Business analysts know that it costs a company much more money to get a new customer than to keep doing business with their existing ones. Thus, to be as profitable as possible companies are urged to have loyal customers that keep coming back again and again. Unfortunately, this is easier said than done, and focusing all of your efforts on keeping existing customers is a sure way to ruin your company as truth be told people don't live forever and companies have to look to the next generation of buyers eventually.

1. Nobody Is Loyal Anymore

No thanks to the internet, loyalty is lower than ever before. In just a few mouse clicks, customers can compare the prices of you and a dozen or more of your direct competitors for the same product. Not to mention online auctions where prices can go even lower. This means that people have literally no loyalty - they will choose thatever retailer offers the lowest price.

2. Bidding Wars

This means retailers often engage in bidding wars. This can escalate to nonprofitable proportions - often retailers sell products for the exact amount they purchased them for from manufacturers. Of course, in order to do business retailers have to pay expenses like rent so they can have a physical store open at all. In addition, utilities, shipping, labor, not to mention possible losses from theft all come into play.

3. Making Money

With all of these costs, youd wonder how they make money at all. Retailers often sell products that require other products in order to function - for example a toy that requires batteries or a printer that needs a printer cable in order to work. Manufacturers could make printers that connect wirelessly using bluetooth, but retailers won't buy them because then there wouldn't be any money to be had. The same is true for the automotive industry - hardly any money is being made on the cars themselves, and the cost of gas is skyrocketing.

4. Cutting Losses

This leads to a worst case scenario - your retail operation has overstock of last months technology and there's already new products out there that customers will select instead. It becomes urgent to sell off your products at a loss just so you have the shelf space to put the new items out for customers to look at.

5. Building Loyalty

Many retailers will offer customers a membership option that will save them money on select purchases within the store. Of course, every retailer has some sort of program like that and so, again, it doesn't matter where consumers shop. Lost leaders can draw customers in, often in the hopes of having them buy more than just the lost leader, but that rarely happens. The same is true for first-time customer offers.

6. Perfection Or The Highway

Customers now demand absoloutely flawless service. Everything from the price to how the product is packaged needs to be, for lack of a better word, immaculate. With a dozen major competitors to your business just a click away, you have to give them some reason for doing business with you other than your price is cheaper. Sell customers on brand awareness or, better yet, offer free extended warranties and free technical support on everything you sell.