Sustaining Business Growth

Every week thousands of businesses go into receivership, and the fault is usually put down to mismanagement of money. The business spent more than it was taking in.

However, a more accurate way to look at this is mismanagement of customers. The more customers a business has, the more it takes in every month.

Many companies that go out of business have not even considered using their most valuable asset: their customer database.

Think of a customer database as a bucket with a hole in the bottom. As new customers are received, they go into the bucket, but at the same time, there are customers leaking out of the hole in the bottom. The proportion of those leaking out to those being added to the bucket is the key to growth, stagnancy, or loss. To state the obvious, if more customers leak from the bucket than are added each month, the business goes down the drain.

So how to plug that leak?

First of all it must be accepted that the bucket is leaking. Failure to face that one reality leads to business failure.

Most businesses that don’t do CRM and are successful are picking up a lot of new customers every month, and losing less than they pick up. A 10% annual growth is still possible for businesses like that.

But imagine what would happen if they could plug the leak of customers who don’t order again…

The math involved is simple: For a business with 1000 orders a month, gain 100 new customers  and lose 80 a month, and it has grown by 2% that month. If it does that over a year it’ll have grown by 24.3%. At the end of 12 months it will be taking 1243 orders a month.

However, if CRM is used to keep in touch with the customers, send them special offers, a newsletter, surveys, coupons etc., and it manages to lose just 20 customers a month less, it will have 54% growth at the end of a year. At the end of 12 months, just by plugging a simple leak, it will be taking 1540 orders a month.

The cost of retaining an existing customer is a tiny fraction of that of obtaining a new customer, and with online CRM systems available such as MailCustomers, there is simply no excuse for watching expensively acquired customers slip out of the bucket where they will go to a competitor for the same product they could have got from you, if you had only reminded them that you existed.

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