Getting a customer to successfully complete a purchase from you is a battle only half won. The true challenge is retaining old customers, so they continue to buy from you and help you get some new customers in the process through vouching for your loyalty. Additionally, securing new customers is ten-fold times more costly than retaining an existing one.
Customer retention, hence, will not only save you money but also let you hold your customers for a prolonged period, so they spend more at your business over their lifetime. Do not confuse customer retention and customer acquisition; customer retention is the exact opposite of customer acquisition. Customer acquisition, which is the process of gaining new customers, will help you grow your business, but customer retention, which is the ability to engage with old customers repeatedly, will help you sustain your business.
If you are still confused about what customer retention really is, then understand it this way. Suppose your company is a bucket, and your customers are the water filling the bucket. If you want the water to fill the bucket completely, you must ensure there are no holes in the bucket, and the water is continuously running.
If there are holes in the bucket, no matter how hard you try, even with continuous running water, you will not be able to fill the bucket. Therefore, along with acquiring new customers, i.e., running water, you must retain your old customers, i.e., patch water holes in the bucket.
“Customer retention is the best indicator of how well a company is doing as a business. Retention drives acquisition by increasing the total amount of money a customer gives you; therefore, a company can have higher customer acquisition costs.” Additionally, great retention will lead to more opportunities to increase revenue from a specific customer.
Mentioned below are the top benefits of customer retention to help you understand why customer retention is important in today’s excessively competitive marketplace.
Loyal customers do not only provide better returns, but they also prove to be cheaper in the long run. According to Bruno Estrella – a well-known growth practitioner, loyal customers stick around even if prices have been hiked as compared to a new one, who will continue looking for cheaper options. Additionally, through word of mouth publicity, old customers also bring with them the possibility of new potential customers who have a high probability of sticking around.
Existing customers are 50% more likely to try new products as compared to new ones because of their faith in your company and the efficiency of your other products. Upon liking or disliking the new product, they will also help you with candid feedback, which will be a great opportunity for you to improvise accordingly.
For people to praise your company and recommend your product to others, they need to buy from you more than once. If your services and products are good, if the customer is coming back to buy from you, that means customers like your company, which would then help you build a positive brand image. When the customer recommends you to others, he/she will most probably specify why you are worth it.
Hence, through focusing on customer retention, you will automatically let your brand stand out from the others in the crowd. Do not make the mistake many companies make, i.e., only focussing on customer acquisition.
In this fast-paced world, nobody likes being reached out to for marketing and promotion offers, except for your old customers. Due to the loyalty they share with you, they will most likely not mind taking out time from their busy schedule and appreciate your marketing and promotional offers. They might also react positively to the promotional offer, which can then turn out to be a great growth opportunity for you.
Unlike new customers, old customers do not need to repeatedly encounter new marketing and promotional content because they already have faith in your company and product. If you are running low on funds, you can cut back on promotional material because old customers can give you business both with and without the marketing content.
Designing and planning a promotional and marketing campaign can be a very challenging and lengthy task. Accumulating data from scratch will take up a lot of time and effort. This is when purchase data of old customers can come in healthy.
You will have valid data proving your claims, and you will not have to engage in guesswork. You can also ask your old customers to fill your survey and feedback forms. They will be willing to take out time to do the same as opposed to a new customer who might see it as a waste of time.
Now that you have understood the need to retain old customers, you might also wonder what some ways are to do the same. Continue reading to know some easy strategies to retain customers.
Your company cannot solely survive on customer acquisition. Customer retention is a vital aspect that will help you sustain in the competitive marketplace for a long. Hence, work relentlessly to retain your old customers, build a strong rapport with them, and provide them exactly what they need.
Old customers will enhance your brand image with repeated buying frequency, positive publicity, and cost-effective revenue growth. It can seem to be a daunting process but with hard work and determination; you can make this happen.