(Guest post written by Mark Johnson, a marketing consultant with a degree in business and a passion for helping companies achieve their ambitions.)
It’s easy to forget with everyone talking about targets, niche markets and ‘wow’ factor, the one thing essential to any business: our customers. Without them there wouldn’t be a business for us to go to.
There are constant tips on keeping ahead of the market and getting more customers all the time. But in fact more often than not it’s more astute to focus on retaining the customers you already have. So I’ve formed eight reasons why customer retention is better for your business than acquisition.
- Customers Will Stay
We’ve all at some point seen the mad dash of staff to be the first to reach the new customer who’s just walked through the door. Acquiring new customers is always a good thing but it shouldn’t be the only thing your business focuses on. Customers who feel ignored or under-appreciated will leave. It’s harder to convince an old customer to come back than a new customer to join, so focusing your efforts more towards retaining customers and rewarding them for staying with you should take priority, and will pay off in the long run. This is the secret to a long lasting relationship with your customers.
- Word of Mouth Marketing
Happy customers will tell their friends and family if they’ve had a good service or bought a good product. Reputation is the marketing asset that the customer creates for you, and it’s an asset that keeps on giving. Prospective customers are more likely to trust a recommendation from a friend or someone who has previously used a service, and had a good experience. Although reputation is primarily customer influenced, offering great services and providing exemplary customer service is the best way to influence customers’ perception of your brand.
- Loyalty Equals Profit
Customers who regularly use your service have a relationship with the business built on trust and positive experience. This means they are more likely to spend more and try more products. Taking the time to develop a good rapport with existing customers will encourage them to return, which increases profit for your business. A regular customer is more valuable to your business in the long run, than a new customer who just buys one product because your service if new and exciting to them.
- Feedback Boosts Statistics
Nothing makes a customer happier than being asked their opinion. It’s one of the best ways to personalise your relationship with your customers and give them a chance to feel valued. Customer feedback is essentially a how to guide in getting more business. They’re telling you what they want more of. The things they do like can be used for marketing statistics e.g. ‘X % of our customers enjoyed this product.’
- Regulars Will Try New Things
Being consistent with your brand and merchandise will secure loyal customers. This will prove profitable when it comes to launching new products. Steadfast customers can be up to 50% more likely to try a new service or product than new customers, especially if you’ve kept all your brand promises in the past.
- The Go-to Brand
When a new customer needs a service or product – and there a lots of businesses to choose from – what makes choose one company over the other? The answer is reputation. This is built, more than anything else, on the opinion of existing customers. Customer retention is directly linked to your business being the go-to brand for your particular services. Your existing customers will be the reason newcomers choose your brand over someone else’s.
- Wiggle Room
Expanding your business or adding a new dimension to your brand is a risky time for profit. Regular customers will keep using your service, which means you have a bit of wiggle room for trying out new aspects. If your customers trust your brand they will be more willing to explore the new part of your business. Then again, if it doesn’t work, retaining current customers will mean your profit won’t be seriously affected.
- Save Money
Recent figures show that the cost of customer acquisition can be up to seven times more expensive than retention. It stands to reason then that focusing on keeping the customers you already will save you money in the long run. Spending time on your loyal customers earns their loyalty in return. It can be profitable when it comes to selling new products as you’re likely to have loyal customers ‘getting the ball’ rolling which in turn will bring in newcomers.
Customer retention is proven to cementing relationships between the brand and the customer. That’s not to say acquisition isn’t necessary. If anything, the two practices are really one and the same thing. Retaining current customers naturally leads to the acquisition of new ones. Through attention to your current clientele – listening to their feedback, and making sure your brand delivers every time – the customer does some of the most crucial marketing for you. By word of mouth and consistent use of your service, new customers will naturally come if they can see the solid customer foundation your business already has.
About the Author – Mark is a marketing consultant with a degree in business and a passion for helping companies achieve their ambitions. Should you wish to get in touch with Mark, you can contact him here.