If you are a business owner, then despite your area of operation, you would be facing fierce competition in the market. This is because almost every entrepreneur is looking to adopt newer ways of beating his or her contemporaries, and those who succeed in doing so, own the market eventually. So if you want to grow in terms of your business, then you must concentrate on ways to gain an edge over other key players in your field.
Nowadays, the success of any business is determined by the number of clients that it is serving. This is because the greater the number of clients that you have, the more revenue you generate as compared to others. In addition to this, it also reflects the reliability of your company, and the trust that people put in your product or service.
When it comes to serving customers, businesses seem to be divided on the notions of retention and acquisition. However, before we get into the debate of new customers vs. existing customers, let us get into a little detail regarding the two aspects.
Customer retention is basically when you work to wards keeping customers that you already have. This means that you do not focus as much on customer acquisition, and adopt techniques that would help you satisfy your existing buyers. You can do this in several ways, such as keeping them up to dated regarding your product or service, answering their queries right away, being there for them in whichever manner you can, and giving them rewards for their loyalty. On the other hand, customer acquisition denotes the process of acquiring new buyers for your product or service, something that is achieved through constant marketing. Now, the way you do this solely depends on the nature of your business, and the type of people that you are aiming to target. But you should know that there are several marketing strategies for you to choose from, such as social media marketing, telemarketing, digital marketing, or the conventional print media marketing. The choice is absolutely yours
Since now we are clear on both the ideas, we would like to declare our support for the concept of customer retention. This may not seem like the average answer that you would expect from a group of entrepreneurs, but studies support this, and we will shortly see how.
As per research, it can be concluded that a 5% increase in customer retention can increase a company’s profitability by 75%. Now this is a very strong statement, and in order to back this up, we will present to you the reasons that led us to think along the same lines as well.
Customer retention is cheaper as compared to customer acquisition
While most people would believe that the key to earning more profits is by acquiring new customers, it is actually the opposite. This is the reason why you should concentrate on keeping your old customers and come up with ways to make them stick to your brand or company. Need to know why is this? Read on to find more.
When it comes to spending on growth, many businesses do not have enough resources to do so. In fact, even for companies that have operations spread on a large scale, investing on something that is uncertain is not always easy. This is the reason why if you’re a business owner, you must focus on things that you are already familiar with and working on. For instance, working to improve ties with your current clients will be cheaper and easier for you than to spend on attracting potential leads. This is because getting old customers to return to your product or service, or convincing lost customers to try your brand again will cost you less than acquiring new customers from scratch. There are several reasons for this, the most important of which is that customer acquisition requires you to spend extensively on marketing strategies that may or may not work. On the other hand, you can update and follow up with people who have dealt with your business in the past using simpler, cheap techniques such as telemarketing, or email marketing.
In addition to this, when it comes to customer acquisition, you have to invest in finding new leads for your company. This requires a lot of hassle, since you have to go through several databases in order to find people who might be interested in your brand. Also, contacting them means that you have to keep aside resources for this very purpose that can be spent somewhere else if you are to concentrate on customer retention instead.
Lastly, there is an established fact that if you indulge in keeping your present and past clients, then there are more chances of you making sales as compared to when you try to find new leads.
Acquisition stops working when you can’t retain your clients
Even if you have decided to spend more on customer acquisition than retention, you will realize with time that it wasn’t really a smart choice. This is because if you only focus on acquiring new clients, and not on making them stick around to make purchases from your company, then you are in for an unpleasant surprise. Sooner or later, these new customers will lose interest in your product or service, since you are not concentrating on making their experience with your company worthwhile. As a result, the resources that you spend on finding new leads for your business will eventually go to waste if you do not work on how to retain them for a long period of time.
Customer retention is a faster way of making profits
Every marketing strategy takes its time to show effect. Also, it is not for sure that it would work as it is expected to. Hence, if you are a business owner who is spending excessively on acquiring new customers by employing new marketing techniques, but cannot see any growth, then you should instead focus on retaining your current and old clients. This is because it is easier and faster to convince people to make purchases from you who have already dealt with your company instead of trying to attract new clients.
