Question
A small business can use the concept of Customer Base Penetration to grow and expand by focusing on their existing customers. This strategy involves increasing the number of products or services existing customers buy from the business. It's based on the understanding that acquiring a new customer costs more than retaining a current one. Loyal customers are more likely to purchase again, forgive mistakes, and try new products. Therefore, by focusing on increasing the Customer Lifetime Value (CLV) of existing customers, businesses can tap into growth opportunities with reduced acquisition costs while improving customer loyalty. However, this strategy requires a strong customer base and sufficient customer data to create accurate Voice of Customer (VOC) profiles.
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In the rush to acquire new customers, organizations can ignore the Customer Lifetime Value (CLV) of their existing customers. Acquiring a new customer costs between five to twenty-five times more than retaining a current customer. Further, loyal customers are five times more likely to purchase again, five times more likely to forgive and seven times as likely to try new products. Focusing on Customer Base Penetration can provide untapped growth opportunities with reduced acquisition cost while improving customer loyalty. This is among the safest of the ten paths with a high probability of success. However, this path can be executed only when there is a strong customer base to penetrate and sufficient customer data to create accurate VOC profiles with customer attitudes and interests. Customer Penetration includes capturing market share of rival brands.
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