25 Nov 5 Reasons why Customer Retention is Important
Very often salespeople get so centred on gaining new customers that they fail to efficiently cope with the want to keep those they already have. Yet, we keep on listening to, again and again, that it’s cheaper to maintain existing customers than accumulate new ones. Allow me to remind you of simply one fact: in keeping with Marketing Metrics, the success rate of promoting to a present customer is 60-70%. This states the importance of Customer Retention as an important marketing strategy.
Customer Acquisition vs. Customer Retention
The most common mistake for companies around the market is that they think that the fact that they have a good product or service will help them with consumer retention.
And, even as this might be the case in some instances, the hard truth is that it’s merely a short-term approach. An even harder truth is that ultimately your customers might just switch to the competition.
Because if you stop trying to interact with them, your Customers start feeling that you no longer care about them.
So, what’s the outtake?
You want to maintain on attempting and earn a customer’s loyalty, consistently.
Having a powerful customer advertising method gives you the ability to pick out, tune, and promote more to the customers who’re more likely to bring you long-term and definite revenue. The businesses that “get this” consciously spend money on customer retention, due to the fact they see it as the most important sales-driving force.
Customer retention as a large revenue-driving force.
Why need to you care about existing customers and customer retention?
Every business needs new customers. Yet, the very best and most predictable supply of revenue is underneath your nose: it comes from retaining customers who already understand your company and services provided by you.
Here are five motives why you should care about present customers.
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Better conversion rate
Existing customers have already bought your product, so until that they have a bad experience, they will continue to purchase from you in the future. You’ve already established belief, confidence with your product, and even understood something about them, which makes it less complicated to discover their desires and expecting their moves. It is easier to track their wish lists and recommend them according to their personal choices.
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Less advertising
You’ll have to spend less effort and time locating new customers and convincing them to buy your product and services, saving you money. Retaining a customer only costs one-sixteenth of what it costs to gain new customers but the revenue it brings into the company is more than its worth. Moreover, an existing customer has already gained trust over you and more likely to word-to-mouth advertise your services to new potential customers.
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Room for development
You have a golden opportunity to enhance your presenting and customer satisfaction rate just with the aid of paying attention to your customers’ comments. Was your customer service accurate and sufficient? Did your product meet their expectations? Was it a great value for money? Just ask, listen, and improvise on your services. Old customers tend to give more honest feedback and ideas than new customers who are new to your products and know very little about your services.
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Higher earnings
Selling to existing customers is much less centered on cost, unlike promoting to new customers. And due to the fact that your current customers already accept your true services, it is much easier to convince them to become interested in even more of your services or products through up-selling and cross-selling. A study tells us that 80% of your company’s future revenue will come from just 20% of your present customers. This indicates the importance of customer retention.
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Lower costs
It’s going to save you quite a few cash! As little as a 5% increase in customer retention can boost a company’s profitability with as much as 75%. Though, attracting new customers is as important as retaining old customers as the new customers will eventually become your retained customers in the future. But customer retention costs less and is an investment a company should make. Customer retention not only saves your money at the present time but also increases the chances of your boosting revenue in the future. It is an investment for the longer-term.
Businesses should no longer underestimate the value of customer retention and begin being proactive in keeping their customer base. In other words, the customers you already have are your most excellent shot at maximizing your revenues and making your business more profitable.
Even though gaining new customers is a sign of business expansion, losing customers is clearly too highly-priced. Your existing customers provide you with a terrific chance to grow your profits, as they are much more likely to buy from you in the future, than the new ones.
And to be able to make it take place, you want a plan and business model to keep your relationships alive keeping in mind customer relationship management. With the help of a Customer Relationship software, you could collect and manipulate information of your customers and also manage the game around customer engagement. But it is not the only solution you can rely on. They will only provide you the information you need to react upon your relationship with your customer.
The customer retention rate of a company indicates how trustworthy and loyal the company is towards its customers. It represents the customer experience and support at a company affecting directly its brand image. New customers are very likely to trust the opinion of a person who has already used the company’s product or service more than the company’s advertisement itself. And therefore, customer retention is an important factor in gaining the loyalty of the existing customer market as they are your first tool for marketing.
The more customers you keep, the higher your profits are likely to be in the future.