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Here from the Groove blog? Thanks for visiting. Below you'll find a great guest post Alex did for us. If you run an online business, we encourage you to join our email list so you can get free marketing resources and content delivered directly to your inbox.


This is a guest post by Alex Turnbull from Groove

Have you spent weeks or months (or years) racking your brain trying to figure out how to get more customers?

Before you spend another minute thinking about marketing, consider a simple question: why?

Why do you want more customers? If, like most small business owners, your answer is “mo’ money,” then let’s take a step back and look at some facts that might surprise you:

For most small businesses, acquiring new customers is the least efficient way to make more money.

What’s the most efficient way?


It’s your customers. The ones you already have. The ones who’ve already raised their hand and shown you that they’re willing to spend their hard-earned money for the value that you deliver.

The potential return on spending for new users pales in comparison to the opportunity for growing your business with your existing customer base.

The research proves it: a Bain & Company report found that acquiring a new customer costs six to seven times more than retaining an existing customer. And that businesses which boosted customer retention rates by as little as 5% saw increases in their profits ranging from 5% to 95%!

Turning your existing customers into long-term repeat customers can be the most efficient way to grow your business.

Return customers tend to buy more from a company over time. As they do, your operating costs to serve them decline. 
- Fred Reichheld, Bain & Company

Want to help your existing customers want to buy more?


Try these three proven strategies, backed by research and case studies, to make your customers love doing business with you.

Know What Your Customers Need

Get closer than ever to your customers. So close, in fact, that you tell them what they need well before they realize it themselves. - Steve Jobs

Every single time you visit Amazon.com, you see something that looks like this:

You’ve shown Amazon what you’re interested in, and Amazon does you the favor of suggesting other products that might be of value to you. Much of the time, they’re right.

It’s an effective strategy, but just how effective? Really. Damn. Effective.

Amazon says 35 percent of product sales result from recommendations. - Matt Marshall, VentureBeat

And it’s definitely not just Amazon. Netflix users will recognize this screenshot:

That recommendation engine is responsible for 75% of the movie-watching choices Netflix’s users make. Imagine what it would mean for your business if you could influence 75% of your existing customers to buy more by anticipating their needs!

But you don’t have to be Amazon or Netflix - with millions upon millions of data points being mined around the clock - to know what your customers want and be able to deliver it to them.

If they've already purchased a product, send them an email highlighting more products from the same category. Or, even small copy tweaks can help. For example you could test changing your copy from "Related Products" to "Customers Who Bought This Item Also Bought" on your product pages.

If you’re talking with your customers, you should understand the challenges they’re facing. Offer solutions to their problems, beyond what you’re already offering.

Reward Loyal Customers

Look down at your keychain. Do you have any barcoded tags with logos of the businesses you frequent?

If not, you probably have a card with the same info on it sitting in your wallet, or stuffed in a drawer somewhere. Or, if you’re like me, you manage most of these relationships online.

If any of those apply to you, then congratulations. You hold one or more of the 2.1 billion customer loyalty memberships in the U.S. today.

Why are loyalty programs so ubiquitous? Because they work.

A 2012 survey by ClickFox suggests that 54% of consumers would consider increasing the amount of business they do with a company for a loyalty reward, and 46 % said they already have.

The most popular forms of loyalty programs - frequent flyer programs, grocery store memberships and credit card rewards - are well known, but many small businesses generate revenue by offering their customers loyalty rewards.

In 2011, GrubHub, an online food delivery site, started offering a fun and unique loyalty program for its return customers. The program, called Yummy Rummy and first tested on GrubHub’s team internally, lets customers play a game for every three orders they place. They’re given a 25% chance to win free prizes like dessert, drinks or a discount off of their tab.

Is it working? We asked GrubHub:

Customers keep coming back to GrubHub for a lot of reasons (customer support being the most important!), but Yummy Rummy has been a big part of that. Customers call it addictive. 
- Abby Hunt, GrubHub

How do you create your own loyalty program?

Two of the many insights in Dowling and Uncles’ 1997 piece on customer loyalty programs in the MIT Sloan Business Review might be particularly useful to you as you think about your own opportunity. Build your loyalty program to:

1) Add to the value proposition of your existing offering.
 Think about how you can reward customers with more value from your business, not just free stuff.

