Fans of Seth Godin’s blog know that while he often offers smart, I-never-thought-of-it-that-way insights, he sometimes states the obvious—but does it in a way that can serve as a fresh and useful reminder of the simple marketing truths we already know but may have forgotten.
In a recent post, Godin talks about the folly of spending more money to acquire new customers while ignoring the loyal customers you already have. These current customers represent two potential opportunities for growth, both by increasing their share of wallet and by mobilizing them as word-of-mouth advocates.
Here’s Godin’s take on companies now spending “more” for customer acquisition:
The reason this is a mistake is simple: it's expensive. Attracting a new customer costs far more than keeping an old one happy. Not only that, but an old customer is far more likely to bring you new people via word of mouth than someone who isn't even a customer yet.
Which is why share of wallet makes so much more sense than share of market. How much does each of your existing customers buy from you? Do they count on you for all the things they buy in this market, or just some? Does Toyota sell me every car my family drives? Does Chubb get to insure every single thing I own? Usually not. Because marketers are so focused on more that they forget to take great care of what they've got.
It’s a good reminder, in a bad economy or a good one, in loyalty and in life: stay focused on the things—and people—that matter most.