales. And when it comes to increasing sales, for most companies all the effort goes into bringing on board brand new customers. Traditionally, very little emphasis is placed on generating repeat sales and referrals from existing customers. It’s almost taken as a given that those new customers will turn into happy, long-term ones. It may come as a surprise then to discover that far from new customers being the most important element of successful marketing, it’s actually repeat business and referrals from existing customers that provide the foundations of every successful company. That’s the important message from Ross Reck’s classic book Turn Your Customers Into Your Sales Force. In this article we look at the importance of repeat sales and referrals to your business.
The Statistics Speak Volumes
In his book Reck makes it clear just how important repeat sales and referrals are with these amazing statistics:
- 25 per cent of your success in business is getting a sale from a new customer.
- An additional 25 percent comes from getting repeat sales from a customer.
- But a whopping 50 per cent of your business success comes from getting existing customers to recommend and promote your product or service to their friends, family and colleagues.
It’s quite an eye-opener, isn’t it? And guess what, there are other compelling reasons why you should focus more on repeat customers and referrals.
New Customers Cost More
Yes, that’s right. Research tells us that it costs five times more to acquire a new customer than it does to keep a current one. In addition, existing customers tend to spend more money. Because they have a trusting relationship with you already, they are more likely to spend money on purchasing your premium products or services. And if your happy and satisfied customer refers you on to a colleague, then that referral costs you nothing to acquire. This kind of free marketing is priceless to any businesses and especially to small ones or startups.
Repeat Customers Are Easier To Sell To
Your sales staff have limited time and resources so focussing their efforts on existing customers will pay dividends. The truth is with repeat customers you have a 60 to 70 per cent chance of closing the deal, unlike new customers where the chances are a poor 13 per cent. So rather than wasting time on chasing potential customers that never end up signing on the dotted line, getting your sales staff to focus on nurturing and developing your existing client base makes good business sense.
Achieve More Sales Faster
With repeat customers or those that have been referred to you, the sales process moves much faster. That’s because of the higher level of trust that is apparent from the outset and the fact that these prospects are already predisposed to do business with you.
The Bottom Line
And so, if you’re one of those companies that concentrates on bringing in new customers at the expense of existing ones, then it’s time to rethink your approach. As Ross Reck makes clear in his book, it doesn’t take a huge amount of effort or resources to develop long lasting relationships with your existing companies. And the potential rewards on offer from repeat business and referrals are well worth that investment.