Think your business doesn’t need a formal Customer Retention Program? Here are 7 reasons why you do:
1. Getting new customers is expensive – Finding new clients entails significant costs. In fact, most businesses find that it costs 5 to 10 times more to acquire a new customer than it does to retain a current one.
2. You need to protect your revenue stream – How much of next month’s revenue is likely to come from existing customers? 50%? 75%? A Customer Retention Program can help protect that.
3. Repeat customers spend more – Businesses often find that repeat customers have significantly larger transactions than new customers.
4. Existing customers present great up-sell and cross-sell opportunities – Because they’re already familiar with your company and your brand, existing customers are more likely to be willing to try out other products and services that you offer. What many companies don’t realize, though, is that many of their customers are not be familiar with all of the services and products that they offer. For example, someone who signs up for your social media services might not realize that you also do websites. A well-designed Customer Retention Program can overcome these issues and generate more sales.
5. Customers will leave if they think you don’t care – Studies show that 68% of customers who leave your business do so because they think you are indifferent to them. They just don’t feel valued. A formal Customer Retention Program can ensure that you stay in touch and make them feel appreciated.
6. Loyal customers can become brand enthusiasts – A great Customer Retention Program can increase customer loyalty and satisfaction. Happy customers are more likely to become brand enthusiasts who share their positive experiences with their friends, family and social media connections.
7. Loyal customers are less price sensitive – Many people would rather pay a little more for something that they already know is a good quality, high value service than jump ship and take a chance on a competitive service that costs a little less. Your Customer Retention Program can help remind people what a good choice they’ve made by sticking with you.
The bottom line is, customer retention increases profitability. A lot. Since just a 5% increase in customer retention can increase business profits by over 25%, the right Customer Retention Program will quickly pay for itself. In my next blog I’ll give you some tips for creating a program that works.