Did you know that increasing your customer retention rates by just 5% can increase your profits between 25-95%? Relationships generate bigger profits. It is true, customer loyalty has a valuable impact on your bottom line. Here are the top three benefits of customer retention.
1.The Costs of Retaining Old Customers is Low
The cost of retaining customers will vary by industry, but the research is clear that retention is cheaper than acquisition.
Mike Johnston of The Chartered Institute of Marketing:
"Research shows that it can cost up to 30 times as much to get a new customer as it does to keep an existing one. It pays to stay very close to your customers, so you know their exact needs, today and tomorrow.” LinkedIn Pulse
A lower investment means that you can keep more money in your pocket or to reinvest back in your business where needed.
Make sure you have an effective “after sales service” strategy in place. After sales services can include anything from offering coupons and discounts to sending out birthday emails and gifts. Provide your loyal customer special offers that make staying worth it.
2.Loyal Customers Provide a Boost In Sales
Not only is it cheaper to retain than acquire, but the return on investment (ROI) is often higher too. Loyal customers tend to spend more than new customers. They have been around long enough to trust you and your products and services.
Loyal customers tend to frequent a retailer more often and also make larger and larger purchases. This is apparent even in harder economic times, according to Kissmetrics and SumAll:
“25% to 40% of the total revenues of the most stable businesses in the SumAll network come from returning customers. Even better, steady customers help businesses weather lean economic times; businesses with 40% repeat customers generated nearly 50% more revenue than similar businesses with only a 10% repeat customers.”
Repeat customers also tend to buy a wider range of your products and service packages. They know that if they adore one of your products they will likely enjoy the others.
Make sure you are offering your customers an optimal buying experience. Package your products and/or services exceptionally well, always deliver on your promises, and offer quality.
3. Long-Term Customer Relations Have a Positive Effect on Your Brand
Retaining a loyal customer base is proof that you deliver a great customer service experience. Potential customers will see that you have repeat business and trust you more from the start. Word-of-mouth advertising is still the most powerful form.
When you offer a great customer experience, your fans will want to share your brand with their family, friends, and colleagues. This is the best form of brand awareness that you can receive. Great customer service is about a variety of factors from being dependable to offering fair prices. But, most of all, realizing that everyone on your team is in public relations.
“Your whole company is in customer service - you realize that just like everyone is in PR, so are they vested in the customer experience.” Fast Company
Invest in customer service. From training your staff to providing an easy method for customers to access support, put effort into service. Provide as much information as you can in an easy to obtain manner.
The bottom line of your bottom line? Retaining your current customers and building loyalty does take some work, but is worth every bit of the time and effort investment. Set yourself up for success by looking at the big picture.