When I recently read a report on an Inc. study about customer retention, I was once again reminded that it costs businesses 5 to 10 times more to acquire a new customer than it does to sell to an existing one. Plus, on average, those existing customers will outspend a new customer by 67%.
It’s no wonder most businesses rely heavily on their current customer base to meet their sales and profit goals! The big surprise, though, is how little effort many organizations put into designing and implementing customer retention programs.
What are customer retention programs?
Customer retention programs are programs designed to keep in touch with your current customers so that they will:
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Remember that your company exists
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Keep buying from you
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Make bigger purchases ($ volume) or buy additional items (upsell) from you
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Refer others to you
What should you include in your customer retention program?
Most retention programs should include one or more of the following elements:
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Acknowledgement
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Thank the customer for their purchase
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Acknowledge important dates in the customer’s life (such as their birthday) or the lifespan of their relationship with your company (such as the anniversary of their purchase of your product)
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Reward
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Give the customer a gift, such as a free gift card to the local coffee house
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Give the customer a coupon for future use, to drive them back to your store for another purchase or service
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Education
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Newsletters and other educational pieces that provide tips and information about how to make the most of your product, other products of interest, or other helpful and relevant issues
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How do you set up a customer retention program?
This will be the topic of my next article. Stay tuned!
