Before getting into the strategy per se, you need to understand the importance of customer retention. Customer retention is a branch of customer loyalty, which is a never ending process. Customer retention refers to extending your service to existing customers, so that they remain your customers rather than taking their business elsewhere.
Its important to sell to new customers, but its more important to keep them once you’ve got them, and here’s why
- Increasing your customer retention rates by just 5% results in profit increases of 25% to 95%.
- 80% of your companys future revenue will come from 20% of your existing customers.
- Attracting new customer will cost you 5 times more than retaining an existing customer.
These are the odds that every company has in their table, and at every game both the customer and the company is to be in favor; to foster seamless customer relationships. To understand this in depth, you should know why customers leave. Most often, businesses believe that customers jump ship due to mainly two reasons. 1) Customers found the product/service cheaper elsewhere and 2) Their needs changed. However, this is not true. Customers leave organizations mainly due either poor quality of product/services or bad customer service.
How do we retain these customers then? Here are a few cheat codes:
Set customer expectations properly: Always set your customers expectation in sync with your business strategy. Your sales team would find it easier to make promises to close a sale which the company is not equipped to fulfill. This will result in disappointment. Dont let your sales staff do this. Even if your product is of high-quality, promising or raising customer expectations to a level where the company cannot perform, shall be aggravating for the customers
Keep in touch: Always keep in touch with your customers. Try to sieve into the companys culture that customers are the resources that actually drive your business. There are businesses that becomes too much involved in business, that they lose sight of what actually keeps the business running; customers. There are many tools and outlets where youre able to reach out to the customers and stay in touch. Social media is proving to be a very cost-effective and reliable tool to connect with existing customers and also attract new customers.
Quality control: Once expectations are set, you should always strive to meeting their expectations or exceed them at times. Quality assurance and Quality Management tools are to be implemented to guarantee that the customer receives what he/she has expected and nothing less.
We have given you a few statistics and explained why customer retention is so important. We shall discuss about retention strategies in our next post.