Customers are very important to businesses, even more so the loyal ones. All businesses should strive to gain a loyal following from their customers. Having loyal customers is more profitable and businesses can lose $1.6 trillion per year when customers move away from them.
Just how important is customer retention? Consider these stats:
It’s easier to sell to existing customers:
- The probability of selling to an existing customer is 60-70 percent. The probability of selling to a new prospect is 5-20 percent.
- 65 percent of a company’s business comes from existing customers.
Customer retention impacts your cost of sales:
- It costs 5 percent more to acquire a new customer than it does to keep a current one.
- It costs 16x more to bring a new customer up to the same level as a current one.
- 82 percent of companies agree that retention is cheaper to execute than acquisition.
- A mere two percent increase in customer retention can lower costs by as much as 10 percent.
It makes most sense for your bottom line:
- 80 percent of your future profits will come from just 20 percent of your existing customers.
- The average repeat customer spends 67 percent more in months 31-36 of their relationship with a business than they do in months 0-6.
- A five percent increase in customer retention can lead to an increase in profits of between 25 and 95 percent.
- Repeat customers spend 33 percent more than new customers.
- A 10 percent increase in customer retention levels results in a 30 percent increase in the value of the company.
- A mere two percent increase in customer retention can lower costs by as much as 10 percent.
So how do you increase your customer retention rate?
Studies show that 47 percent of customers surveyed have switched companies after a single instance of poor customer service and that a customer who is “totally satisfied” delivers 2.6 times as much revenue as one who is “somewhat satisfied.” That’s how important customer service is.
Work to meet and exceed your customers’ needs.
2. Extend customer service until after the sale
Most companies offer excellent customer service before and during a sale but fail to deliver on the same level of customer service after the sale. This is a missed opportunity, according to Amit Sharma. Sharma, who proposed the Actual Moment of Truth, says that the gap or moment after purchase is the perfect opportunity to engage a customer and turn him from a one-time buyer into a lifetime advocate.
Create new experiences for a buyer post-purchase: send them content relevant to their purchase. Call them to get feedback or updates, and address all feedback—the positive and especially the negative.
Make sure to create positive experiences for your customers before, during, and after a sale.
3. Do a regular sales funnel analysis to address low conversion or churn rates
Prevention is better than cure. By doing a sales funnel check you can see where your prospects are dropping off or leaving the buying process. This is your churn rate.
Lowering your customer churn rate by five percent can increase your profitability by 25 to 125 percent. So fix the issues early on to avoid having customers dropping out of the pipeline.
4. Monitor existing client base
Using your CRM database, you can also monitor current customers to see which ones haven’t re-purchased. Your database shows you all the sales made every month so you will see which customers have not made a new purchase in the last months. This means that it’s time to re-engage those customers. You don’t want them leaving or moving to a new supplier.
5. Reward loyalty
Studies show that six customers out of 10 cite surprise rewards as a reason they stay loyal to a brand. Take it a notch higher with a personalized reward which 56% of consumers say improve their estimation of a brand. Loyalty programs are also a good customer retention strategy.
You reward can be a discount or an add-on. We suggest that you personalize the reward by choosing something that makes most sense to the client. If the client can benefit from an upsell, maybe give a big discount on that upsell. (It’s a win-win for you and for the client.) Sometimes a reward can also be an actual gift, which any client will surely appreciate.
6. Take note of key accounts
These are the accounts that proved to be most profitable for your business. You would also want to reward them to keep these clients happy. Not only are you retaining a customer; you’re retaining a valuable customer.
7. Always check in
Make sure you’re updated on how the customer is faring using your product or service. Regularly check in with them. The check-ins don’t have to be all business: treating them out to lunch or coffee or inviting them to a company function is a nice, personal approach to building a genuine work relationship with them.
8. Make them feel part of your organization
Get their feedback on your product or service; ask for their ideas, suggestions, or recommendations. Make them feel like their input is invaluable and that they’re part of the company’s decision-making process.
9. Be proactive in responding and listening
Make sure you and customer service and/or support are always accessible. Valued customers must have a direct line to you. Then be proactive in responding to every inquiry or concern. And make sure to quickly resolve issues, and offer resolution and compensation for the inconvenience. Studies say that more than half of customers who complained about customer service continued to do business with the company after being offered some kind of compensation, such as a discount.
Crucial to being responsive is being an active listener. So really listen to what your customers are saying.
10. Always deliver personalized customer experiences
Humanize every interaction. Everything you will deliver to your customer—whether it’s a simple message or a piece of content, or assistance to an inquiry or a concern, or a small token of appreciation—should be customized to what he wants and needs. Every customer responds very well to personalized service and will stay with a supplier who provides him that.
Get to know your customers well so you can service them well. Cultivate a sincere yet professional relationship with them. You can also analyze their behavior to see their characteristics, purchase history, buying patterns, etc. That is, after all, what an intelligent CRM does for your business: it helps you get to know your customers better and maintain healthy, positive relationships with them.
11. Always deliver on your product or service promise and guarantee
At the end of the day, what you sell them should live up to its promise. It should work for what the customer needs or wants. Maintain the highest standards for product and service quality and you will be rewarded with quality customers.
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