Customer retention

Increase your retention of current customers.

Firstly let us have a look at some statistics that give us an insight into why customer retention is key in running a successful business.

 

 

 

 

 

  • Acquiring new customers can cost five times more than satisfying and retaining current customers
  • A 2% increase in customer retention has the same effect on profits as cutting costs by 10%
  • The average company loses 10% of its customers each year
  • A 5% reduction in customer defection rate can increase profits by 25-125%, depending on the industry
  • The customer profitability rate tends to increase over the life of a retained customer
  • In surveys 68% of people said the reason they were no longer a customer of a company was because of an attitude of indifference towards them.

    • Think about it, how much have you invested in Sales and marketing? I can imagine it’s a large part of your overall budget. You don’t spend all that money to gain a client and then see them walk away. It costs far less to keep those clients happy and to nurture them and sell to them time and time again.

    You can work on your customer retention policy at any time, and marketing campaigns will be a significant part of your strategy. You could decide to increase your focus on retention when you’re writing your annual marketing plan. But if you’re losing customers already, focus your energy on retention right now.

    Determine your retention strategy
    Your retention strategy is driven by what your business does and how it is focussed. For example, if your business is focussed on customer intimacy, your customers are counting on great service and you need to ensure they get this. If they’re buying from you because your cheap then you’ll usually focus more on automating services to minimize costs. In some industries that are highly focussed on customer intimacy then the original sales rep may be the best person to manage an existing client if for example, the account may require ongoing selling.

    Market to existing customers
    Put as much effort into your current customer campaigns as you do the rest of your marketing programs. This is an audience you know, you know what they like and what they buy so you can target your marketing accordingly. Grab their attention, focus on the offer, measure your results. Use your campaigns to nurture your customer relationships, encourage them to buy again, expand your relationships by cross-selling, up-selling and even ask for referrals. If they have had a good experience dealing with your company they will recommend you to others.

    Measure purchase intent and loyalty, not “satisfaction”
    Your existing customers have a wealth of knowledge about your products and service, use it! Ask for customer feedback. Ask things like, whether they intend to buy again and why or why not. Ask what three things you can improve and whether they’ll provide referrals. These questions provide actionable insights.
    If you can refine and improve your customer retention strategy and execution then this could deliver the highest ROI of all your marketing programs.