Probably the least useful rewards for customer loyalty are free gifts such as lottery tickets; these are nice to receive but tend to be only short-term tactical froth that can devalue the brand. - Dowling and Uncles

Instead of gift cards, can you thank your loyal customers with value-add rewards like useful, exclusive content that helps them in the context of what they’re already buying from you? Notice how in the GrubHub example above, the rewards - free food - are valuable within the relationship between the company and the customer.

2) Maximize the buyer’s motivation to make the next purchase.

You want your loyal customers to keep coming back. Otherwise, they’re not loyal customers, right?

3) Leverage your loyalty program to incentivize repeat business. There are many ways to do that (again, GrubHub is a great example), but you can employ some neat psychological strategies to optimize your offering.

In one study, researchers handed out loyalty cards at a car wash. The cards offered a stamp for every car wash the customer bought.

Half of the cards had spots for eight stamps, with a free car wash offered for collecting all eight. The other half had spots for ten stamps, but two of the spots came pre-stamped.

The result?

The pre-stamped cards resulted in 178% more repeat business than the unstamped ones.

The customers with the pre-stamped cards already started with progress made toward their goal, and their incentive to buy was maximized.

This strategy is known as 'artificial advancement'. Pretty cool, huh?

"Above and Beyond" Customer Support, Every Time

Think about the last time you were truly WOW’ed in a customer support interaction. Did it feel like the agent went above and beyond to help you? That company probably won you as a repeat customer, right?

Chances are, if the company has a support-focused culture, “above and beyond” is the norm.

A couple of years ago, Peter Shankman was exhausted and hungry, flying home from a business trip. He sent a joking Tweet to Morton’s Steakhouse:

The Ask

Can you guess what happened when he landed in Newark?

Yep.

Shankman wrote about the experience in a blog post titled The Greatest Customer Service Story Ever Told, Starring Morton’s Steakhouse.

Customer service is no longer about telling people how great you are. It’s about producing amazing moments in time, and letting those moments become the focal point of how amazing you are, told not by you, but by the customer who you thrilled. They tell their friends, and the trust level goes up at a factor of a thousand. Think about it: Who do you trust more? An advertisement, or a friend telling you how awesome something is? 
- Peter Shankman

The post was shared more than 16,000 times on Facebook and Twitter - not a bad return on the cost of a steak.

Another example from our own archives: Allan Branch, founder of LessAccounting, is a Groove customer. After he emailed us for support, we resolved his ticket, but the interaction didn’t end there. We sent him a small token of our appreciation, and he let the world know:

With his 10,000 followers, our little surprise to Allan got us one very happy customer, and a whole lot of website traffic and trial signups.

Empower your support team to create those ‘amazing moments in time’!

Not every customer has Shankman’s audience. But the research shows that customers do talk, and according to data from American Express, happy customers who have a positive experience with customer support share their story, on average, with nine people.

How many support tickets are you handling each day, and what would happen if each one of those resulted in nine new prospects?

Awesome support does more than create chatter; it makes great business sense.

That same American Express report showed that 70% of Americans would spend more money with companies that they believe provide excellent customer service. And on the other (scarier) end, another study concluded that 91% of unhappy customers will not willingly do business with your business again.

Keeping your customers happy through “above and beyond” support can be the difference between growing your business through keeping your existing customers happy and losing them to your competitors. The choice seems like an easy one to us.

According to Marketing Metrics, The probability of selling to a new prospect is 5- 20%, while the probability of selling to an existing customer is 60-70%.

The odds are in your favor, and the numbers add up: delivering more value to your existing customers is the best, most efficient way to grow your small business.

Don’t Get User Acquisition “Tunnel Vision”

Now, I’m not telling anyone to abandon their user acquisition efforts. Acquisition is still a super important part of your marketing strategy.

But don’t make the mistake of thinking that it’s your only option for growing your business. There are others, like those I shared above, that can be just as - or more - effective.


About the Author: Alex Turnbull is the Founder and CEO of Groove, a customer support app for startups and small businesses. You can follow him on Twitter or read more at the Groove Blog.