Customer Retention: Top Marketing Strategies to Improve Profits

May 11, 2020 Business

Have you ever heard the saying, “you don’t know what you have until you lose it?” This statement couldn’t be any more accurate when it comes to the subject of customer retention.

While bringing in new customers is a crucial indicator of growth for any business, losing customers can very quickly mess up your profits — and your bottom line.

According to a report from Destination CRM, it costs five times more to recruit new customers than it does to retain current ones. And how about building long-term relationships with new customers? That number goes up to 16 times more. Marketing Metrics states that a repeat customer is 60% likely to patronize your brand, while a new visitor to your business is only 20% likely to deal with you.

With businesses worldwide losing an average of $1.6 trillion annually as a result of customers jumping ship, it is interesting to note that less than one-third of business executives consider customer retention strategies a priority.

Too many businesses are plowing all their marketing resources into lead generation and customer acquisition at the expense of existing customers. If you notice that your business is making increasingly less profit, it could mean that your marketing does not cater to them.

What is Customer Retention?

Customer Retention is the activities, actions and techniques used by an organization to retain its customers over a specific period of time. With these activities, customers tend to be loyal to the company, or the product; at the same time, many of these customers often choose the company or products over other competitors.

Uniquely, retained customers are more likely to be your products and company’s ambassador; that is to say, they could go to any extent to give you and your products satisfactory reviews. Additionally, they trust your brand.

Nowadays, many individuals tend to read product reviews before buying. Therefore, satisfying reviews from your customers will have positive effects on your sales. This will have beneficial effects on your bottom line.

To reduce the number of customer defections, an organization need to put in place a good customer retention program.

A definition of customer retention program

Customer retention program is a business strategy and process adopted by an organization to strengthen and improve its customer relationship; in effect, it will help its customers to keep coming back.

All things considered, a good customer retention program put in place will increase customer loyalty.

Importance of Customer Retention

A satisfied customer is a happy customer. For this reason, you should always aim to keeping your customers happy with the products and services on offer.

Here are benefits associated to strong customer retention program.

  • Increase business revenue:

    Your company profitability could be affected if you have to spend more on marketing to new customers. With good retention program in place, you spend less on marketing and hiring sales team; hence, reducing the cost impact on your bottom line.

  • Build customer relationship:

    A good customer relationship strategy will have a positive effect on your brand. With good customer relationship, you have a better conversion rate. In addition, you are more likely to increase your customer purchasing power.

  • Increase brand value and reputation:

    A company with good customer retention program always have strong brand reputation. Your strategic retention program could simple turn out to be a referral system. That is to say, your satisfied customers will likely refer other clients to you; thus, helping you to create good reputation and brand awareness.
    In general, this will improve your brand identity.

  • Brand Trust:

    Customer loyalty and satisfaction will create a positive impact on your busibess brand. Striving hard to improve your brand trust should be a top priority within your organization. Without trust, your business will fail, because you will be losing customers on a regular basis. For this reason, you should build a solid brand trust through customer satisfaction and retention strategies.

  • Reduce customer acquisition cost:

    You spend more when it comes to acquiring new customers. According to destination CRM, it will cost a company five time more to attract a new customer. This cost is high; therefore, a decent customer retention program put in place by a company will significantly improve the overall company performance.

  • Upselling opportunities:

    Another benefit of customer retention is that you have the opportunity to upsell and cross-sell your products and services to existing customers. Here you already have the customer; you only need to pitch other products to them. This will save you time, money and energy on acquiring new customers.

As shown above, a good customer retention program has lots of benefits. Not only for its effects on the company’s overall performance, but also for its impact on building a solid brand.

According to Brandongaille, an average of 12 – 15% of existing customers account for 55 – 70% of revenue. And also, raising customer retention rates by just 5 % can boost business profits by 25 – 90%. Your long time customers hold much higher value for your business than new customers, plain and simple.

The right thing here would be to tweak your marketing strategies to sufficiently accommodate current customers. That is if you do not want your profits to suffer for it. Of course, you’ll need to be using CRM software to make this possible.

We’ve outlined a few marketing strategies to help you boost brand loyalty amongst your existing customers; also, it will help you keep your profits on the up and up.

5 Ways to Build Brand Loyalty

Ways to Build Brand Loyalty, How to Build Business Brand, Customer Relationship Management

While customer retention is vital to the survival of a business, brand loyalty is equally important too. As a business, you need to always strive to have competitive advantage over your competitors. In order to do this more effectively, you need to build a reputable brand.

