According to outbound marketing experts, as well as today’s inbound marketing gurus, increasing customer retention by just 5% can push profits up between 25-95%. Also, just in case you are shocked by such statistics, let us further surprise you by claiming that putting the right loyalty program in place can generate more profits than the smartest acquisition! But how and why?
Let us first put it bluntly. Even though the cost of retaining customers varies from one industry to another, yet it is an established marketing principle that customer retention is, overall, cheaper than customer acquisition. According to both established wisdom and in-depth research, it can cost up to 30 times as much to get a new customer as it does to keep an existing one.
With this in mind, we can reassure businesses that it really pays to stay very close to your customers, so you know their exact needs today and tomorrow, and to keep in continuous contact with them.
Furthermore, it always pays dividends to invest in keeping current customers happy. Therefore, you have to consider putting in place the best “customer loyalty program”, which would help you have an effective “after sales service” strategy in place. These after-sales services can include anything from offering coupons and discounts to sending out birthday emails and gifts. Provide your loyal customer with special offers that make staying worth it.
Moreover, if you pay attention to customer satisfaction, you will find out that your loyal customers tend to spend more than new customers do. So, not only is it cheaper to retain than acquire, but the return on investment (ROI) is often higher too. The reason is that existing customers must have been around long enough to trust you and your products. Chances are loyal customers tend to frequent a retailer more often and make larger and larger purchases.
It is also known statistically that 25% to 40% of the total revenues of the most stable businesses usually come from returning customers. Even better, steady customers help businesses survive lean economic times; businesses with 40% repeat customers generated nearly 50% more revenue than similar businesses with only a 10% repeat customers.
What’s more, repeat customers also tend to buy a wider range of your products and services. They know that if they adore one of your products they will likely enjoy the others.
And what about customer relations? In fact, they have a positive effect on your brand. Let us put it this way: retaining a loyal customer base is proof that you deliver a great customer service experience. Potential customers will see that you have repeat business and trust you more from the start.
When you offer a great customer experience, your fans will want to share your brand with their family, friends, and colleagues. This is the best form of brand awareness that you can receive. Great customer service is about a variety of factors from being dependable to offering fair prices.
Therefore, now you have to stop listening to the comments of your admirers, which unquestionably sound like music to your ears, and focus instead on customer feedback.
In other words, you have to forget about Shakespeare’s “to be or not to be”, and move on to “to retain or to acquire”, with the bulk of your focus on the fact that while retaining your current customers and building loyalty may take some work, but is worth every bit of the time and effort.