Customer Retention is a Marketing Strategy

Did you know that 68% of business is lost due to apathy after the sale? When I read that I thought - "YES! Finally, vindication that all that customer relationship management (CRM) work is very much worth it." I've always been a big advocate for ongoing customer communication. Maybe it's because that is a role I held in my various marketing roles in the past. 

So much effort (and money) is focused on gaining new customers in marketing. Yet many take for granted this valuable continuing conversation with current customers.  

Don't you want to gain back more of that 68% potential loss? Customer loyalty and retention efforts are marketing strategies.

Not convinced? 

Let's dive into some statistics on why customer retention is so effective, what you might lose if you don't take it seriously and some customer retention strategies you can start implementing right away. 

About Customer Retention

Customer retention is the art and science of keeping existing customers engaged and satisfied, encouraging them to continue to choose your business. For small businesses, this is particularly critical, as a loyal customer base can serve as a foundation for stable growth. There is much to gain, for instance: 

1. Brand Loyalty: Repeat customers are more likely to choose your business over competitors, even if prices are slightly higher.

2. Stable Revenue Streams: This stability is especially vital during economic uncertainties.

3. Positive Online Reputation: A positive image can attract new customers. Satisfied customers are likely to leave positive reviews and testimonials, enhancing your online reputation. 

4. Cross-Selling Opportunities: Existing customers who are satisfied with a particular product or service are more likely to explore other offerings. 

Statistics on Customer Retention

Maybe you're saying to yourself right now, "I want proof." Well, ask and ye shall receive... 

1. Cost-Effectiveness: According to research by Harvard Business Review, acquiring a new customer can be up to five times more expensive than retaining an existing one.  

2. Increased Profits: The Pareto Principle, also known as the 80/20 rule, often applies to business – 80% of a company's future revenue may come from 20% of its existing customers. Retaining them crucial since those 20% can seriously boost profits.

3. Word of Mouth: Satisfied customers are likely to become brand advocates, leading to positive word-of-mouth marketing. A study by Nielsen found that 92% of consumers trust recommendations from friends and family over other forms of advertising. Do you ask your friends and family for recommendations like I do?  

4. Customer Lifetime Value (CLV): Businesses that focus on customer retention strategies often see an increase in Customer Lifetime Value. Which represents the total revenue a business can expect from a single customer throughout their entire relationship.

5. Competitive Edge: In a crowded market, exceptional customer service can be a differentiator. A study by Bain & Company found that increasing customer retention rates by just 5% can increase profits by 25% to 95%. 

The Costs of Ignoring Customer Retention

Maybe you're motivated by loss instead of gain. No worries if that is the case because it only means you are human! Most of us are more motivated by what we could possibly lose versus what there is to gain. So... 

1. Loss of Revenue: Failing to implement effective customer retention strategies can result in a constant need for new customers. This not only increases marketing costs but also leads to a revenue rollercoaster. As a former marketing director, I used to remind my colleagues of this constantly! 

2. Negative Word of Mouth: Unhappy customers are more likely to share their experiences with others (let's face it, the Internet is full of negative Nelly's). This can potentially deter new customers.  

3. Reduced Profit Margins: Getting new customers is expensive! The costs associated with marketing campaigns can eat into profit margins. Retaining existing customers is a more cost-effective approach.

4. Missed Growth Opportunities: A loyal customer base provides a solid foundation for expansion and growth. Ignoring retention means missing out on opportunities for upselling, cross-selling and expanding products or services.

Types of Customer Retention Strategies

Ok then, let's get down to the "how" of customer retention. What should you do to start implementing customer retention strategies in your business right now? Here are a few tips to get started. 

1. Personalized Communication: Leverage the advantage of personalized communication. Send personalized emails, special offers or even handwritten notes. Share your gratitude with your current customers and make them feel valued and appreciated.

2. Loyalty Programs: Implementing loyalty programs can be an effective strategy. Offering discounts, exclusive access or freebies to repeat customers encourages them to stay loyal to your brand. 

3. Exceptional Customer Service: Providing excellent customer service is a timeless strategy. I can't tell you how many times a smile and a kind word from an employee has helped me make the choice on which coffee shop to visit. You can stand out by training your staff to be attentive, responsive, helpful and going the extra mile. 

4. Feedback Mechanisms: Actively seeking customer feedback and acting upon it shows you are committed to improvement. Doing so can foster a sense of partnership with customers. Pro Tip: Be clear in your communications that you will aim to implement what you can. You don't want to be running yourself ragged doing all the things people suggest. 

5. Social Media Engagement: Use social media platforms for engagement and customer interaction. Don't get so focused on the "media" part of social (i.e. what will I post?). Instead, remember to be social too. Connect with customers, share updates and address concerns in real-time, showing up transparently. 

6. Regular Follow-ups: Regularly checking in with customers after a purchase shows that their business is valued. It also provides an opportunity to cross-sell or upsell additional products or services. 

7. Surprise and Delight: Occasionally surprising customers with unexpected perks, gifts or exclusive access can create positive emotions and enhance their overall experience.

To Sum Up Customer Retention Strategies

Hopefully I have convinced you to take action with some customer retention strategies that apply to your business. Because this effort in your marketing will most definately yield results. Retention is a lifeline that sustains and propels growth. Small businesses that invest time and resources in building lasting relationships are likely to reap the rewards of a loyal customer base, positive word of mouth and sustained success. 

Ready to become a trusted resource for your business but don't know where to start? Schedule a call and let's discus it! 

Show the form