Making more sales in a less period of time by reaching out to your existing clients is always the easier option. There are many reasons for this, the most important of which is that you have already convinced them of your business’s competence, and all they need is a little reminder of that. Once you get in touch with them and update them about your product or service, you will make sales right away.
Your current and previous clients know all about your company, and the product or service that it is offering. They also know that you are reliable, provided that their previous experience of dealing with you was good, which makes it easier for them to engage in business with you again. As a result, you do not need to spend time on introducing them to your company, and only a small nudge is good enough to convince them to make a purchase from you.
To sum it all up, acquiring new leads is quite time-consuming, and may not always work out as planned. On the other hand, doing simple things such as providing a consistent consumer experience to your existing clients can go a long way when it comes to making profits.
Customer retention will help you gain an insight into your clients’ behaviors and maintain a good reputation
Customer retention works to benefit your company in many ways. It is particularly helpful in data generation when you are looking to know more about people who are interested in your product or service. Once you have all the data that you need, you can use it to analyze patterns of consumer behavior, which will help you immensely in the future. For instance, you can use it to improve your company, and make its operations as per the likes of your intended clientele. This will cause a surge in your sales, and you will be able to make profits in very little time.
In addition to this, studying consumer patterns will help you in acquiring and retaining clients in the future. This is because you will get to know the type of people to target and convert into long-term clients, saving you many dollars worth of marketing strategies and plans. You will also be able to plan in a way that will give you the most sales.
On the other hand, if you do not provide for your current clients in ways that they expect you to, they will automatically leave your company for your competitors’. This will make you lose out at the market front, and your company’s reputation will suffer immensely.
You must always strive to keep your current clients happy. This is because doing so will help you enjoy good reputation in the market, which will eventually get you more and better leads. Also, you will be able to defeat competition by building a loyal clientele for your company, one that you can always rely on for immediate sales boost.
Customer retention will automatically work towards customer acquisition
This is an established fact that there is nothing better than having loyal customers for your business. This is because you can always work on them and get to the sales level that you are aiming for. In addition to this, loyal customers can promote your business simply through their word of mouth, which can do wonders when it comes to future customer acquisitions.
As you can see, customer retention can work towards the betterment of your business in many ways. It is especially important for businesses that have acquired a clientele, and have exited the initial phase of their operations. However, nowadays, marketers are impatient, and believe in tangible results. As a result, since customer loyalty is something that cannot be measured as such, it becomes less significant in the eyes of some business owners. But if you are looking for consistent growth, then you should give customer retention its due importance by investing in ways that complement it. Lets have a look at some of them below.
Always promise less and give more
In an attempt to gain and retain clients, businesses often commit the grave mistake of promising more than they can actually deliver. This works towards raising the expectations of their client, which can create problems if not met with as promised.
When it comes to the processing time, or the amount of resources that you are planning to dispense for a given client, always make sure to promise less than you deliver. This way, your clients will be pleasantly surprised, and will come back to make use of your services whenever a need arises. Hence, this is an effective way of customer retention.
Try to build a connection with your clients
This is extremely important when it comes to customer retention, since your clients will stick to your business when they have something in common with it. This stands true for values, interests in causes, way of expression, and other related things. For instance, you could work towards supporting causes that your clientele is interested in, and invest in areas of their interest in order to keep them interested.
You can also build a connection with your clients by communicating with them on a regular basis through channels that they use the most, such as social media platforms. You share posts every now and then, and reply to their comments to make them realize that you care for them.
Never compromise on customer service
This is the most important principle when it comes to customer retention. Always make sure that you are spot on with your services, be it the delivery of an order, or replying to queries sent in by your clients. Also, be professional and polite while communicating with your customers to make them feel welcomed.