3 Reasons Why Customer Retention Matters to Your Business￼
Account for the Majority of Your Revenue
On average, 80% of all your business revenue will come from just 20% of your customers. These tend to be repeat customers that engage with your business on a frequent basis. Trust is an important factor when it comes to a purchase decision and those who already have had a positive experience with your brand are more likely to engage again in the future. Even a 5% increase in customer retention can increase a business’s profitability by as much as 75%! Furthermore, existing customers are less price-conscious compared to new ones. Repeat customers are more willing to pay a premium on the company’s service or product rather than switch to a competitor if they had a positive experience with your business in the past.
Word of Mouth Matters
Loyal customers will not only account for the majority of your business profits but also are the main drivers behind the growth of your customer base. It is estimated that word of mouth is the driving factor behind nearly half percent of all purchasing decisions. Furthermore, individuals are 77 percent more likely to purchase from a business if they have learned about it from people in their circles. In terms of trust, a whopping 92% of customers stated that they trusted recommendations made by their family and friends over advertising. Word of mouth can also go the other way. If existing customers have a bad experience with your business, they are likely to discourage others in their network to engage with your business as well, considerably harming its growth.
Reduces Running Cost
Imagine all the money spent on new customer acquisition to offset the fall in profit as existing customer leave. According to leading experts, It can cost 5 times more to acquire new customers than it does to keep current ones.
Furthermore, long-term customers tend to be more familiar with your business and its processes, requiring less ‘hand-holding’ in their interaction. This means that the cost of servicing tends to be a lot cheaper in general.
For any business, big or small, customer retention is essential for their long-term success. If you are struggling to retain your existing customer, take advantage of our free e-guide.
If you would like to chat about how customer retention can boost your business’ sales and customer experience, click here to arrange a time with our specialist.