What Is Customer Retention?
The average business loses around 20 percent of its customers annually simply by failing to attend to customer relationships. In some industries, this leakage is as high as 80 percent. To prevent this, one should understand and implement Customer retention. Customer retention is the strategy a business uses to increase the number of repeat customers and increase the profitability of each existing customer. The easiest way to grow your customers is to not lose them.
How To Improve Customer Retention?
Customer retention is important for any business to run smoothly, one cannot just forget about their old customers and run behind the new ones. Here are a few strategies to improve your customer retention...
Most businesses work very hard initially to build customer relationships by investing time, money, and effort. But as time passes, they let the relationships go unattended and thus the customers lose interest and they leave. It is important to not leave the customers on hold or ignore their feedback. Once you stop the leakage, it’s often possible to double or triple your growth rate because you’re no longer forced to make up lost ground just to stand still.
Sell And Sell Again
Your selling has actually only just begun when someone makes that initial purchase decision. So many people do an excellent job of making the initial sale, then drop the ball, ignoring the customer, while they chase more business. Your need to strike an iron when it is hot, which means one should lock in the sale and repeat business that will flow from it to allay your customers’ fears and demonstrate by your actions that you really care. You should thank them and remind them again why they’ve made the right decision to deal with you and put a system in place to sell to them again, and again, constantly proving that they made the right decision.
Approach Your Old Customer
There’s little point in dedicating massive resources to generating new customers when 25-60% of your dormant customers will be receptive to your attempts to regenerate their business if you approach them the right way, with the right offer (source). Approaching customers who already know you or made a purchase from you is the easiest as well as the quickest way to increase your sales. This will improve your sales and also help you to keep in touch with your existing customers. Re-contacting and reminding them of your existence, finding out why they’re no longer buying, overcoming their objections, and demonstrating that you still value and respect them will usually result in tremendous sales and drastically increase revenues in a few days and will also lead you to some of your best and most loyal customers.
Frequent Communications Calendar
You can avoid losing your customers by building relationships and keeping in touch with them through different calendars of communication. It is a programmed sequence of letters, events, phone calls, thank you’s, special offers, follow-ups, and cards or notes with a personal touch, etc. this not only makes them feel special but also makes them feel valued and important. this helps to acknowledge them, keeps them informed, asks for post-sales doubts, and makes them a part of your business so that they come again and again.
Extraordinary Customer Service
There should be a never-ending pursuit of excellence to keep your customers so satisfied that they tell others how well they were treated when doing business with you. The product or service you deliver into the realm of the extraordinary by delivering higher than expected levels of service to each and every customer. Most importantly it is the dedication to customer satisfaction by every employee providing immediate response; going above and beyond the call of duty; consistent on-time delivery; delivering what you promise before and after the sale; a zero-defects and error-free-delivery process; and recruiting outstanding people to deliver your customer service. Extraordinary service builds fortunes in repeat customers, whereas poor service will automatically drive your customers to your competition.
Benefits Of Customer Retention
Saves Money On Marketing
it costs significantly more to acquire a new customer than it does to retain an existing one. So save your money and reduce your marketing expenses by keeping your old customers who are already familiar with your products and services. When you are familiarized with your products and services, your business will need to spend less time on customer support.
Loyal customers will always use your business regularly for purchases and tend to spend more money. Existing customers are 3 to 10x more likely to buy than a new lead. They are 50% more likely to buy new products and spend 33% more than new customers(source). A valued customer trusts your business and believes that you offer a superior service compared to competitors. They also believe that your company listens to their needs and requests and it is important to do that. Pay attention to which brands, products, and purchases the customer prefers, as they are more likely to make additional purchases at your business.
Word-of-mouth is the most cost-effective advertising you can do that only comes from your loyal and happy customers. Repeated customers are more likely to tell their friends and family about your business and its products, and customers respect the opinion of those close to them. Customers are happy to tell people about excellent service they received or a product that they enjoyed.
Just look at some of the numbers:
- 49% of U.S. consumers say friends and family are their top sources of brand awareness.
- People who are referred by a friend are 4x more likely to buy from a business, and one offline word-of-mouth impression drives sales at least 5x more than a paid impression.
- 92% of people trust recommendations from family and friends more than all other forms of marketing. A successfully retained customer is much more likely to refer other customers. These referees cost less to acquire and have a higher lifetime value than customers gained from other ways.
97% of consumers said they are somewhat likely to become more loyal to a company that implements their feedback, while 55% of consumers said they are not likely to continue being a customer of a company that ignores their feedback. Loyal customers provide valuable feedback, and it’s important that you listen. How can you improve your business if you are only dealing with new customers? Customers who make frequent purchases from your business will know which areas of your business could be improved. Ask your repeat customers how your business can serve them better. This will increase the opportunities that you may have overlooked.
- Customer Retention