Customer retention refers to the act of keeping the customers you have already attracted to your business. On average, attracting a new customer costs as much as thirty times more than it does to retain an existing one, depending on the industry, and retaining happy customers can lead to huge profits as well. If you have not really considered the benefits of customer retention before, here are four reasons why it is so important in business.
1. Save Money on Marketing
As we mentioned above, the key benefit of customer retention is the amount of money you will save. Once a customer has already made a purchase with you, and had a good experience, it is a lot easier to encourage them to buy from you again than it is to seek out, attract, and encourage a new customer to buy. In addition, long term customers are also familiar with your products, so you don’t need to spend as much money on customer support, which is another bonus.
2. It Reduces Strain on In-House Teams
When running a marketing strategy, it is important that your whole team understands what is expected of them and how to achieve the targets that you have set. However, with marketing becoming so competitive, a lot of businesses now look to the new on-demand freelance economyto help them with the process. While this can be a good thing, and be more successful than doing things in house, it can still be stressful. Customer retention greatly reduces this strain, while keeping profit margins high.
3. They’ll Provide Valuable Feedback
Long term customers understand your company, and will have things that they love and things that they, well, do not. If you ask for their feedback, they are likely to give you a very honest answer, and this can help you to improve certain things that could be better. You may even be given good feedback on things that you had previously overlooked! In addition, companies that ask for feedback and then implement it are likely to make their customers even more loyal than they already are. Everyone loves a company that listens to their concerns and tries to find a way to make things better.
4. They Provide Free Advertising
A lot of people look for reviews about a company before deciding to make a purchase from them; this is especially true for smaller businesses that they may not have heard of before. When you have a loyal customer, they are likely to tell their friends, family, and other acquaintances about you, and as customers respect the feelings of those close to them, this can be an easy way to convert new potential leads into buying customers. Plus, statistics have shown than 92% of people trust the opinions of those closest to them than any other type of marketing!
As you can see from the points above, customer retention is a key part of success in business. If you have not been paying close attention to this, now is the time to make a change.