The Real Benefits of Keeping Your Customers
I have no doubt that you feel that you already make it a priority to keep your customers.
But do you know what that really means?
Keeping customers is certainly one of the most important reasons behind any business success. While academics and professionals may disagree on the exact numbers, some reputable estimates say that a 5 percent increase in your customer retention can improve your profits by as much as 70 percent.
But despite the widely recognized value of customer retention, it remains one of the most misunderstood marketing components.
Five Major Benefits To Hanging On To Your Customers
Following are some solid reasons based on the “Lifetime Value of Your Customer” that show why keeping customers should be among your most important priorities:
#1 – You Save Money!
It is largely accepted that acquiring new customers is much more expensive than keeping the ones you have. Some estimates put it at five times as much. This makes perfect sense, when you think about it.
Finding new customers can be a wildly expensive exercise in trial-and-error. Usually, you don't know the benefits they care about most. The point is, no matter how sound your decisions, finding new customers will happen after you make mistake after mistake until you finally get it right. (Frequently you give up just before something good happens).
Keeping the customers you have, is far less expensive, (but it is not easy).
#2 – The Customers That Stay Spend More With You:
The longer customers stay with you, the more they spend on average per transaction.
Why do customers spend more? Often, a customer's first service purchase is a test of your services. On-going purchases are votes of confidence.
Additionally, if you are doing your marketing job, the customer becomes increasingly aware of your additional services; you, in turn, become increasingly aware of what the customer wants. In this way, the customer's awareness and confidence increase while your ability to market grows as well.
#3 – Keeping Customers Builds Your Reputation:
If you have high customer retention rates, that means you are keeping customers satisfied. In this way, high retention rates builds your reputation in your community and among potential customers.
#4 – They Talk About You – positive “Word of Mouth”
It's no secret that customers talk to other customers. When they're unhappy with you, they'll frankly tell others their opinion much, much quicker! On the other hand, when they're satisfied with your services, they will speak well of you. I'm not so sure they will rave, but the beauty of positive “word-of-mouth” is free and credible marketing.
Customer retention - which results from customer satisfaction - is the most effective way to generate word-of-mouth marketing.
#5 - An Unexpected Benefit - Productivity Gains!
Your employees get greater satisfaction knowing that their efforts not only bring customers, but also keep the ones you have. In a concrete sense, repeat customers signal the lasting value of their work. In this way, high customer retention rates improve employee morale. This, in turn, increases productivity.
Clearly, customer retention should be among any firms most important priorities. But success doesn't occur in a vacuum. Rather, strong customer retention rates result from customer satisfaction. This, in turn, results from the firm's continuous ability to provide value at all contact points with the customer. For this reason, the firm must put a premium on value creation. Only then will retention follow.
This tool is invaluable and has been developed based on small 1-10 employee businesses. Use it and profit from it!