Most businesses put a lot of time and money into gaining new customers. Yet the most crucial source of revenue for most companies is the customer base that they already have. So why do customers leave, and what can you do about it? In this article, learn the hows and whys of customer retention with key factors to increase your company’s benefits and profits.
Why Is Customer Retention Important?
On average, retaining an existing customer and leading them back towards a sale is much cheaper than recruiting new ones, which is around 7x more expensive. Yet an Econsultancy report shows that retention investment is decreasing while the focus on keeping customers is increasing.
This makes very little economic sense. An existing customer trusts your company and the buying process and is much more likely to buy again, whether a repeat purchase or an entirely different product or service.
Marketing to existing customers also requires less effort. Marketing Metrics suggest that selling to an existing customer is around 50% easier. They don’t need to be convinced about the service and are even less concerned about costs.
Therefore, key factors like higher customer retention rates increase sales and benefits profits. It would help if you were dedicating a decent chunk of your marketing budget to creating a customer retention strategy.
Why Do Customers Usually Leave?
Customers have more choices than ever, but most leave because they feel your business doesn’t care about them.
There are many reasons why a customer can stop buying from your company. They can be persuaded to buy from a competitor, but this makes up only a tiny percentage of those who leave, as does direct dissatisfaction with your business.
The most cited reason customers leave is their belief that you don’t care about them.
Suppose a customer has a bad experience with your customer service department or gets the message that their custom doesn’t matter to you due to a lack of communication or effort. In that case, they can find somewhere else to shop.
There’s plenty of choice in the marketplace. Customer retention is based on loyalty and trust. You have to prove that you value your customers and that you would do anything to keep them on your side
Retaining Customers
As we have seen, excellent customer service is the first and most crucial step to customer retention. This means being available when customers need to talk to you, offering a service that meets their expectations, and responding to any problems well.
Be there for your customer, and they will be there for you. Do not promise what you can’t deliver – instead, overdeliver on your promises. You can also use several customer-retention strategies to keep your customer happy. Which one(s) you use will depend on your business:
Customer Retention Strategies
VIP Reward Schemes One of the best ways to retain customers is to offer them constant rewards for their purchases. Every time they spend, they get something in return. The supermarkets use this approach with their loyalty cards, which provide cashback and vouchers for shopping.
Some popular online poker sites use a VIP reward scheme with a tiered points system so that everyone gets rewards, but the top players get more.
Consistent Communication – Be honest and open with your customer, yet be consistent. You don’t have to push a hard sell every time you reach out, and you shouldn’t.
Say hello when a customer hasn’t interacted with your products recently, or thank you when they purchase. Use personalized follow-ups to build relationships and show you’re in touch with your customer’s needs. Please take advantage of blog and social media campaigns to keep it personal with your audience.
Promotions and Targeted Offers
Customers are always interested in getting more for their money. So regular promotions and special offers should keep them interested in your business and tempted to purchase. You can use targeted offers to make this more appealing to your customers.
For example, if they have been browsing a specific product category a lot. You could offer a discount on the products they have shown interest in. Finally, a great customer retention strategy.
Gain Feedback – Complaints are very valuable. They tell you where you are going wrong and highlight when customers are probably fleeing your business.
Please take note of any feedback you gain, and make it easy for customers to give feedback whenever they have paid for a product or service. Consider sending out occasional feedback forms to gain a general sense of your customer and their needs. Most importantly, listen and respond.
Concluding
We hope that this article on knowing the hows and whys of customer retention with key factors to increase your company’s benefits and profits has helped you. Leave us your comment!
