It’s a known fact that it costs much more to acquire new customers than to retain old ones. In fact, the cost of acquiring a new customer is seven times more than the cost of retaining an old one. Moreover, repeat customers spend on average 33% more than new customers! In that case, customer retention is the biggest asset for your company. It helps increase the profitability of your business. It’s pertinent to build lasting relationship with your customers by providing personalized quality services, rewarding loyal customers and encouraging feedback.
Customer retention increases your customer lifetime value and boosts your bottom line. Customer retention is the practice of keeping the existing customers by giving them the kind of product and service they want. The more customer retention would mean less churn and less churn would mean more success for your business. But we are in a world where choice is complicated and easily available, and customer behaviour is changing drastically. It’s more important than ever to retain and keep your customers happy by constantly adapting to their needs. Customers benefit enormously from a customer retention agenda, it’s the holy grail of brands now.
According to a study, product, quality, value for money and consistency are some key drivers for customer loyalty and retention. Case in point, Air Vistara in India is enticing the profitable frequent flyers of competition by automatically allocating Elite Tier status for people with similar status on rival airlines. At the other end of the spectrum however, one of India’s oldest loyalty programmes – Shoppers Stop First Citizen launched in 1994 – today by some estimates drives more than 70 per cent of business and provides two decades of loyalty data for analytical interventions.
Why is customer retention significant for your business?
• For most obvious reason that loyal customers will come back for more. They don’t buy only once. They purchase more regularly and in great quantities. You can offer exciting discounts to your most valued customers and encourage repeat business. Something like a 10% discount after a certain number of purchases. Not only is loyalty cheaper, it has better returns. According to reports, engaged consumers buy 90% more frequently, spend 60% more per transaction and are five times more likely to stick with you in the future. On average, they’re delivering 23% more revenue and profitability over the average customer.
• Retained customers become your brand evangelists and spread positive word about your brand to friends and family. This reduces your marketing expenses. And customers give a lot of weightage to opinions of people close to them. Word of mouth referral is a strong indicator that your brand is on the cusp of greater growth.
• Engaged customers provide more feedback which can be further analysed to improve your products and services. Feedback is critical to the success of your brand.
Customer retention strategies that always work:
• Reward your most profitable customer with a number of incentives to further strengthen their loyalty. Specially because these customers go the extra mile to recommend your product and services. So, they must be rewarded for their effort. Pay attention and acknowledge the effort and give an instant gratification.
• Build rapport with a customer loyalty program and build them the right way. Make it simple and easy to access. Besides, loyalty programs can also more often than not, go beyond discounts and become a channel for customers to communicate with you and get educated.
• Give your customers convenience like Starbucks. Its Mobile order and Pay feature within their app is a super successful feature where customers can simply order their coffee even before they arrive at the store. The more accessible your products and services are, your customer are going to love you for that. It’s also important to identify the desires and customer behaviour to create tools and systems that empower them.
• Have customer satisfaction surveys. This lets your customers voice out their opinions and lets you listen to what they have to say so that you can make the necessary amendments in your products and services. It’s a great tool to identify unhappy customers before the churn. It’s important to ask the right questions in order to gain insights you can execute on. You can then use this information to make better business decisions and retain customers.
Gaining new customers should also definitely must be on your cards and is a definitive sign of business growth but it’s too expensive specially during economic downturns. Hence retaining customers is a great way to increase order frequencies, increase customer lifetime value and cost revenue growth.
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