Understanding the Importance of Customer Retention
As a business owner, you’ve likely put great focus on your marketing strategies. After all, marketing covers everything that gets the word out about an organisation.
It’s because of this that the global spending on marketing alone has totalled a shocking $39.27 billion in 2017. And as you can imagine, it’s steadily increasing.
In the United Kingdom, advertising spending showed a massive 3.7% increase in 2016. The year ended with a total advertising expenditure of £21.4 billion.
With such huge focus on marketing, many overlook one major element that keeps businesses afloat: The importance of customer retention.
Because a lot of organisations seem to have bumped customer retention down on their list of priorities, we’re addressing it here. This post highlights its immense value and reminds everyone how it can easily make or break businesses.
Importance of Customer Retention for Businesses
It’s as important as spreading the news about your brand and what it has to offer.
It’s equally as vital as acquiring new leads and converting them into paying customers.
In essence, it’s crucial to your business. And taking it lightly can lead to massive losses.
Researchers have measured how much it costs to get a new customer and the cost to retain an existing one. The results vary on number, but they all point to the same trend–that the former is a lot more expensive than the latter.
Not only would you have to expend more time and resources to get the attention of someone new, but you’d also have to do more to convince them to buy your products or services.
For instance, Forrester Research found that acquiring new customers means spending five times more on what you’d otherwise spend keeping existing ones. Business 2 Community also highlighted that attracting new customers costs six to seven times more than making existing ones stay.
Then there’s the sales probability. With an existing customer, you’re 14 times more likely to complete a sale than what you have with a new one.
Also, did you know that when you launch a new product, your current customers are more likely to give it a try than new ones? In fact, they have the willingness to spend as much as 31% more than the average newcomer to your brand.
There are many other stats and figures, but they all have the same conclusion: It would be a huge mistake for businesses to not hold customer retention in high regard.
After all, it’s your current list of clientele who have a higher likelihood of helping your business grow.
Going Back to Basics
The core of customer retention lies in your ability to keep customers. Make them keep coming back for more. It’s the quantification of how good you are in satisfying your customers and how loyal they are to you.
Returning customers are the best kind of customers you can ever have. This signals that they’re happy with what they’ve paid for and the service you delivered during the transaction.
The happier and more satisfied customers are, the higher their likelihood of choosing you again. There’s also a greater possibility of them recommending your brand to their family and friends.
Aside from you having to spend less on existing customers, customer retention also gives you more potential sales. Loyal customers cost less to market to–but they’re the ones who spend more on your business.
Customer Retention Tells So Much About Your Business
When you can create long-term relationships with your customers, this yields greater value and returns to your business. It’s a sign of the quality of products and services your brand offers.
Think about it. Would you keep coming back to the same business if you weren’t happy or if you didn’t like the first experience you had?
Of course not.
How great you are in retaining your customers reflects your business as a whole. This includes its mission and vision as well as the overall quality and impact of your offers.
And, most importantly, the priority it places on customer experience and satisfaction.
When you build long-lasting customer relationships, it tells the world that you’re a good business to deal with. It shows how professional and credible you are.
A loyal customer, on average, becomes 10 times more valuable than when they made their first purchase. That’s how important customer loyalty is and why you need to retain them and make them want to keep patronising your brand.
Keep in mind that in today’s society, consumers have the freedom to talk to about their customer experience. As such, news of falling short on their expectations can spread like wildfire via the internet.
Boosting Customer Retention with Additional Care Services
High customer retention rate indicates great customer experience. It’s strong evidence of the value you provide since consumers keep coming back to you.
But there’s more to retaining customers than just giving them great products and smooth transactions. There’s also how you go beyond ensuring they have great customer experience.
A good example is having an out-of-hours telephone answering service. Many people tend to forget that not all businesses have 9-5 operating hours. Although this is standard, many of them still find it frustrating if they can’t reach a business.
With an answering service to take their calls outside business hours, you can take their customer journey to a whole new level. You can wow them even more. And as a result, they’ll feel even more inclined to stick to your brand.
Ready to Raise Your Business’ Customer Retention Rate?
As you can see, the importance of customer retention is one thing you can’t afford not to focus on. It plays too many major roles.
This said, now is the best time for you to improve upon this integral aspect of your business. And that’s where we come in.
Get in touch with us now to learn more about how you can boost your organisation’s customer retention rate!