One of the main reasons why businesses fail is poor customer retention. Often, businesses are more concerned about selling and gaining new customers than managing their customer base. When customers aren’t treated right, they’ll have no reason to patronize your business a second time, nor will they be interested in referring new customers.
Although being able to draw new customers is important in scaling your business, it’s even more important to be able to build lasting relationships with old and existing customers. As the saying goes, a bird in hand is worth two in the bush. When you think about it, it’s a lot easier to sell to existing customers, as you already have their market data and preferences. With new or potential customers, you’ll have to collate fresh market data in hopes of selling the right product or service, and there’s no guarantee of converting them into paying customers.
Top 5 Reasons Why Customer Retention is Important for Business
In business, offering the best product isn’t automatically synonymous with success. Your customers’ experience is crucial to their loyalty to your brand. Once your customers feel valued, they’re more likely to be retained. Here are the top 5 reasons why customer retention is vital to your business:
1. Loyal customers bring consistent sales
Brand or customer loyalty is a major reality of business, and it only happens when you successfully retain existing customers. Certain customers will rather patronize a particular business brand, even if others like it or are better than it. For instance, smartphone users will remain loyal to Samsung over Apple, and they’ll always be willing to buy every Samsung product in the market. What this means for Samsung is that there’ll always be sales of literally any product they launch. Your business will enjoy consistent sales when you retain existing customers with amazing products and services.
2. Lesser marketing cost with greater conversion
Marketing is a costly yet important part of the business – it’s the only way to get customers. Despite being an important means of securing customers, it’s not 100% guaranteed. Sometimes, marketing campaigns hardly convert into sales. However, when you have a strong base of retained customers, you won’t need to spend so much on marketing. Why? The existing customers are already familiar with what your business has to offer. At best, you’ll only need to market new products or upgrades. The great thing about marketing to retained customers is that there’s a higher chance of sales conversion.
3. Free referrals with high turnover
A referral is a great way to generate sales, but it only happens when you have satisfied customers. While one-time customers may refer others depending on their experience with your business, retained customers are more likely to refer their friends and family. A sense of pride comes with knowing someone who has the solution. Your retained customers won’t hesitate to spread the word if it’s your business.
What’s more, is that most referrals from retained customers often yield results. Seeing as the retained customers are more acquainted with your business, they can be more convincing and practical when referring. As such, referred customers approach you based on the word-of-mouth assurance of what you offer.
4. Practical and valuable customer feedback
Customer experience is the primary determiner of feedback or reviews your business will receive. While you may obtain valuable feedback from one-time customers, the most valuable and practical feedback you can receive concerning your business is from retained customers. As loyal customers are more acquainted with your business, they can easily provide feedback on issues necessary for your business growth. Also, a retained customer has the courtesy to provide constructive criticism and feedback on business areas that can be improved. It’s easier for a loyal customer to bear with your business during downtimes compared to one-time customers.
5. Readiness to pay premium prices
Retained customers who’re used to patronizing you are hardly bothered about price changes. The long-term patronage comes with a sense of loyalty and satisfaction. As such, the satisfaction retained customers gain from your products or services is more important than the price they have to pay. While crazy and consistent price changes can be discouraging, retained customers won’t mind slight changes – especially if you inform them ahead of time. Upgrades and adding value to existing products or services usually come with a price change. Just as you would inform your existing customers about upgrades, you should also inform them about price changes.
Moreover, retained customers are more likely to pay premium prices based on the mindset that premium prices come with premium quality.
Get It Right With Evolution Business!
The secret of customer retention is in treating customers right. Besides having great products and services, your business must be customer-centric. Reaching out to customers in appreciation for their patronage and reviews is a great way to build a friendly relationship with your customers. When this happens, there’s a higher chance of them patronizing you even more.
If you’re unsure how to interact with your customers, you can simply reach out to Evolution Business Marketing & Communications As a full-service digital marketing agency, we have practical strategies for positioning your business in the hearts of your customers. With over 20 years in digital marketing and communications, we can help you generate new leads and make the best out of your existing customers.
