Guest article provided by: new-startups.com
A great deal of emphasis is naturally placed on customer acquisition. This is important to the growth of a company and its business strategy. But equally important (if not more) is the retention of existing customers. Retaining existing companies is cheaper and more productive than searching for new ones.
Watching your mailing list swell with so many new inquiries following a product launch can be fascinating. Success seems assured, and there is a tendency to focus activities on further growth. It makes sense to continue on the roll, right?
Yes, that’s right, and while a product is hot, we want to continue growing. Imagine this growth as a stream of inquiries flowing into our bucket. We watch leads pouring into the top, but you don’t notice the hole at the bottom of the bucket by focusing only on that. Running out of this hole is a steady flow of customers who have been ignored and lost.
Every lead has cost the company money to obtain, and if those customers are cherished, they will stay with the company and repeatedly buy products. The investment made when the customer first receives will produce a far greater return, and keeping a customer is much cheaper than getting a new one.
Why Customer Retention Is So Important
Customer retention looks at the broader picture. It does not just focus on how great the company is at gaining new customers. It also includes how well the company is keeping its existing ones.
Existing customers both spend more and buy more frequently than new ones. Increase your customer retention by as little as 5%, and it is going to have an impact of between 25-95%. (1)
According to Statista, the average retention rate of the following industries is as follows: (2)
- Retail 63%
- Banking 75%
- Telecoms 78%
- IT 81%
- Insurance 83%
- Professional Services 84%
- Media 84%
Examples of Strategies for Customer Retention
Most large companies have a team that handles customer retention. They do this by contacting customers once the purchases have taken place.
The fact that you remember the customer typically will impact them and will encourage them to buy again in the future. This team will maintain a relationship with the customer for as long as necessary to stay with the company.
Ask for Feedback. Ask the customer for input, and then instead of just filing it away, act upon it.
It is known that customers remember the terrible things far longer than they remember the good experiences.
If something bad happens, apologize and fix it. If there is a good experience, make it memorable by sharing that success with the customer.
There is a danger that the relationship with the customer falls into a routine. You know what they want, and you see that they get it. However, a customer will be particularly impressed if they see you trying to move forward to take customer satisfaction to a new level.
These are just examples of strategies that you can use. Successful companies are always looking for new ways to satisfy and please existing customers.