The following strategies will help build brand loyalty; at the same time, stabilize your customer retention program.

1. Be proactive in your customer relationship management

If you continuously keep an eye on the right metrics, it will be possible for you to notice the warning signs whenever a customer is considering leaving your business. The key indicators that show what kinds of products a customer buys and their purchase frequency, the way they use the product, if and how often they have made inquiries to customer service, if and how many referrals they’ve gotten, and much more.

Let’s say, for instance, that you have a segment of customers who usually leave feedback after every purchase or who purchase at least once every quarter of the year. Whenever these numbers drop, it may be a sign that those customers plan on leaving. Using your CRM, build a list of these customers, and craft a series of follow-up emails to them to find out why they haven’t been purchasing or leaving purchase feedback as usual. Their replies will give you insight into what could be wrong and will help to fix the problem immediately and prevent them from going.

2. Implement social proof

Social proof comes in the form of star ratings, reviews, and testimonials. These sorts of public domain perceptions about your brand can be the difference between retaining your current customers and watching them walk out the door.

The fact is that almost no customer will consider buying a product or subscribing to a service from any company without first reading a review or a testimonial. This fact is why popular review platforms like Yelp, Trustpilot, and more niche-specific sites like essay writing review service, Best Writers Online, curate reviews from customers about different businesses all over the world.

Use this to your advantage so that your present and new customers can quickly come to terms with your brand. Reviews and testimonials are especially effective because they are not your words, so they do not sound ‘salesy’; they come from customers, most of whom have no stake in your business.

3. Reward your VIP customers

Like the first point, this is another proactive measure to keep your current customers with you. Your customers patronize your business at varying levels. With your CRM software, you can easily filter the customers whose activities account for the bulk of your revenue. This segment of customers is essential to the success of your business. You should be doing everything possible to make sure that these customers do not ever walk away.

One way to do that is to implement a rewards program for them. Follow up on this group of customers and inform them about the rewards and incentives you have created specifically for them as a way to appreciate their patronage. Whatever inventive type you choose to go with, ensure that it feels commensurate to the amount of business they have brought your way. This move not only keeps them loyal to you, but it also allows you to cross-sell or up-sell them in the future.

4. Implement a robust after-sales strategy

It would surprise you the number of businesses that end their interaction with customers immediately after they conclude the sale. This behaviour is a terrible way to handle customer relationships. If you want to maintain or boost your brand loyalty, an excellent after-sales strategy will be a step in the right direction.

Your after-sales strategy will put you in your customers’ good books. Follow them up and make inquiries into how your product/service is helping them meet their needs. Be calm and listen to all they have to say. If they have any complaints, it could be that they are doing something wrong. If you find that the fault is with the product/service, you can take steps to correct it immediately to prevent future complaints.

This concern for them tells your customers that you are not just after the sale, and that can only be a good thing for you as they’ll be more open to using your company or referring others to you.

5. Activate CSR mode

According to a 2012 survey report from Scribd, 72% of participants stated that they would be more open to using and recommending a brand that is involved in some social cause. In today’s business clime, corporate social responsibility is a must if you want to improve your overall brand perception among current and potential customers. Sometimes, using for messaging and platform as a voice for something greater can lure customers from your competitors.

Find a social cause. It could be anything: fighting forest fires in Australia, planting trees to fight climate change, donating a portion of your profits to combat child trafficking, educate the girl child in third world countries, or helping specific charities.

It is a good idea to even ask your customers about this. Send out a survey if you have to so that you can find out their general leaning in terms of CSR efforts. When you’ve made your pick and started implementing it, make sure to add it everywhere important subtly. That is, social media page, website homepage, and all compatible marketing strategies. You cannot fail with this.

Final Words

Focusing all your marketing efforts to bring in new customers is a recipe for disaster. On average, losing a customer costs any business a global average of $243. Also, new customers do not immediately convert as much as current customers. I’m sure these scenarios show you the urgent need to change strategy.

Apply the marketing strategies mentioned in this article, and you will stand a much better chance of saving on your marketing budget, boosting your profits, and experiencing an increase in brand loyalty.

Author:

Aaron Swain is a writing specialist. He is passionate about marketing and SEO. He expands and improves his skills throughout the writing process to help and inspire people.

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