It is a well-known fact that retaining a customer is 5-20 times less expensive than getting a new customer. It is also a better way to improve your business, increase your revenue, get referrals and stay ahead of the competition.
Business put in effort to use a mix of various business strategy which include social media, PPC, brand strategy and many more in other to attract customers. So, it is only right to put in effort to keep them, after spending so much time and sometimes money. A high retention rate is the base for business success. That’s the reason why figuring out a way of retaining your customers is essential. Let’s first see what customer retention mean.
Customer retention is a business strategy, businesses take to turn customers to permanent buyers or subscribers of there products or services, in other to prevent customers from defecting. Retaining customers is more than just transactional, it's about the relationship you create with the customer, this brings about customer loyalty and brand loyalty. Having in mind that customer retention starts with the first contact the customer has with your business will help you see the goal, which is to create a lifelong relationship with the customer from the very start. The kind of relationship customer have with friends is the type they want to have with your brand. When a customer sees that your business isn’t just reliable but also authentic and your business is aware of there needs and what matters to them, they will be loyal.
IMPORTANCE OF CUSTOMER RETENTION
Customer retention comes with a lot of hard work, but the work pays off, when you know the importance of what a retention road map does to your business. Just like we said earlier, it is easier to retain a customer than having a new customer. The interesting thing about customer retention is that when you release a new product or service to the market it is 40% easier for your loyal customers to give it a try than getting new customers
BENEFITS OF CUSTOMER RETENTION
While most business spend a whole lot to acquire more customer because they have this notion that by doing this, they feel that, they can increase revenue, expand their market base, which is true. But one thing they fail to understand, is the benefit customer retention will give them, as they strive to earn an increase in revenue and expand their business. Lets outline most of the benefits;
1. Less Market Cost
The amount that is been spent on pursuing new customers can be really expensive. This cut across various marketing strategies, such as social media, SEO, email marketing, PPC, and many more. You spend less in marking your loyal customer subscribe or pay for your product and services. One thing business owners or VPs should have in mind is that repeated buyers are already comfortable and have confidence in your product or service. So prioritize marketing campaigns for your loyal customers, who show interest in your production or service. And will be more willing to purchase new and existing products or services. This does not only reduce the amount spent on advertisement but also is a way of showing the business commitment in rewarding the customer loyalty.
2. Increase Upscale and Cross Sale
This is a gold mine that many businesses are not putting effort on. It is a sad one to note, that many businesses do not do a diligent follow up after a customer makes a purchase of a product or service. Those efforts put in following up with retaining a customer, will increase the value of the current sales and thus makes the customer have a good experience of the products or services your business offers. As it been said “loyalty pays”, loyal customers have a better chance of paying or subscribing for more product or services than a new customer, bringing an increase in up-sale which increases the revenue of the business. An existing customer has a 50% chance of trying a new product than a new customer due to the trust the customer has with your brand. A loyal customer does not only have this firm believe in your product or service but also believes that your product or service are superior to competitors in the market. The customer also loves your product and service because it aligns with their needs and preference.
3. The Joy of Referral
Referral is the bonus you get for keeping a customer happy and making the customer a loyal one. When your customers are loyal to your product or service, they are more likely to give your business a free advert through word of mouth. Your loyal customer are willing to go extra, in explaining in details and try there possible best in convincing their friends and family about the benefit of using your product or service.
Another advantage of referral is that you won’t put too much intensity on selling the product or services as that has been practically been done by the referral. One thing is sure that this type of advert produces more loyal customers, since the customer start on a good review. As this will bring about reduction in cost of customer acquisition. The new customer will patronize you because they have seen how you’ve treated others.
4. Constructive Feedback
Customers feedback is essential to helping any business grow and it increase the customer experience. For this to happen, the Customer Success/Experience/Engagement manager needs to listen to the customers and endeavor to implement this feedbacks. When a business takes note of challenges their customers go through, the emotions they feel when using their product and services, the change they need to see in the product and services, the business will have loyal customers. Customers want to see themselves as kings and want to feel this sense of belonging, that they can say something and be heard. This makes them loyal to your product or Services. How do we get this customer feedbacks? Well, there are various ways to do so;
I. Sending emails to your subscribers list and asking them how they feel about the product/service or the challenges they face when using your product or service.
II. Putting up a pool on your social media account can not just help to get customer vote for an issue they face or a change they want. But can be an avenue for the customers to air their views and express how they feel about your product. Once these changes are implemented, the business will grow due to an increase in retention, also this method can be applied to other unit of your business as well.
5. Less churn Rate
Churn rate simply mean the rate at which customers discontinue to use your services or product. Sometimes it is hard to get customers through the door and it can be easy to let them out through the back door if it isn’t lock. The only way to lock it is by having a good customer retention strategy to keep the customer not just happy but loyal. When your focus on customer retention is active, the people who leave your business can reduce significantly.
There are many reasons that courses customer churn such as bad/poor customer service, poor quality of product and sometime even better offer from your competitors. But when you look at what causes the churn in your business you will now know how to improve the business and prevent the churn rate from getting high.
In Summary
Customer retention is a must for every business, no matter the success you have, you need your customers to be loyal to your product or service. Applying customer tactics, such as feedbacks and personalizing your engagement with your customer will see an increase in your customer base.