The Top Benefits of Customer Retention

According to a study by Bain & Company, increasing your customer retention rate even just by 5% can boost your profits up to 95%. It's no mystery why so many companies are now focusing on customer retention because it's vital for business growth.

In a nutshell, retention is where you keep customers for longer. A good retention strategy helps companies to sell more, increase customer lifetime value, and therefore creates long-term revenue from them.

In this article, we'll explore some of the top reasons why it is a good idea to build a customer retention strategy.

What are the top benefits of customer retention?

Here are 10 reasons why you should focus on customer retention.

1. It's the best way to increase profits.

Retaining loyal customers is less costly than finding new ones and it results in higher revenues because loyal customers buy more. In some cases, they will even buy exclusively from you.

2. You save more money by retaining customers than finding new ones.

Even if you spend the same amount on customer acquisition as to keep your existing customers, it's still cheaper because acquiring a customer requires much more effort than keeping an old client. That's why it's always a good idea to focus on customer retention and create an effective retention strategy.

3. You'll reduce your marketing costs

Market is crowded, competition is tough, and it's getting harder and harder for companies to acquire new clients. Retaining customers doesn't only save you money but also helps you reduce your marketing costs because with a loyal customer base, you'll need to spend less on advertising, lead generation efforts, and other customer acquisition channels.

4. They buy more often.

Loyal customers are the ones that purchase again and again. According to an infographic by HelpScout, loyal customers are 6x more likely than new customers to start spending more with your brand.

5. It's easier to sell more to an existing customer than win a new one.

Not only do loyal customers buy more often but it's also easier to convince them to make another purchase. They already know your brand and like what you offer, so if you're offering discounts or extra products (such as cross-sells and upsells), they're more likely to say "yes" than a new customer who only knows the basics about your company.

6. You can focus on higher-quality leads.

When you acquire a new client, it takes much more effort and costs much more to convince them to buy something from you. When you create an effective retention strategy, you'll be able to focus on higher-quality leads and spend your marketing efforts on potential customers that are more likely to buy.

7. Your brand will be stronger.

Having loyal customers means that your company has a strong brand presence, people know who you are, what you stand for, and they like it. The stronger your brand is, the better impression you make on potential customers.

8. You'll be seen as an authority in your industry.

By focusing on customer retention, you can show how experienced and knowledgeable your company is about what it does. People want to buy from those they trust and who are seen as an authority by others.

9. Your clients will recommend you to others.

As we all know, word of mouth is one of the best types of marketing so if you manage to create a great product or provide excellent customer service, your customers will tell their friends and family about it - which can translate into additional revenue for you.

10. You'll save time and money on finding new customers.

Don't forget that finding new customers takes a lot of time, effort, and resources - it's complicated to find the right people, get in touch with them, convince them to buy from you or subscribe to your service/newsletter, etc.

Tips To Help You Keep Your Customers

1. Always be available to your customers when they need you (having a functioning helpline is essential).
2. Show that you care about your customers by delivering personalized offers just for them.
3. Personalize your communications to ensure that you are speaking to each customer on an individual basis.
4. Act quickly to resolve any problems your customers have. This will help you show them that you are invested in their success.
5. Develop relationships with your customers, so that they become loyal advocates for your business.

Conclusion

A strong customer retention strategy helps to increase the value of your customer base and is a powerful way to improve sales. A lot of businesses overlook this area because they think it's hard to retain customers - when in fact it's very easy, and also highly rewarding.

If you need help in building a winning customer retention strategy for your business, send me a message!