Retention & acquisition are both part of the customer journey
We all know the adage; it is five times more expensive to acquire a new customer than to retain an existing customer. A great theory but, in reality, there is also a need for companies to grow their customer base to prosper.
However, it seems customer retention has fallen off the radar in the mad frenzy to acquire new customers. According to a survey conducted by Invesp, 44% of companies admit to having a greater focus on customer acquisition, while 18% focus on customer retention.
This means that more than 50% of companies spend more time and money on getting new customers through the door instead of also trying to keep their regular customers coming back.
With stats like these, it isn’t surprising that some customers might feel a disconnect in the experience and service delivery. Once a customer has signed up, made a purchase or used a service for the first time, are forgotten or spammed, receiving inappropriate communication targeted at the masses instead of relevant personalised communication? What do you do to properly engage and stay connected to understanding how to retain and grow your customers?
Existing customers are the easiest targets
Surveys have shown that the success rate of selling to an existing customer is 60–70%, while the success rate of selling to a new customer is 5–20%. Existing customers are also 50% more likely to try a new product and spend 31% more on average versus a new customer.
Considering these common sense stats, it seems prudent to focus on retaining a valued customer. By guiding customers through their journey from onboarding to long term value and understanding, you will deliver much greater value to your business and cement your relationships and increase sales and profits.
Customer retention is the best way to measure how reliably companies are providing a service and when it comes to revenue, customer retention is vital to consistent growth and financial planning. The more loyal customers a company has, the easier it is to make financial decisions.
A retention strategy is not about blanket communications, neither should its effectiveness be measured by the quantity of communication – reminiscent of the old days of 'spray and pray'. A true retention strategy is led by knowing the customer and being personal and relevant in all communications. Start to use the right tools for your business and how you work with your team.
After spending so much on acquiring a new customer, it is worth the effort and the associated cost to give new customers the best chance of growing into long-term customers. By tailoring and targeting information, companies can expect to see upwards of a 10% improvement in return on investment. Customer retention increases the customers’ lifetime value which in turn boosts revenue.
Examining the customer’s cumulative experience along the entire customer journey will make it more likely for customers to repeat purchase, recommend the brand or service to their friends and inspire loyalty.