In my experience, businesses are naturally inclined to cling to the pursuit of hunting down new customers as a kind of security blanket when trying to grow a business. “Sales are down, we need more customers” is a common knee-jerk reaction when times are tough.

There will always need to be an element of acquisition in a business’s marketing endeavours because of the ‘leaky bathtub’ effect (customers will drop off as their needs change etc.). However, I do believe that often the energy and resources that go into acquisition are at the expense of putting more effort into looking after existing customers and growing the business from within the current customer pool. The hole in the bathtub would not be so large if more customers could be retained – this might involve diversification to satisfy their new needs, doing a better job of customer service and a range of other strategic initiatives.

If you have the ‘tap’ turned on full blast to recruit new customers, take a step back and consider if there are opportunities at your doorstep with existing customers that you may have overlooked. This article explores the topics of activating and retaining existing customers – it could become your secret weapon to help you get the edge on your competitors.

A few good reasons for focusing more on existing customers…

• Ideal audience: not only do existing customers already possess a relationship with the brand, but they also represent a consistent revenue stream and are more likely to make repeat purchases…so they are an ideal audience

• Makes economic sense: one of the most compelling arguments for focusing on existing customers lies in the economics of retention. Studies consistently show that it's more cost-effective to retain a customer than to acquire a new one. Acquiring new customers can be up to five times more expensive than retaining existing ones. Furthermore, existing customers tend to spend more over time, as their trust in the brand deepens and they become more receptive to upsells and cross-sells. By prioritising retention, businesses can achieve a higher return on investment and boost their bottom line

• High churn rates are detrimental: the short-sighted approach of ignoring existing customers can have detrimental consequences. A high churn rate not only undermines revenue stability but also tarnishes the brand's reputation. Customers who feel neglected or unappreciated are unlikely to remain loyal, leading to a vicious cycle of churn and acquisition that drains resources and limits growth

• Power of their advocacy: existing customers have excellent potential for being champions for your brand. Satisfied customers are more likely to spread positive word-of-mouth, refer friends and family, and leave glowing reviews

What does ‘activating’ existing customers involve?

Customer activation in marketing is a term that I’ve noticed many business owners are not familiar with – they may already be doing it, but it may not be consciously on their radar of marketing activity as a planned category. Activating existing customers involves re-engaging them, reminding them of the value the brand offers, and reigniting their interest. This can be achieved through targeted marketing campaigns, personalised offers, loyalty programs, or simply providing exceptional customer service. By nurturing this relationship, businesses can stimulate additional purchases and foster brand loyalty.

What do retention activities involve?

Retaining existing customers is not just about ensuring they don't defect to competitors; it's about cultivating advocates who champion the brand. In today's interconnected world, where social media amplifies both praise and criticism, these brand ambassadors are priceless assets, capable of influencing a vast audience. Typical retention activities could be anything from ‘surprise and delight’ campaigns (examples would include samples with purchase or time-sensitive discounts that feel tailored and exclusive) through to implementing a customer feedback loop (to allow the business to make product or service improvements) or even improving communications through introducing new regular emails or video updates.

The longer-term benefits of putting more effort into activation and retention

Businesses that prioritise customer activation and retention enjoy numerous benefits beyond financial gains. A loyal customer base provides a stable foundation amidst market fluctuations, shielding the business from the unpredictable nature of being in business, including political and economic changes or even the antics of a competitor. Engaged customers also offer invaluable feedback and insights, enabling the business to adapt and innovate according to their needs.

Implementing a customer-centric approach requires a shift in mindset. Instead of viewing customers as mere transactions, businesses must recognise them as individuals with unique preferences and desires. By leveraging data analytics and customer relationship management tools, businesses can gain deeper insights into customer behaviour, allowing for more targeted and personalised interactions. 

I’ve always liked the analogy that an excellent relationship with customers is like a conversation – it relies on the two-way flow of communication. A sign that you might need to put more work into activation and retention is if it is all feeling very ‘one way’. In an ideal world you want to have the kind of customer relationships where they jump to be involved in an invitation to trial a new service, take part in research or upload user-generated content onto social media. Like any relationship, if you are being ‘ghosted’, that’s not a good sign for future outcomes!

What does it take to create a culture of customer-centricity?

Fostering a culture of customer centricity requires commitment across all levels of the organisation, but especially from the top so that it flows down. From frontline staff to senior management, everyone must be aligned in their dedication to delivering exceptional customer experiences. This entails investing in training programmes, incentivising employees based on customer satisfaction metrics, and continuously refining processes to remove friction points in the customer journey.

In conclusion, while the pursuit of new customers is undeniably important, businesses must not overlook the untapped potential within their existing customer base. By focusing on activation and retention, businesses can unlock a huge array of benefits; from increased revenue and cost savings to brand advocacy and market resilience. In today's competitive landscape, where customer expectations are higher than ever, prioritising existing customers isn't just a strategy; it's a necessity for sustainable growth and long-term success.

If you’d like to explore how Flex Marketing could help you ensure that retention and activation are key priorities in your business, get in touch to see how we can help.

About Andie Johnson

Andie is the owner of Flex Marketing. Flex Marketing helps businesses grow by allowing them to have the help of senior marketing resource without needing to employ a full time marketing manager. How flexible! We call this outsourced marketing services, however, some refer to it as ‘fractional resourcing’. We help multiple businesses at the same time who can’t yet justify having a permanent senior marketing person, so we become their ‘fractional CMO or senior marketing manager’ for an agreed number of hours per month. Often we drive a particular project or help with a specific business need that may be temporary. Flex Marketing has been helping businesses in this way to grow their businesses since 2011 and is based in Auckland, New Zealand.