Customer retention is when you hold on to customers you have spent money to acquire. This set of customers is supremely important for any business today. Many companies don’t realize the importance of customer retention, focusing more on acquisition, and sometimes leaving their existing customers unsatisfied.
Acquiring new customers is 5 to 25 times more expensive than retaining existing ones, depending on your industry. Clearly, it is customer loyalty that leads to profit.
According to the advisory firm Bain & Co., increasing customer retention by just 5% boosts profits by 25 to 95%. Outboundengine.com says that the success rate of selling to a customer you already have is 60-70%, while the success rate of selling to a new customer is 5-20%. Hence, it is wise to spend resources on this subset of customers, to reap the most benefits.
According to research by Temkin Group, loyal customers are 5x as likely to repurchase, 5x as likely to forgive, 4x as likely to refer, and 7x as likely to try a new offering. American Express found that 33% of customers will consider switching companies after just one instance of poor customer service. Since 65% of a company’s business comes from existing customers, it’s key to focus on the customers who already spend their time and money on your business, and offer them perks. Understanding customer’s perceptions and expectations is a necessity in this age where 69% of customers demand personalized experiences. The investment will pay for itself.
So, what’s the bottom line here? New businesses need to acquire more customers to build a customer base. But once a new customer is acquired, it is customer retention that makes them stay. It is advisable to spend at least 50% of your marketing budget on tactics to retain customers. It always serves as an excellent long-term business growth strategy. Before you start getting new customers, take a moment to ask yourself whether you have the foundation to retain them.
This is where PredictivEye comes into the picture. We partner with small and mid-size businesses to improve retention rates. We go a step further and prevent customer churn by recommending individualized retention strategies instead of “one-size-fits-all”. Utilizing dynamic machine learning models, our platform continuously listens to your customers to ensure that they get the best, every time!
Request a demo today and see the difference for yourself!