While winning business is an incredible feeling, study after study highlights that holding onto existing customers is more valuable for businesses. Management consulting firm Gartner Group has declared that 80% of an organization’s future business will come from 20% of its current customers1, while business tome Marketing Metrics suggests companies have a 60-70% chance of selling to an existing customer compared to less than 20% to a new prospect2.
Unfortunately, amid the whirlwind of the pandemic, many companies faltered on retention efforts during the past few years. Competing priorities and travel restrictions that hindered traditional retention strategies created an environment where previously strong client relationships were neglected and consumers felt less attached to brands that were once important to them.
Little wonder then that 41% of CEOs recently polled by Chief Executive magazine cited “shifting focus to retention” as a task they had undertaken or considered pursuing during the previous three months3. This was the surveyed group’s biggest priority by a significant stretch and a clear sign that many executives are increasingly aware of the need to get the balance right between engagement and retention.
While customer engagement creates meaningful connections that can result in purchase activity, a strong customer retention strategy ensures consumers keep returning to a business and ideally become loyal advocates. Which leads to a couple of obvious questions – what can companies do to transform engagement into retention and how will they know if they are achieving success?
It is nigh on impossible to turn a first-time customer into a customer for life but you sure can lose them forever. For many people, customer onboarding is their first impression of a business and that is why it is essential to use a platform or system that is memorable for all the right reasons. The better your onboarding process, the more chances customers will be back for more.
The only thing customers love more than a little appreciation is when that appreciation comes in the form of discounts or rewards. A VIP program is a great way to reward loyal shoppers and inspire more purchasing activity, while offering incentives to lapsed customers often inspires them to return to the check-out.
Every customer is different and companies that invest in understanding who they are and what they want have a head-start on their competitors. With a quality customer engagement platform, businesses can capture data about their customers and, in turn, send them individualized promotions and targeted campaigns based on their spending and visiting habits.
Many companies make the mistake of seeking customer feedback without a similar commitment to responding to it. Studies have shown that responding to feedback personally can increase incremental revenue by up to 21%4 and mitigate the risk of customers sharing negative sentiments on third-party review sites. Sending personalized offers to unhappy customers has also been proven to turn them into engaged customers and ultimately retain their business.
Companies have no shortage of metrics that can be used to measure their customer engagement and retention efforts. From conversion, churn and average session rates to repeat purchase ratios, they can gain definitive insights into how well - or poorly - they are performing. Crucially, a small increase can have a big impact.
A famous study conducted by Bain & Co found that increasing customer retention by as little as 5% correlates with at least a 25% increase in profit5. Those are the sort of numbers to put a smile on any executive’s face, with a boost in metric performances by even a percentage point or two capable of delivering substantial revenue increases or cost savings via various forms.
Increasing customer retention rates means companies can reduce the need to market to new consumers, which is often a time-consuming and expensive affair compared to marketing to existing customers.
Countless studies have shown that loyal customers are the cornerstone of business success, hence why a reduction in churn rate is a huge win. Repeat customers engage in more positive word of mouth, require less investment and are likely to spend more than new customers.
There is a direct correlation between how long consumers spend on a company’s online channels and how likely they are to make a purchase. Little wonder that increasing ‘average session duration’ metrics by even a few minutes can ensure significant returns.
Amid many statistics about this most important of topics, it is concerning that one study found 44% of businesses focus on customer acquisition and a mere 18% dedicate their attention to customer retention6. Given the increased purchasing power of loyal customers, many companies clearly need to rethink how they are approaching the situation and that can start with a greater appreciation for and strategic focus on shoppers who are already in the room.
More than 90% of people are more likely to be repeat customers at companies with excellent customer service. Learn why businesses turning their focus to a customer-centric model to enhance customer experiences.
 Five Customer Retention Tips for Entrepreneurs (forbes.com)
 Don't Get Lazy About Your Client Relationships (forbes.com)
 Customer Retention: CEOs Share Strategies (chiefexecutive.net)
 The Ultimate Guide to Customer Engagement | Thanx
 A 5% Increase in Customer Retention Boosts Profits Up to 95% (smallbiztrends.com)
 70 Powerful Customer Retention Statistics You Need To Know in 2021 (semrush.com)
Customer Experience CX
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Customer Experience CX
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