Why Customer Retention is the Fuel to Skyrocket Your Business to New Heights
Before we get started, let’s point out the main reason I need you to listen very closely and not just click out of this email. According to a study from Harvard Business School, increasing customer retention rates by just 5% increases profits by 25% to 95%. Interested? I’ll start with the basics.
What is customer retention?
Your customer retention rate is how well you keep customers over time. A low retention rate has been compared to filling up a cup with holes in the bottom. I suppose you could keep filling the cup, but I strongly suggest determining what is causing those holes and decide how to repair them. On average, it costs eight times more to acquire a new customer than it does to retain a current one. If that doesn’t convince you, repeat customers typically spend 67% more than new ones.
It is easy to think that if your product or service is good enough your customer will remain loyal. While that can be true in some cases, we are seeing more often than not that customers are leaving a business with a good product simply because they feel the business doesn’t care about them on a personal level. Shown below are the top four reasons why customers leave a company.
How do you show that you care about your customers?
- Send out a PRINTED monthly/bimonthly newsletter—this is something we strongly believe in and practice. Not only are you connecting with your customers and making it easier for them to remember your name, but you are also fostering a relationship by sending a tactile piece that your customer can thumb through, save, or pass along to a friend. Email isn’t taken as seriously and more likely to end up in a virtual wastebasket. Get a free customer retention kit here.
- Target customers with special offers—take advantage of the information you collect about your customers. Create profiles of their likes, dislikes, and common orders to determine what offers they would be most interested in and segment with campaigns tailored to that profile and watch your sales and retention rates soar! An easy way to keep up with these segments is to use a CRM to create drip campaigns that move along the buyer’s journey with your customer.
- Reward your best customers—do you know which customers generate the most revenue for you? Or who is referring the most new customers? It’s time to find out and give them a reason to continue being an advocate for your business. Reward those customers with discounts, free products, or social shout-outs.
- Personalized follow-ups—another favorite of mine is a thank-you card after every job. It is a simple touch that reminds your customers that you care about them on a deeper level. It also builds a relationship and makes certain that you aren’t losing customers because they think you don’t care.
Crucial Customer Retention Stats:
- Affordability: It’s 5x to 25x more expensive to acquire a new customer than it is to retain an existing one.
- ROI: A 5% increase in customer retention can increase company revenue by 25% to 95%.
- Loyalty: Retained customers buy more often and spend more than newer customers. They’ve learned the value of a product or service and keep coming back, again and again.
- Referrals: Satisfied, loyal customers are more likely to sing a company’s praises and refer their friends and family—bringing in new customers free of charge.
Before you spend another dollar on acquiring a new customer, take a look at your retention rates and show your current customers a little extra love. Not quite sure how to get started? We would love to help! Send us an email at [email protected] today.Thanks for reading, and until next time, have a blast in your business!