If ever there's a case of misdirected advertising expenditure that every advertiser should address it is in the almost obsessive issue on gaining New Business . It seems to be the major focus of almost every client, advertiser and adperson that I've ever encountered - and, of course, they have a point.

Pure New Business is a vital part of all business plans for growth and stability, however, New Business is only a part of the sales picture and there is an often forgotten area that is arguably far more important.

And that is to nurture and develop Old Business.

There are two ways to look at Old Business .

One, if you ignore it (made the sale, job done, who's next?") then those customers will soon drop off the end of your world, or two, if you look after it, it can repeat, grow, refer and help give you real long-term stability.

And looking after Old Business means…

• Having a good product in the first place. If you have, then it's much easier to retain and use that customer source, but if you haven't, then find out what the problem is fast because every disappointed customer is worth thousands of pounds in negative advertising revenue – helping your competitors!

• Great Customer Service. People love to be loved. People need to know that companies and manufacturers care about their products and their customers. Look at it in a personal way. If you show a friend great care and attention they will seriously appreciate it and you have a friend for life. If you treat a friend with rudeness and indifference you'll probably never see them again.

• Knowing who and where your customers are. Most advertisers, depending on the product of course, have the opportunity to build a highly detailed database of their customers' addresses and, vitally these days, their email addresses and it is through this that a huge amount of business can be had. Nothing new here, you may think, but so many companies simply do not spend enough time and money on this important source, do not keep it current, do not keep it detailed enough, do not use it regularly nor with any imagination.

And Old Business can create sales because…

• Most products or services can attract a repeat purchase, maybe tomorrow, maybe next year, maybe in 5 years

• All customers have a circle of family, friends and neighbours who, because of a glowing referral, could soon become your New customers

• Every happy customer becomes a free source of advertising for your company, brand or product.

• Your company may well offer other products or services and every satisfied customer is a prospective purchaser who already has good feelings about you

As every door-to-door salesman will agree, you have already overcome the two greatest hurdles of the sales business; you have already found your prospective customer and you've already got a foot in the door and are metaphorically sitting on their sofa. Most reps and salespeople I know would claim that having got that far, the sale is virtually in the bag – so why waste it?

The one big conundrum here is to assess how much of your advertising budget and time should be allocated towards developing Old Business , and there is no simple answer to that as every company, product, industry and situation is so very different.

However, it would be foolish to dismiss the obvious validity of constantly looking for pure New Business as without it we would never have that perpetual conveyer belt of sales sources, never open up new areas of the market and, of course, all 'new' leads eventually become your highly cherished 'old' business – so it really is a two-pronged attack.

But there is another major factor is the Old versus New debate…

As I have mentioned elsewhere on this site, we must remember that ALL advertising has a varying degree of wastage ("wastage?" shock, horror, I hear you say)

Yes wastage – and it could be anything up to 90%+ of your advertising expenditure goes straight down the proverbial toilet because, possibly, a great deal of advertising is either preaching to the converted OR talking to the totally disinterested OR simply not seen or heard at all - and every advertiser should take this disturbing fact on board.

However, with Old Business advertising, this wastage is kept to an absolute minimum because firstly the approach is made directly to an already interested or satisfied customer and secondly because some of the methods are virtually free anyway (i.e. emails & texts)

So, as a notional example, if we spent £100,000 advertising a £500 product for purely 'new business' opportunities and had a generous conversion rate of 0.25%, we'd generate sales of £125,000. However, if we spent just £10,000 approaching all our existing customers and had a very realistic conversion rate of 2% we'd generate sales of £100,000 – but for a tenth of the cost!

Now, I'm sure some can tear these figures to shreds as we can with most figures or statistics (they are notional but perfectly viable) but the facts remain that advertising costs to Old customers are only a fraction of the costs to New customers and yet the response figures will always be far greater.

Why?

Because that happy person is already sitting on your sofa!

David Wood. 2009