Customer Retention – What is it and Why Does it Matter for Your Business.
It’s the customers that move any business. A company can opt for a strategy in which its main purpose is to acquire new customers and to sell regardless of who is buying or, instead, focus on retaining current high-value customers that make continued purchases.
Here are some Customer Acquisition Vs. Retention Statistics:
Acquiring a new customer can be up to five times more expensive than retaining an existing one.
Increasing customer retention rates by only 5% can lead to an increase in profits of between 25 to 95%.
Existing customers are 50% more likely to try new products and spend 31% more when compared to new customers;
The success rate of selling to an existing customer is 60 to 70%, while the success rate of selling to a new prospect is 5 to 20%.
Even with the obvious benefits of Customer Retention, according to the same study, 44% of the companies admitted focusing more time, energy and resources on acquiring new customers, rather than striving to preserve a customer they already have. Only 16% of companies focused more on retention.
Of course, the maturity stage of your business will have an impact on your strategy; if you have a new business, your focus should be on acquiring new customers. However, if you have a more mature business, you should also focus on retaining your existing ones.
Customer identification and engagement are techniques applied since the time when small business owners knew their buyers very well and had important information about them, such as birthday dates, consumer preferences, and where they lived. Over time, it was noted that this relationship was very beneficial to business, as it made shoppers more loyal to the stores.
Even with the expansion of digital borders, companies are realizing that the old way of dealing with clients was very effective, giving now more value to the level of service quality.
How to Improve Retention, Engagement, and Loyalty of Your Customers?
First of all, you have to be aware of the fact that the consumer profile has changed a lot in recent years. Currently, customers in all segments not only value an efficient customer service but also wish to have a personalized shopping experience. They are more demanding, attentive to the market and new trends, and are always willing to question companies. With the increasing presence of technologies, consumers have become accustomed to having easy access to information, ranging from price comparisons to technical product features and company service.
Consumer-Centric Marketing is one of the most efficient ways to retain them by promoting more than a simple communication channel, but rather an individual relationship. Through personalized experiences, this strategy generates a positive perception of your brand and its services guaranteeing the loyalty of the consumers.
In this context, it is important for organizations to get more knowledge about their audience and, consequently, to offer a different treatment to them. Therefore, the use of retention marketing tools is essential for brands to interact, simply, automatically and effectively, with their consumers. From them, it becomes possible to know the habits of the customers and treat them in a personalized way, with products and services according to their preferences.
To build this good relationship, it is imperative to have impeccable service. Make the customer trust in the solution of your company and eventually even become a promoter of your brand recommending it.
Some of the Main Advantages of Customer Retention include:
Reduced Advertising and Marketing Costs
In the case of retaining your existing customers, efforts with mass advertising or other publicity actions are much smaller, because your biggest advertisement is the delivery of quality products or services, lasting relationships, and satisfaction to your already existing loyal customer base.
Free and Organic Customer Base Growth
Loyal customers will likely refer your products or services to friends and family, who may then become customers too, thus growing your loyal customer base with just free word of mouth advertising.
Higher Negotiating Power with Suppliers
If you work with suppliers, and they know that your company has a lot of loyal customers, and consequently a constant but increasing flow of periodic sales, they will be much more open to negotiating better prices, quantities, payment methods or deadlines.
Ability to Forecast Consistent Growth in Financial Planning
If you can count on loyal customers returning for the next financial quarter, it’s easier to make anticipatory budgetary decisions.
Retaining Customers is Staying Ahead of the Competition.
You already know that quality products and services open doors, attract consumers interest and help you position yourself in the market.
But with markets so fierce, any product or service can be copied or improved, increasing competition in all sectors, and you certainly do not want your existing customers to yield to the temptations of competition.
In the Business World, it is not enough to just want; you need to ACT. Customer Retaining Marketing is a medium-to-long term job that includes, besides the quality of what is offered, a strategy capable of exceeding customer satisfaction limits, building an affective bond between the brand and the client.