Still today, a large number of businesses are deceived in to thinking that having a great product or service automatically translates to being a profitable business. This simply isn’t the case...
You need a solid customer retention strategy to maintain your profitability, throughout the highs and lows of your business events and sales cycles. Why should customer retention be a core focus for your business? If your business employs solid customer retention strategies, resulting in higher customer satisfaction levels, this eventually means revenue growth for your business. It goes without saying that a happy customer will have good reason to do business with you again. Therefore, you’ll retain them and make more money in the long run.
Here are three reasons customer retention should be your main focus:
Related content: The customer retention playbook [free guide]
1. Cost of replacing customers higher than keeping customers
If you’re losing customers you’re basically losing money. And lots of it. The cost of replacing your lost customers with new ones is alarmingly high (taking into account acquisition costs in advertising, managing sales and time spent for conversion). The cost of customer acquisition is six to seven times more than customer retention.1
2. Lose up to 95 per cent profit increase
Keeping your existing customers loyal is more cost efficient than constantly trying to acquire new customers. The stats say it all: a 5 per cent lift in customer retention can actually result in an increase in profit by as much as an astounding 95 per cent.2 So, another way of looking at this would be: if you ignore customer retention, you could lose out on a 95 per cent profit increase. Now, why would you want to do that?
3. Increasing customer retention levels boosts company value
A 10 per cent increase in customer retention levels can result in a 30 per cent increase in the value of the company.3 And if you’re still not sold yet, Gartner Group states that as much as 80 per cent of your company’s future revenue will come from just 20 per cent of your existing customers.4 So, the moral of the story is: better take well care of them—or else.
Want to retain and acquire more customers to boost revenue? Check out our ebook below:
1. Understanding Customers, by Ruby Newell-Legner
2. Bain & Co
4. Gartner Group