We're often told about how important Marketing is to a business. We're here to tell you why Customer Retention is just as important as marketing, and it should be a key consideration for any business.
Did you know - the top 5 companies with the best customer retention rates are Amazon, Facebook, Apple, Netflix and Google...
Amazon was the top company for customer loyalty in 2018 with an 86% customer retention rate. This is less than one percent lower than last year’s ranking when they had 87%.
Whilst the above mentioned companies are renowned for making billions of profit per year, it's important to recognise that these Sales haven't happened solely due to innovative marketing tactics. The way that they treat their existing customers is world-class and it is a critical reason to why everyone flocks back...
Why is customer retention important?
Customer retention is important because it helps companies grow. This sounds counter-intuitive. How are you going to grow if you just keep your existing customers?
Well, the longer you can keep customers using your product or service, the more "sticky" they become.
Customers who stay with you longer will make repeat purchases and will also refer their friends. Customers will continue to buy from you if they are satisfied with your services or products and will also refer you to their friends and family, which then creates more opportunities for growth.
Another reason for retaining customers is the cost-savings in spending money on acquiring new customers in comparison to keeping your current ones happy and satisfied. Many businesses have found out that it costs five to ten times as much money to acquire a new customer than it does to retain an existing one. Not only does the cost of acquisition increase, but so do the marketing expenses because you are continually trying to identify new markets or segments to tap into.
Want to quantify the savings you can make by increasing retention?
How can you retain more customers?
Now that you've seen how much money you can save by simply increasing your customer retention by 5-10%, the next question you're asking is HOW!
In order to retain customers, it is essential to pay attention to not only their needs but also their wants. Customers need to know that there are still people out there who are committed to providing them with the best customer service possible.
Companies can prevent customers from drifting away if they listen closely to their customers and take action when necessary.
Our 3 top recommendations for ensuring customers remain loyal to your business are below:
Acknowledge a customer's experience (good or bad) - Customers enjoy being right and it's important that you take ownership if you make a mistake.
Focus on what the customer needs, not what you want to sell - Try to speak in language that customer's understand. Study their pain points and demonstrate how your product meets their need.
Be responsive with them - This sounds so simple but it is so important for businesses to get right. Customers want to be updated with the progress on things. Across any organisation we've consulted with, the lack of communication or inconsistent messaging has always been the largest feedback theme that comes through. Let's put it this way ... we've never heard a customer complain about receiving too many updates.
How can you continue to meet the needs of your customers?
There are an array of different ways that you can ensure you're continually meeting the needs of your customers. There's a saying that we have 2 ears and 1 mouth because we should be listening more than we talk. This concept should also be applied to your business - Listen more than you talk!
Our top 3 recommended approaches to listening more to your customers are below:
Set up a formal listening program, also known as a Customer Experience Measurement program.
Set up a regular cadence with your front-line staff who are speaking to your customers daily. This will ensure you're always keeping your finger on the pulse of what customers are saying & needing.
Establish a Voice of our People (VooP) program. This program allows front-line staff to submit ideas / initiatives based off of customer pain points they're hearing. All ideas can be ranked and voted upon, with the most appropriate initiatives turned into projects.
If you would like to chat about how BMC could assist you in establish any of the above listening programs, please get in touch!
Ben the Bearded Man