In the pursuit of growth, many CEOs and founders fall into the same trap: they think massive profits come from an endless stream of new prospects. But here is the hard truth: it is six times more expensive to acquire a new customer than it is to sell to your existing base.
If you want to scale profitably, you need to shift your focus from acquisition to retention. You need to climb the Ladder of Loyalty.
Understanding the Rungs
The Ladder of Loyalty helps you categorize your database to identify exactly where your revenue opportunities lie:
Suspects: Businesses that fit your target profile.
Prospects: Those who have shown interest or made an inquiry.
Shoppers: One-time buyers.
Customers: Repeat buyers.
Members: Consistent, loyal buyers who enjoy specific privileges.
Advocates: Loyalists who actively provide testimonials and referrals.
Raving Fans: Your best sales force. They promote you everywhere they go.
The Profit Secret
Massive profits aren't found at the bottom of the ladder; they are found at the top. When you turn a customer into a Raving Fan, you stop paying for advertising and start benefiting from the most powerful marketing force on earth: word-of-mouth.
Your Assignment
This week, take a look at your own database. Don't worry about how many new leads you have. Instead, ask yourself:
How many 'Raving Fans' do we currently have?
What strategy can we implement to move our 'Members' to 'Advocates'?
When you stop looking for the next sale and start looking for the next relationship, you create a world of opportunity.