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If you are into a business, then you may know the importance of customer retention as one of the pillars of long-term sustainability in this highly competitive consumer market. Finding new customer and exponentially expanding your base is essential. At the same time, retaining existing customers will give the same value as of expanding the customer base.
Many of the new-age salespeople are keener on gaining new customers and clients and tend to downplay the importance of retaining. The strangest thing is that it is much easier and cheaper to hold the existing customers compared to acquiring new customers, so why don’t many entrepreneurs do it the other way around?
An e-commerce research result had shown that the investment in the acquisition of new customers has increased to about 34% from a lesser head, but there is a decrease in the cost of retaining existing customers from 24% to about 19%.
One assumption is that if you have a quality product or service, then customer retention will follow the suite. This may be true in many cases, but the fact is that this strategy only works out this way over a short term. Over the course of time, the customers, even on staying loyal to you, will feel that you do not care for them or acknowledge them will ultimately leave. This is much likely to happen in a competitive business market as of now.
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Earn loyalty consistently
Maintaining a strategic retention program will give you the advantage of easily identifying, tracking, and keeping up with the customer interest and sell your products and services to more consumers you are happy to maintain a long-term relationship with you.
A KMPG survey was held among corporate marketers with the key question being “Which may be the top among significant drivers ensuring your business’ revenue over the next couple of years? Not surprising, the majority of them cited customer retention as the key revenue driver.
Why focus on customer retention?
To ensure better conversion
You existing customers have bought from you at least once, and if they have a good experience, they will surely buy from you again. You can get to know about their needs better and come up with newer products to meet the demands.
Reduced marketing cost
It only required minimal effort for the marketers to find the existing customers who can give valuable feedback which makes the remarketing process much easier and cost-effective.
Increase the profits
Reselling to existing customers is much easier than new as you do not have to offer any discounts or add-ons if they are satisfied with the quality.
A study by the Bain and Company revealed that there a steady 5% increase in retention rate could enhance the profitability of a business by 75%.
Another statistic by the analytic firm Gartner shows that more than 80% of the future revenue of the businesses comes from about 20% of the existing customers.
Further, in this article, we will discuss a few workable tips by Flosum, Inc. for the entrepreneurs and marketers by to practice better ways regarding customer retention.
Four Tips for Effective Customer Retention
There is no one called pure sellers; even they are customers. So, everyone knows what a potential customer feels as individuals. An excellent customer database and ideal strategies based on that exact ‘feel’ we discussed is the primary need. Here are the tips.
1. Solidify Trust
Trust has to be earned when it comes to building a relationship with your product or service customers. In the modern world of business, even the most remote customers have access to a huge amount of information with a myriad of brands and products bombarding all around them. So, trust is the most critical component, and once if it is lost, it is merely impossible to get it back.
Offering the social proof on your products as reviews from the existing customers is an excellent way to reassure others and to get more new customers. Another approach to building trust is to have a transparent customer communication like sharing the cost structure with the customers. To maintain trust, you should respect the customers and also keep the notified about all the ups and downs of your brand honestly.
2. Treat as VIP Customers
The best possible approach to customer retention is to prevent a loyal customer exit. If you keep a close watch, you can always sense the early signals of your customers tending to leave. Keep track of the core variable factors like their purchase patterns, service calls, product usage, etc. to identify these signals.
Do you know how many of your loyal, long-term customers have not made any purchase from you for more than six months? You have to create a VIP customer list first and then track their association with you to identify whether they show up signals of leaving and then try to re-establish the relation through smart marketing moves.
3. Target Your Existing Customers with Seasons/Special Offers
Once by knowing your customers, one can custom tailor the approach to each of the VIP customers and always keep them in the loop. A proper CRM application will let you track the purchase history of the customers and then determine what kind of an individualized offer may increase the relevancy and keep your brand active in their mind.
If you are aiming at a group of customers who showed interest in the products but never bought from you. Check out the ways to convert their interest on similar products by giving them some special offer or seasonal discounts. Using software, marketers can create a list of all sales activities and compare it with the contact who subscribe to your updates to devise a more personalized promotional strategy.
Using your CRM software, you can create a list of all open sales activities and compare that with a list of all contacts that are subscribed to your newsletter. The result is a list of contacts that are interested in your product but so far, have not initiated a sale.
4. Reward Your Most Loyal Customers
You can easily track the customer records to identify those who account for the most revenue through purchases. With this info, you can devise some reward programs regarding points of discount coupons to those who stay loyal to you and make volume purchases from you. Starting from the most loyal customers to further down, you can set a strategy for reward programs. Cross-selling can also be tried with existing customers with reward and incentives to make your loyal customers feel special and come back to you again.
In the midst of the highly noisy market of the times, the marketer should be appropriately driven by data and insights to retain loyal customers by developing personalized customer experiences.