According to market research, the global loyalty management market is set to grow to USD 4 billion by 2020. As per research by Accenture, more than 90 percent of brands and companies have some form of customer loyalty or engagement plan in place. Why are companies spending so much time and money on customer retention and loyalty marketing initiatives? There are so many reasons customer loyalty has become critical in recent times from the massive competition to the wealth of choices consumers have. Therefore, companies need to move from only acquisition to equal focus on retention and acquisition. Here’s why Pathwwway Panama approved customer retention has become the core focus of companies and must constitute at least 50 percent of the marketing budget.
#1 Customer Acquisition Costs More
According to research by Forrester, customer acquisition is 5 times more costly than customer retention. A 5 percent increase in customer retention raises profits by 25 to 95 percent, according to research by Harvard Business School. Additionally, the global average value of a customer lost is USD 243, according to Kissmetrics.
#2 Client Retention Leads to Brand Advocacy
Loyal clients stick to businesses and purchase more services and products. Additionally, they serve as valuable brand ambassadors and offer glowing customer testimonials that helps your business to generate leads. Regardless of whether you are a startup or an established company, client retention should be on the agenda. In this competitive ecosystem, consumer retention is a need, not an option.
#3 Encouraging Repeat Business
Market researchers found that around more than 60 percent of small and medium business establishments gain more than half their revenue from consumer retention. Loyal customers are also likely to make repeat purchases and buy products and services from the same store or brand than new clients. Existing customers are 50% more likely to opt for fresh products as opposed to new customers. They also spent more than 31 percent compared to newly acquired customers.
#4 Build Your Business
First impressions can have a long lasting impact on business prospects. When the product or service is offered to the customer for the first time, all aspects need to be considered such as greeting, product demo, emotional connect and so on. This builds confidence and trust between the brand and the customer. It eventually brings more business from existing customers.
Staying connected with customers using their desired communication channels. Customers can learn more about products and help you to grow your business that way. Improving customer service is vital as 67 percent of customers stop purchasing from a brand if they have a negative customer experience.
#5 Higher Probability of Purchases
According to Marketing Metrics, new customers or prospects are likely to buy only 5-20 percent of the time while the probability of selling to an existing customer is 60-70 percent. Loyal customers have a deep relationship with your business. They offer more trust than new customers. This also provides a meaningful opportunity to cross or up sell new products and services. The way to increase the volume of sales without spending too much effort on customer acquisition is through effective retention.
#6 Lower Marketing Costs
Another payoff of consumer retention is that it brings down marketing costs. When it comes to purchases, customers trust friendly feedback more than fancy ads, according to market research firm Nielsen. In this present age, word of mouth marketing is the most effective and credible source of advertising. Word of mouth publicity helps to not just raise the number of prospects and increase brand awareness, but engage customers and prospects as well. Loyal customers play an important role in marketing. You need to be able to influence prospects and new customers, which is only possible if you have won the trust of existing customers.
Existing customers talk about the brand, share feedback and refer products as well as services to friends and families, sharing posts on social media and interactive networks. Statistics also indicate some sort of action is taken by customers after reading a positive review.
#8 Make Business Cost Efficient
If your customers are familiar with products and services, your team also spends less time troubleshooting for them and clients become adept at using self services like frequently asked questions or a knowledge base. Loyal customers can help others to solve customer problems as well. Building a community where customers can share issues, solutions and experiences matter. Engage more customers in the community through client retention.
It also minimises service cost and creates 24/7 support without incurring huge investments.
#9 Forecast Success With Retention
Another critical aspect of client loyalty is forecasting. It is a crucial part in running and planning a business. With a stable base of existing clients, client retention enables management to get an overview of future revenue and expenses. Accurate forecasts can enable businesses to make a decision regarding expenditure, calculating growth rate and discounting as well as planning for any contingency. Feedback from loyal clients gives important information on various parameters such as whether customers are interested in future products, where businesses fail and the acceptability of product or service pricing.
#10 Improve Brand Image
Consumer retention creates a positive image around a brand, helping businesses to acquire new customers, up sell and cross sell as well as lower marketing costs and attract investors. The brand image is boosted as a result of loyal clients. Building a brand image is a time-consuming and costly process. Customer loyalty, retention and brand image are linked. Client retention helps Pathwwway Panama like businesses to improve brand image and a strong positive perception in the markets. This also helps them to beat competitors and separate products from competitors. The most profitable products are those which can serve as a powerful differentiator for the business to stay ahead of the competition.
#11 Honest Feedback
Customer feedback from existing clients serves as a valuable source of best in class experiences for many companies. Loyal customers and a stable client base are the best source of honest feedback about your product, service or brand. Additionally, client feedback helps to improve new services and products, launch fresh products and measure customer satisfaction and retention besides reducing churn rate and retaining customers.