Customers are the lifeline of your business. So naturally, you make every effort to acquire more customers. While there’s nothing wrong with this approach – indeed, new customers are essential for business continuity and competitiveness – you may be making one crucial mistake.
Are you forgetting about your current customers?
Your existing customers already do business with you. You’ve won them over, and have built a solid relationship with them. In return, they reward you with their loyalty and repeat business. If you’re lucky, they prefer your offerings over your competitors and even trust you enough to bring you new business via referrals.
But how are you rewarding them?
Are you rewarding them at all?
Do you acknowledge their loyalty and advocacy?
Or are you so caught up in customer acquisition, that you forget that your best customers are already in front of you?
The Costs of Customer Retention vs Customer Acquisition
Research has shown that:
- Acquiring a new customer can cost 5X more than retaining an existing customer
- The success rate of selling to an existing customer is 60-70% and just 5-20% for a new customer
- Loyal existing customers are 5X likely to repurchase from a company, and 4X likely to provide referrals
All these facts make one fact very clear. Existing customers matter as much as – and perhaps even more than – new customers. And yet, about 44% of businesses (including Indian call centers) focus on giving royal treatment to new customers, while only 18% focus on rewarding existing customers.
Why Customer Retention Matters
“You don’t have to spend time and resources going out and finding a new client — you just have to keep the one you have happy.”
Existing customers are more likely to spend more, have a larger average order size, and give repeat business. This directly impacts your revenues, and ultimately, profitability. In fact, increasing customer retention by 5% can increase your profits by 25% to 95%.
Existing customers can also be your greatest advocates. If they’re happy, they will refer others, who in turn will bring in more business, and more profits – creating a virtuous cycle that benefits everyone.
When you can successfully retain more customers, it creates a positive reputation for your company as a reliable, trustworthy brand. In the long term, customer retention impacts your growth trajectory, since existing customers are as invested in your business’s longevity and success as you are. Current customers also require less maintenance and less marketing effort to convince that they’re better off with you, rather than without you.
For all these reasons, it’s crucial to pay more attention to customer retention. By all means, ramp up your customer acquisition activities. However, it costs 16X more to bring a new customer up to the same level as an existing one, so do make a sustained effort to keep existing customers happy and satisfied.
3 Powerful Customer Retention Strategies
- Stay in Touch
Today, business success is determined by customer experiences, not by price or quality. Deliver these experiences by communicating with them on a regular basis. If possible, talk to them 1-on-1. If this is not possible, you can still stay in touch with every customer via social media, email marketing, and content marketing. Share interesting content on your blog, send special offers and discounts, engage them with contests or quizzes, and ask for feedback through short surveys. Remember them on their birthdays, and send genuine, warm wishes for the holidays.
- Create a Loyalty Program for VIP Customers
A loyalty program for VIP customers can make a big difference to your bottom line. Create a program based on what you know about their needs and prior purchase history. As you continue working with them, gather more information to create tailored offers that keep them coming back for more. Don’t be put off by the perceived high financial outlay of such programs. The costs will be easily offset by increased customer retention, spend and loyalty.
- Ask for Referrals
Asking customers for referrals is a genuine, low-cost way to achieve both your customer retention and acquisition goals. Referral requests signal to existing customers that you care about their opinions, and would appreciate if they could put in a good word for your business. Include an attractive special offer or discount, and you will see more referrals rolling in. At the same time, new customers are more likely to trust you from the outset, since they received a referral from someone they already know and trust.
Your current customers are a goldmine of untapped opportunities and profits. By making an effort to retain them, you can ensure brand “stickiness”, and a consistent flow of revenues and profits. Repeat customers are often loyal customers who stay with your organization through both, good times and lean periods. So if you haven’t made an effort to reward, encourage and retain them yet – now is a great time to start.
- Loyal existing customers are 5X likely to repurchase from a company, and 4X likely to provide referrals.
- Existing customers give repeat business and directly impact your revenues and profitability.
- Through referrals, your existing customers bring more business and profit.
- Offer Loyalty Programmes for your existing customers depending on their needs and prior purchase history.
- Be in touch with your customers via one-on-one, social media, email marketing, and content marketing.