Top 5 benefits of customer retention
- Reducing the cost of customer acquisition
- Increasing the value of each sale
- Gaining insight into your customers
- Building referrals and loyalty
- Reducing customer churn
Implementing customer retention strategies takes time and resources, so why should your business prioritize it? There are many benefits of customer retention, both quantitative and qualitative. It can make your business more profitable in the long term and improve your brand image in the eyes of your target market.
5 benefits of customer retention
1. Reducing the cost of customer acquisition
Acquiring new customers is costly, time-consuming, and energy intensive. Often, after you’ve spent weeks or months nurturing a lead, they may decide to head to a competitor. When you have a high degree of customer churn (your customers don’t return to your business after an initial purchase), you’re forced to look for new customers.
However, when you focus on customer retention instead, your existing customers are more likely to make multiple purchases from your business, meaning you don’t have to invest as heavily in the customer acquisition side of your business.
2. Increasing the value of each sale
Even when a customer has made a purchase, the sale isn’t over. A big mistake organizations make is not following up with customers to upsell or cross-sell additional products and services. Those follow-up efforts can not only increase customer retention but also increase the value of the current sale.
For example, if your customer purchased a subscription from your business, why not reach out to them in a month to see if they’re interested in increasing their subscription to the next level? If the customer bought your product, see whether they would also like to add a related product to round out their purchase.
Create thoughtful satisfaction surveys and improve customer retention for your company today.
3. Gaining insight into your customers
Successful businesses are good at what they do because they know their customers. They aren’t just familiar with their demographics; they have detailed insight into the challenges their customers face, the emotions they feel, the level of transformation they want to achieve, their readiness to buy, and their sense of loyalty to a brand.
Customer retention requires businesses to have this level of understanding. However, this insight isn’t just helpful for customer retention. You can apply it to other parts of your business as well, such as product development or customer service.
4. Building referrals and loyalty
One of the biggest benefits of customer retention is that it helps you get more people interested in your business. When a customer continues to return to your business, they build a sense of loyalty toward your products and services.
In turn, they begin to refer your business to their family, friends, and acquaintances. Not only that, but they may also leave positive online reviews, which act as word-of-mouth marketing online.
As a result of customer retention efforts, you can further reduce your cost of customer acquisition. New customers will come to you because they’ve seen how well you’ve treated others.
5. Reducing customer churn
Customer churn is the polar opposite of customer retention. There are many reasons for customer churn, such as poor quality of products, bad customer service, or better offers from competitors.
Losing a customer, no matter the reason, isn’t good for any business. When you actively focus on customer retention strategies, you can reduce the number of people who stop doing business with you. This can also lead to fewer negative reviews — in person and online.
Customer retention should be a primary strategy for every business, no matter how successful you are. Be sure to apply customer retention tactics, such as personalizing each engagement with customers and giving them opportunities to provide feedback.
You can automate many customer retention processes using software like Jotform to make your processes more efficient and to ensure you reach out to as many customers as possible.