Too many well-intending and smart business owners today think, but they don’t thank. Maintaining regular contact with former customers can be an effective growth strategy for any business. Beverly Ham is president of BDS Marketing, an office equipment store in Irvine, California, and she grew her company from $2.5 million in annual sales in 1984 to $38 million today. She attributes the majority of her growth to a systematized approach of maintaining regular contact with her customers.

Ham says “It only takes one time to lose a customer to make you sit up and say, ‘Why didn’t I keep in touch?’” So she devotes 10 percent of her marketing budget to relationship marketing and gets a 50 percent return on investment.

Michael Watson owns Gallery of Diamonds, a fine jewelry store in Costa Mesa, California, and he to has become a real advocate for on-going customer contact.

“I used to drop a name from my database if I hadn’t heard from a person for five years,” he says. “But I have found that people may not buy a piece of fine jewelry but maybe every five to seven years. So now we wait eight years with no contact before re moving a name from our mailing list.”

I was talking about the subject of customer retention and follow-up with a friend of mine who owns a public relations firm in Charlotte, North Carolina, and he told me “My wife and I have made many large purchases over the years, including cars, furniture, life insurance, homes, central air conditioning, water softening and purification system, jewelry, electronics, vacations, extensive travel, art, remodeling, carpeting etc.”

“And would you believe that in 10 years of marriage, travel and consumption, we have received only two thank-you cards as a result of hundreds of purchases and hundreds of thousands of dollars spent. And one of those thank you cards (actually a form letter) had misspelled our names, and thanked us for purchasing a Lincoln Town Car when we purchased a Mercury Villager. That was the one and only time we ever heard from that dealership in four years.”

He went on to say that “We have made it a policy to avoid giving repeat business for large purchases to any store, salesperson, agent, dealership or company that does not show appreciation for our business the first time around. And we are not alone.”

Murray Raphel, author of the book “Up the Loyalty Ladder” writes of similar experiences. He actually asked the vendors why he and his wife did not receive a thank you note after they made large purchases from them ($600 or more). The air conditioner dealer said “Listen. We know it’s a good idea and we know you’re going to ask why we don’t do it, and the answer is, we guess we just never got around to it. There’s so much to do in this business….”

The car dealer said “Are you kidding? Why, that’s the first thing we do. The day the car is delivered, the salesman sits down and writes a thank-you letter right away. Positively…” Months passed, and they received that letter.

The television dealer said “Sending a thank-you letter is the best thing we ever did. Absolutely. We stopped about eight or nine months ago. We’re so backed up with all the warranty paperwork and finance deals that we just don’t have the time anymore. But we’ll tell you something—from the customer’s point of view it was terrific. We used to get a big response. We have to get back to that sometime….”

Most business owners forget, that it is far easier, faster and cheaper to retain and re-sell their existing or past customers than it is to acquire new customers. Business people complain that they are too busy managing and running their business to thank, retain and follow-up with their customers. They are too busy worrying about their store that they cannot even think about their customers.

Isn’t the sole purpose of a business to acquire and retain customers? Isn’t it the customers that make and grow the business? Hasn’t it been said that, “Nothing happens in business until a sale is made.” Hasn’t it also been said that, “Nothing is more valuable or important to a business than its customers.”

Don Peppers and Martha Rogers in their famous book “The One To One Future, Building Relationships One Customer at a Time” said, “Trying to increase your market share means selling as much of your product as you can to as many customers as you can. Driving for share of customer, on the other hand, means ensuring that each individual customer who buys your product, buys more product, buys only your brand of product, and is happy using your product instead of some other type of product as the solution to their problem.”

And they go on to say “In fact, focusing on share of customer, instead of share of market, is probably the least expensive and most cost-efficient means of increasing overall sales—and, incidentally, market share—today.”

If your company is typical, it costs you five times as much to acquire a new customer through mass marketing as it does to retain an existing customer you already have. If you could reduce your annual customer attrition rate of 25 percent (the average) by just 5 percent, you could add as much as 100 percent to your bottom line. That’s how much more efficient it is to retain vs. acquire customers.

Because business owners are busy, and their internal systems are not perfect, the OCT Group has provided a turn-key customer retention, survey and follow-up system for over 3,000 businesses from coast to coast and Canada since 1987.

Duane “DJ” Sprague is an automotive marketing and advertising expert, speaker, author and Vice-President of Marketing for the Dunning Group. The Dunning Group owns four marketing companies, including Dunning Sprague Marketing and Advertising (a full-service ad agency at www.dunningsprague.com), the OCT Group (a customer follow-up research and retention company at www.octgroup.com), On-Target Direct (an automotive direct mail company at www.on-targetdirect.com), and On-Target Promotions (a promotional and ad specialty products company at www.on-targetdirectpromo.com). Duane can be reached at 888-265-1963.