As many customers choose bargains over staying loyal to a business, having a customer for life is becoming a thing of the past. How can you maintain your profits as you lose frugal customers?
“No matter what business you're in, you've got to accept that the clients that you've got today may be served by someone else tomorrow. You've just got to take the assumption that the client you've got is not a client for life,” says real estate auctioneer and sales educator Tom Panos, speaking on the My Business Podcast.
He says that despite your best efforts, there will always be some customers who will shop around for the best price they can find for products or services.
“There will always be an element of people that are going to turn around and say, ‘I can buy that product or service at that place, at this price.’ I call those 'sticker-shocker people': people that are going to be affected by the price tag,” says Tom.
“You have to accept that these people are going to move on.”
To alleviate the loss caused by these “sticker-shocker people”, Tom says you need to ensure you appeal to new customers.
“You need to have this funnel of new business coming in, because business is going to be lost, but you've got to keep replacing it,” he says.
“What causes a business to fail is this: they run out of clients … because they're not replacing the ones that they're losing.”
For example, Tom mentions how the taxi industry was built up on the concept of repeat business, but has been disrupted by ride-sharing services such as Uber, which have taken this regular business away.
Those established taxi businesses, according to Tom, are suffering as a result, as they do not have an alternative method to attract new customers.
“That's a classic case of disruption, but the truth is disruption is happening – not in just [Uber-type] models, disruption is happening in every business,” says Tom.
“Consumers … have become price-sensitive, and everyone knows the price of everything. It means, more than ever, if you're a business owner you need to have a clear marketing and strategy in your plan. You no longer can rely that you've got a client for life.”