by Neil Lakeland chairman, Chartered Institute of Marketing, Kent branch

When was the last time you rewarded your loyal customers? Are you aware how much each of your customers is worth to you?

Often, when I talk to small business owners or fellow marketing professionals, the conversation turns to the planning of the latest marketing campaign, or how well a previous campaign has done in attracting new customers.

Our focus is always on driving new customers to the company whether it's through optimising the website for pay-per-click or organic search or through direct mail and above-the-line advertising. Customers are the lifeblood of any company and, quite rightly we think, we need more of them. But do we? Or do we just need to be smarter with our current customers?

One of the first things that you're taught when you study marketing is that it is more cost-effective to keep a customer than it is to get a new one (the general rule of thumb is it's around 4-6 times more expensive to attract new customers than it is to sell to current ones). Plus, by concentrating on your existing customer base you effectively move them up the "ladder of loyalty" from customers through to clients (someone who comes back to you) to advocates (someone who freely promotes your business on your behalf).

Advocates, especially in these days of instant communication, are worth their weight in gold giving you valuable word-of-mouth marketing.

You benefit in other ways too. Fred Reicheld stated, in a Harvard Business Review article, that a 5% improvement in customer retention can cause an increase in profitability of between 25 and 85%.

This is significant for any business, but especially important for small businesses in times of recession.

So, how do we do this? One way is to look at a customer retention strategy.

First segment your current customer database and calculate each customer's lifetime value.

You will find that some are costing you money, but, typically you'll find that approximately 20% of them deliver 80% of your revenue.

It is this small segment you need to concentrate on. Then, reward them either through special 'thank-you' exclusive promotions or through some form of corporate hospitality (whilst obviously bearing in mind the UK Bribery Act).

Although under-used now, corporate hospitality can be a great tool in relationship marketing and one, which if used properly, cements the customer's loyalty to your company.

We will be covering this, and more, in our annual marketing lecture on October 12 at MidKent College, Gillingham.