Lex Tannenbaum


Businesses go to a lot of trouble and expense to acquire new customers. They implement marketing initiatives, events, advertising campaigns, social media, search engine optimization, pay per click – you name it, they do it.

And they’re successful – to a degree, at least.  Their efforts attract enquiries, and they use all kinds of conversion strategies to turn these enquiries into customers.

And then what do they do? They congratulate themselves on having “won” a customer, and go on with their hunt for fresh meat.  

So what happens to the existing customers? After all the effort and expense to acquire them, business owners become too busy chasing new customers to even notice that they are losing the old ones.  And so the cycle continues – as fast as they get new customers, so they lose old ones. It’s a bit like trying to fill a basin without plugging the drain.

It is a well-known statistic that, of all the customers lost by businesses, 68% are lost due to “perceived indifference”. That means that 68% of the customers lost to business left because they felt that no one cared about them.

And it’s easy to see why. Promotions offering special deals for new customers abound: Become a new subscriber to a newspaper, and get one month free – and a free tablet on which to read the publication. Special offers at special prices are available to new customers only – and not to old customers signing a new contract. Luggage and clothing are given with the signing of a new subscription – and are not offered to existing subscribers.

This represents a wonderful marketing opportunity.  Old customers have been around for a while, and already trust you and your team, and feel comfortable.   So, while it is necessary for a business to look for new business to grow, it’s just as necessary to ensure that the base remains firm – and that the old customers remain.

It’s most important that the best old customers remain.  We know that customers are not all good, and that the 80/20 rule applies – 80% of the turnover comes from the top 20% of customers, and 80% of the problems come from the bottom 20% of the customers.  Customers can be categorized into four distinct categories:

A – awesome

B – basic

C – can’t deal with

D – dead

What any business’s goal should be is to do business only with A customers.  These are the customers who buy the most profitable items, pay on time, and give referrals.  

It makes sense, then, that when looking for new customers, you should be looking for A customers, not just any customers. That means that you have to know exactly what an A customer looks like.  

To get to know your A customers, you need to identify them. While you may instinctively know who they are, it is a good thing to analyse your customer base and formally identify them.  To do this, list your customers in descending order, from the biggest to the smallest. Create a running total, and calculate the percentage of total turnover as you go. Find out which customers are providing 80% of your turnover. These are your A customers.  

Now that you know who they are, you can find out more about them.  What are their characteristics? How often do they buy? What kind of services do they require? What do they buy? Where do they live? What media do they read? Get to know your A customers personally, and encourage them to introduce more customers “just like them”.

You should never lose an A customer (except, perhaps, through death!)  All A customers need to be nurtured and loved, so that they feel a real loyalty toward the business.  Research ways of creating that loyalty. What can you offer them to make them feel really special? What can you do that makes them feel like a member of an exclusive club?  

Collect information on your A customers, and offer special personalised service to them.  As an example, a restaurant collected information on it’s A customers, and used that information to make the dining experience really special.  They knew their preferred drinks, and served them on arrival, without being asked. They knew their food likes and dislikes, and offered specials accordingly.  They knew their favourite dishes, and texted them when those dishes were going to appear on the menu. Those A customers would never be lost because of perceived indifference!

You need to create a system that nurtures A customers on an ongoing basis – you can’t leave it to chance. Create a schedule of visits, or phone calls, and make someone responsible for maintaining the schedule. Create a regular special offer to A customers only – and let them know that they are on the “special” list.  Have regular “closed events” for A customers only. Creating a system will ensure that you don’t forget them, or allow them ever to have a feeling of being neglected.

On the other side of the scale, the D customers need to be eliminated. Typically, they buy the least profitable items, and then only when it suits them. They complain a lot, and don’t pay on time. They absorb too much of your time and resources, and can prevent you from servicing the A customers properly.

Don’t be scared to close their accounts, and ask them to shop elsewhere. Your A customers will more than make up for any sales you lose, and you will find your profit increasing.  

Spend more time looking after your A customers than you do looking for new business. Just as a house needs a solid foundation to remain stable, so your business needs a solid base of A customers on which to grow.

Do you struggle to keep your existing customers? Looking for ways to build a solid base and get more business from existing customers? Book a chat with Lex Tannenbaum today.