According to a published study by Bain & Company, retaining customers costs companies 7 times less than attracting them. In addition, by retaining only 5% of your customers annually, you can generate up to 95% additional profit. Sounds tempting, so let’s figure out the reasons for customer churn and how to retain customers.
What is Customer Retention
The customer retention rate is a ratio that how to build phone number list reflects a company’s ability to build strong and long-term relationships with customers. It is calculated as a percentage of the number of customers at the beginning and end of the reporting period.
The customer retention rate is calculated as a percentage using the following formula:
Example : You decided that your reporting period is a month. At the beginning of the month you had 160 clients, and at the end – 190. At the same time, 40 buyers came to you during the month.
We calculate:
190-40 = 150
150/160 = 0.93
0.93×100 = 93%
The ideal rate depends on the industry and product, but it is best to try to keep it at a level of 85% and above.
Attracting new customers or retaining old ones – what is more important
Is it possible to win a football match by playing only as a defender or a striker? Of course not. In business too. It is important to find a balance between attracting and retaining customers.
Work on customer retention should begin from the moment the company is founded. If at the beginning of the journey more time and resources are required to attract new customers, then as the customer base grows, the value of retention increases.
Let’s compare these two approaches in the table:
Attraction Marketing Retention Marketing
more expensive cheaper
trust must be earned Trust has been earned, it just needs to be reinforced
the buyer is wary of the offer the buyer is open to offers, knows what he will get
need to stand out from the competition the client has already chosen you, the main thing is not to lose his attention
The main conclusion that can be drawn from the table is that in the long run, retaining acquired customers will bring you more benefits than attracting new customers.
By improving your customer retention rate, you will be able to:
Increase profits . They are increased by purchasing customers who remain with you, as well as saving on attracting new ones.
Increase sales of new products . Regular customers are more willing to buy new products or services.
Launch word of mouth . Customers who love your brand will be willing to recommend it to friends, relatives and colleagues.
Increase brand loyalty . Customers is it wichtich om de strategyen te ferkennen dy’t se who are satisfied with your product and service are willing to forgive you for small mistakes without running to competitors.
Balance cash flow . The more regular customers a company has, the more stable its profits. You will be able to make plans for business growth without fear of a sudden drop in income.
Get more feedback . Customers who have made a purchase only once are unlikely to want to leave you a detailed review or take a survey about improving the quality of service. Loyal customers will help you with this.
Why do customers leave?
There are several reasons why customers leave. By analyzing them, you can see problems that, if corrected, will help increase the retention rate.
Poor quality of product or service
Everything is simple here – if the product does not meet expectations, the client will go to a competitor. In this direction, you need to work not only with the quality of goods or services, but also with the expectations of the target audience. When buying a cheap product, the client is ready to put up with some inconveniences, but if you raise his expectations with promises, the impression may be spoiled.
Secret Tour
we will show you from the inside how our marketing works, thanks to which customers pay attention to us, fall in love with our product and buy it
Bad service
A Forbes study found that 64% of customers au emai list are willing to abandon a purchase if they are unhappy with the service. At the same time, they may be completely satisfied with the product. Improve your service in all areas of your business: from hiring friendly staff to the speed of invoicing.
One-time sales
The client will not always remember your company, even if he liked the product or service. Having seen an interesting offer, he may turn to a competitor. To avoid customers leaving for this reason, keep in touch with them – offer promotions, discounts, make trigger mailings. Simply put, remind them about yourself.
Natural outflow
Customers’ life circumstances change, so there is always a natural outflow. For example, a person moved to another city, and therefore your food delivery became unavailable to him. Or a customer often bought children’s clothes from you, but the child grew up. It is impossible to eliminate natural outflow, but it is advisable to collect feedback from customers to understand the reasons for leaving.
