Why is customer retention so important?
Neglecting existing customers in pursuit of new ones is a common mistake. While customer acquisition is important for business growth, meeting the needs of your existing customer base can be just as critical. Businesses who implement a strong customer retention strategy will reap the benefits:
Repeat customers are more profitable
In a renound study by Bain and Company, it was found that a mere 5% increase in retention rates can increase your profits by up to 95%. Compared to new customers, repeat customers tend to spend more and are more likely to try your new products. Businesses should therefore work towards building a customer base with trust and loyalty towards their brand, to see their profits increase over time.
You can save on marketing
It can cost up to 5 times more to acquire a new customer than it does to retain an existing customer. Your existing customers already know about your products and services – so why not gear efforts towards retaining them, rather than focusing solely on marketing to potential new customers?
Afterall, word-of-mouth recommendations by loyal customers can be more lucrative and credible than any marketing – according to Yotpo, 60% of loyal customers will talk about their favourite brands with people in their social circle.
Customer retention can drive customer acquisition
Attracting new customers requires continuously honing your products and services to stay one step ahead of your competitors, and loyal customers can help you achieve this by providing valuable feedback.
Talk to your existing customers – ask them what they like and dislike about your products and services, and what sort of changes could help to improve their experience with you. Acting on this invaluable feedback to meet your customers’ needs and improve your product and service is how you truly set yourself apart from your competitors and spot new opportunities for growth.
Retaining your customers using insight
So, how do you retain your ever-important existing customers? A strong customer retention strategy will involve learning more about your customers’ expectations and experiences with you. Using a deep insight into customer experience to guide your product and service, you can ensure you are keeping pace with customers’ ever-changing needs and are giving them no reason to look elsewhere. Show that you value them, and they will value you right back.
For more tips on how to maximise customer retention, read our blog: 7 ways to increase customer loyalty and retention.