Companies often face a dilemma in either acquiring new customers or retaining old ones. Which one is the better choice? Research shows that acquiring new customers cost five times more than keeping old customers. Also, the probability of selling to existing customers is 60-70%, much higher than the probability of selling to new ones (5-20%). A study from Bain and Company also suggests that simply by increasing customer retention by 5%, companies can boost their profitability by 75%. It is then safe to suggest that retaining customers is a definitely should be part of sales strategy. But, how can we keep our customers?
These are three vital points every company should take to maintain customer loyalty:
1. Understand who your customers are
Nowadays, companies have no excuses for not knowing their customers. Data analytics play a very crucial role. Today’s customers expect businesses to know them, especially if they are returning customers. We’re not only talking about demographics data, such as name, address, and date of birth, but also past purchases and digital steps. We need this data to accurately develop strategic and tactical approaches that work for their needs, preferences, and purchasing patterns
2. Positive customer experiences
To ensure an excellent customer experience, we need to be professional and exceed their expectation. It involves empowering staff to use available data for both customers’ short term and long term need. At the end of the day, we didn’t only get satisfied but also loyal customers. Our company will also have an excellent reputation as we create brand advocates who will spread the word to thousands of potential customers
3. Personalised message to increase customer retention
Cluster our customer into few different groups based on certain characteristics e.g. purchasing power, purchase patterns, etc. We would then be able to craft a “personalized” messages and offers that is suitable for them. We could easily sour customer relationship by bombarding a new customer with unsuitable follow-up communications.
At the end of the day, strengthening existing customer relationships ensures your revenue stream, profitability and provides a better business growth. Hence, customer retention is vital to the business success.