Did you know that improving customer retention is one of the most effective business strategies?
Most businesses spend plenty of time working to attract and convert new customers, dedicating large portions of marketing budgets to this goal. But while attracting new business is great, it’s actually your existing customer base that has the greatest potential to boost your profits.
Benefits of retaining existing customers
It’s cost effective
It costs less to market to existing customers, compared to finding and attracting new ones, so positive customer retention leads to better return on investment. This is because when someone has already bought your products or used your services, they are already familiar with your offering, meaning less top of funnel marketing is required to encourage them to buy again.
It can generate referrals
Happy customers can bring in new business via word-of-mouth recommendations and referrals. So by keeping fans coming back for more, you’re increasing the chance of them convincing others to try out your products or services. You could almost say existing customers are an extension of your marketing team.
It increases sales
Customers who already know and trust your brand will often come back for more. This means that once they re-engage with your brand, they’re more likely to actually make a purchase compared to those who are at the beginning of their journey with you.
How to retain existing customers to boost your business
1. Identify your customer retention rate
The first step to improving your customer retention rate is to work out what you’re starting with, that is, how many customers you retain over a given period.
Simply subtract the number of new customers from your total at the end of a period of time, then divide that figure by the number of customers you had at the start of the period. Multiply the answer by 100, and you have your retention rate.
2. Understand your customers
Gain as much insight as you can into your customers, through analytics, surveys and feedback. Learn about their behaviours, preferences and needs, and use this information to serve them better and address any issues they may have.
By showing that you are listening to them and that you value their opinion, you will help create a connection that can lead to future sales.
3. Interact with customers on a personal level
By personalising your interactions with existing customers, you help them feel valued and positive towards your brand.
Addressing customers by their first name in marketing communications is one of the easiest ways to do this, but it extends to targeted marketing campaigns as well as personalised recommendations and special offers based on previous purchases.
4. Set up loyalty and referral schemes
Customer-focused loyalty schemes are effective at incentivising purchasers, and convincing them to return for more.
Likewise, a scheme that rewards customers for referring their friends to you is a great way to attract new customers while encouraging existing ones to remain loyal.
5. Offer excellent customer service
The most obvious step, but perhaps the most important. Great service goes a long way, especially in today’s highly competitive world. By making purchases straightforward for your customers and promptly addressing any issues or queries they might have, you’ll build trust and loyalty, and give them no reason not to return.
For help improving your business’ customer retention rate, contact the experts at blue bee today.