Every business shares the same problem: Over time, we lose customers. Often called customer erosion, this is a big problem. Most merchants lose 20% of their customers every year, and some businesses lose even more.
How can you replace those lost customers? And ideally, replace them with loyal customers who come back for many years?
This white paper argues that the best source for a new customer is a new person moving into your neighborhood. The trick is to get the attention of these recent arrivals, and encourage them to try your business while they’re still new in the area.
What do we know about new residents?
People move for three main reasons: housing,work, and family. They move from every region of the country to every other region. And they move a lot: The U.S. Census Bureau tells us that 46% of Americans moved between 1995 and 2000. Moving is certainly very stressful. Researchers confirm that new residents are rebuilding their lives, reestablishing their identities, and dealing with a major life transition: a birth, marriage, divorce, career move, retirement, or death. This transformation continues for at least two years, until the new resident feels at home. During that time, movers are far more likely to try new products and services than at any other time in their lives. In fact, in the weeks following a move, the average new resident spends $7,100 on everything from air conditioners to takeout meals. That makes recent movers a perfect source of new “regulars”. Local retailers need to find a way to attract the attention of new residents, impress them with their goods or services, and capture them as regular customers.
But how much can you afford to invest to capture new residents?
This white paper provides an easy-to-use table to help calculate the lifetime value of a typical customer. This is the total net profit your business earns from your relationship with any one customer. This is an effective yardstick that shows what you can afford to invest to capture new residents as regular customers. Thinking about your retail business in these terms will put you far ahead of the competition, and more than make up for the natural customer erosion that occurs over the years.