Todd Holder rings up our soaps and lotions. Photo by Becky McCray.

A common concern among small-business owners is how to increase revenue. Often, they try to do this by finding new customers.

That is an expensive way of doing it. On average, it will cost from $20 to $50 to get a new customer. Yet it only costs from $1 to $5 to expand sales to an existing customer.

Not only does increasing sales to current customers save money, but existing customers tend to spend more money than will new customers.

So whether you are encouraging your staff or doing it yourself, focusing on your existing customers can provide good returns for a low-cost investment.

Focusing on the existing customer starts with thinking in terms of not only today’s sale but the purchases a customer will make long term. A customer buying from a business represents income not only today but for many years.

An easy way to increase sales to existing customers is to offer complementary products and services. For instance, if you sell luggage, add a rack of luggage tags.

Often, these simple additional items offer a good rate of return. And these items move easily. The only requirement is that you and your staff need to make the customer aware that you carry them.

Another simple tool for increasing sales to existing customers is to remain in touch. The contact with customers can be about a new product or services they might like. These contacts also are a good way for businesses to thank them for their past business.

Of course, nothing can beat a good customer referral system where existing customers help you attract other customers. Make sure that you acknowledge or even offer an incentive for the referral.

Businesses selling to other businesses also should think about how they can help the other businesses increase their sales. One way is for businesses to work together to offer customers a combination of their products and services.

No matter what the economic climate is, getting more sales from existing customers makes good business sense, so take time to plan how this strategy can work in your business.

Photo (CC) by Ninlan Reid, on Flickr

If you’re a business owner, which appeals more: spending $20 to capture a new customer or spending $1 to retain an existing customer?

These numbers represent broad averages but reflect reality, according to research. This means developing a sustainable business requires focusing first on building customer loyalty.

Every business needs to build its customer base, but often the focus is on bringing in new customers. Perhaps the better strategy is, first, retaining existing customers because this forms a stable sales base and they become your ambassadors as you turn to finding new customers.

Retaining existing customers means providing them with what they want at a price they feel is reasonable while offering them a pleasant shopping experience, and giving outstanding customer service and support.

To do all of this means listening to your customer.

However, one difficulty business owners face is that customers will not rate each one of these items equally, and each customer will have his or her own preferences.

Understanding the customer and his or her preferences means coming up with a business strategy that will work best for your situation. To some degree, that means building around where the core of your customer base puts its values.

Yet understand that with the tools available, it is possible to have customized approaches to various groups or even individuals.

The goal is customer retention. Yes, customer retention or customer loyalty programs may have a cost, but based on the research, these programs seem like a good way to spend your money. That’s especially true when research shows that long-term customers tend to buy more and more often than new customers. So you want to keep your customers and keep them as long as possible.

Customer retention programs are not a one-time effort. Internally, the customer changes, and externally, the surrounding environment (think competition) changes. As the customers have various experiences, they will come across other business tools that they prefer. They may move, for example, from valuing price savings to valuing service.

Help your customers see how they get value from your relationship. Encourage them to tell you their ideas and thoughts for change. And then take action on what they say.

Retaining customers can have a great payoff. Making customer retention a mission of your company is well worth your time and effort.