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In the world of business, there are plenty of bridges to cross and battles to fight. The crowded marketspace has only become more crowded over the past few years making it harder for brands and easier for customers with the range of choices at their disposal. Brands are left to ask: How do we attract more customers? How do we make sure these new customers like us enough to come back again? How can we then guarantee them an experience that will motivate them to keep coming back? How much do we spend on marketing, therefor? What about maintaining the existing customer base? All of this boils down to Customer Retention.
How important is retaining customers today? Well, the decision is simple when the stats are in your favor.
“According to the book Marketing Metrics, businesses have a 60 to 70% chance of selling to an existing customer while the probability of selling to a new prospect is only 5% to 20%.”
Despite all the research and studies that show us just how impactful Customer Retention is on business (ROI), it has yet to attain the status of “high business priority”. There is a serious gap in information in this regard which only data can fill. Just knowing what customer retention is won’t help. Company strategies and policies should be created with the vision of improving retention and loyalty. The experience you deliver in your stores, on your website, mobile app, etc, should all build the customer’s affinity towards your brand. Given the plethora of choices that customers have today, unless there’s something about your brand that makes the customer want to come back again – it’s safe to say that you’ve lost the customer!
Here, we’ve compiled a list of compelling stats that should explain to you just how much customer loyalty and customer retention is critical to your business.
The biggest ROI of investing in Customer Retention is that it helps you reduce costs. Loyal customers also tend to spend more and do not need to be persuaded much to revisit your brand.
A 2% increase in customer retention has the same effect as decreasing costs by 10% (Here)
Retaining customers has a ripple effect on your business. Repeat customers spread positive word-of-mouth about your brand and this means you no longer need to depend and spend heavily on marketing. Trust your most loyal customers to do the job for you! They will voluntarily share their experiences with their peers and bring in more new customers, or should I say, more revenue.
84% of consumers say they either completely or somewhat trust recommendations from family, colleagues, and friends about products and services – making these recommendations the highest ranked source for trustworthiness. (Nielson)
I would have boldly stated before that retaining customers is a mountainous task. But, it’s easier that acquiring new customers. It takes a lot more effort to judge and understand the expectations and aspirations of a customer who has walked into your store for the first time than it is to understand an existing customer and win over their trust.
Acquiring new customers is anywhere from 5 to 25 times more expensive than retaining new ones, depending on your industry. (Source)
While loyal customers spend more and are also less price sensitive, they also don’t defect easily to competition. Even if your brand makes a mistake, these customers would empathize with you and rather support you during the hard times. So, Customer Retention, in addition to reducing costs, also builds a fierce fan base for you, placing you high on the pecking order ahead of other competitors.
Research by Rosetta Consulting, for example, found that engaged customers are five times more likely to buy only from the same brand in the future.
A lot of businesses today brainstorm customer acquisition strategies and invest way too much time and money in it thinking that is the sure-shot way to boost profits. Instead, they should be looking at the other end – Customer Retention. Not only are the chances of upselling higher in case of a loyal customer but the cost involved in selling to loyalists is lesser and these customers are less sensitive to price! Acquiring new customers is, no doubt, essential to the growth of your business but if you can support that by bolstering your existing customer base, you have a win-win right there!
A 5% increase in customer retention increases business profits by 25%-95%. (Source)
Customer retention is an untapped treasure trove that requires your immediate strategic intelligence. You can tap into this by investing in a Customer Experience platform that allows you to track and improve customer experience. Get in touch with us to understand how CloudCherry can help you retain more customers so your business profits can soar high.