Customer retention is a hot topic, and you are probably already making an effort to keep hold of customers and nurture them into long-term clients. But what exactly is the point of all of this? Why bother with keeping customers when you can just find new ones?
Let’s take a look at the key benefits of retaining your customers in the long term. You’re likely already aware of some of these, but others may surprise you.
Keeping costs low is one of the cornerstones of doing business, no matter what sector you operate in. If you’re spending too much on operations, staying profitable is difficult; it’s as simple as that. Fortunately, focusing on customer retention provides a great solution to spiralling costs.
While putting an actual dollar amount on customer retention vs. customer acquisition is hard, the latter will probably be cheaper. As many as 82% of companies say it costs less to retain a customer than to convert a new one. If you’re looking to meaningfully reduce your costs and keep your overheads low, this is a great place to start.
Better Marketing ROI
You have to spend money to make money, so the old adage goes. Yes, this is probably true in most cases, but you still want to make sure you’re getting the best from all that investment. So, if you’re spending money on bringing customers in, you want to ensure they stick around.
This makes customer retention crucial as you boost your marketing ROI. It makes much more sense to invest in acquiring a customer who will remain with your organisation than one who will just make one or two purchases and then leave for a competitor…
Greater Market Share
…which brings us neatly to our next point: market share. When customers leave your organisation, where do they go? Here’s a clue – they don’t simply disappear. Every customer your business loses is potentially a customer gained for your competitors.
By working hard to keep hold of your customers, you are not only growing your own client base. You are reducing the number of leads and prospects your competitors can target too. Better customer retention translates directly to a greater market share.
Increased Customer Value
Who is worth more to your business: Is it the customer who makes two purchases worth $100 or $200 each and then heads elsewhere? Or is it the one that makes a $30 purchase every couple of months for the next ten years? If you’ve got a long-term outlook, it’s probably the second one.
A strong customer retention strategy gives you the op
portunity to get more from each customer. The longer they stay with you, the more they are likely to spend. In addition to this, customers will grow to trust you over time and may feel more comfortable in making big-ticket purchases that really boost your revenue.
“Easy come, easy go” is a risky strategy when it comes to acquiring customers. While this might work during growth periods, when there is a seemingly endless stream of customers looking for goods and services in your niche, it can quickly go bad if that stream starts to dry up. Things get much more stable if you have a reliable base of customers that grows steadily over the long term.
With this foundation, you’ll be able to plan for the future. You’ll have more confidence in your operations, so you can enhance the service you provide to these valuable customers. In turn, this should make your business all the more attractive to these customers, and retention should become even easier.
Improved Sales and Acquisitions
Yes, that’s right – a strong customer retention strategy can help you convert leads and bring in more clients. Here’s how this works:
- Reputation – Over time, leads in your field will get to know about what you offer to your customers, and they’ll want to join the party.
- Direct referrals – If your customers tell their friends and family about these offerings, this is even better. 84% of shoppers say they have bought a product because of a referral.
- Shifts in philosophy – When you get better at taking care of your existing customers, you get better at taking care of your audience in general. This shift in philosophy makes you more in tune with the needs of your customers on a wide scale, and you’ll find it easier to convert new leads.
Do Customer Retention and Acquisition the Right Way
If you want to learn more about how you can optimise your customer retention and acquisition strategies, reach out to our team. Schedule your consultation today, and get your Free Marketing Plan from our experts.