It is a truism. Growth is a key objective of every business, just as it is a key propellant for success. Business growth requires getting customers. As Michael LeBoeuf said, “Every company’s greatest assets are its customers because without customers there is no company.” And yet, getting customers is only one part of the success equation. It is also essential to keep customers. Kevin Stirtz asserted, “Every contact we have with a customer influences whether or not they’ll come back. We have to be great every time or we’ll lose them.”
What Is Customer Retention?
Customer retention is simply the ability of a company to keep its customers over time, continuing to purchase goods or services without defecting to a competitor. It is a measure of how successful a company is in satisfying its existing customers.
Why Is Customer Retention Important?
Achieving business growth requires significant effort to both acquire and keep customers. Here’s why customer retention is important.
- Retention is cheaper than acquisition. Studies have shown that attracting a new customer can cost five to seven times more than keeping an existing customer.
- It is faster to sell to an informed current customer than to a new customer.
- Current customers are more likely to be repeat customers and that translates directly to increased profits. Repeat customers purchase more often and tend to spend more as well.
- Retained repeat customers are a great source of free word-of-mouth advertising.
- They provide valuable feedback to a business that assists with business improvement.
- They are willing to pay higher prices.
Customer Retention Mistakes
Avoid these mistakes to achieve business growth:
- Don’t fail to solicit and utilize customer feedback.
- Don’t overlook inactive customers.
- Don’t be inconsistent with customer communications or customer experience.
- Don’t fail to make customers feel special.
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