Simple facts and statistics that will prove that customer retention is cheaper than customer acquisition

Great business managers around the world are always looking implement a customer retention plan, that’s because they know that repeat business is the best way to maximize sales. No matter how impressive your product or service is, it’s important to pay attention to those customers who’ve already bought from you.

In order to maintain the relationship with your brand and to keep past customers coming back to you again and again, you should have at least one or two employees focused on customer retention. These employees should primarily be monitoring the customer turnover and engaging previous customers to maximize sales opportunities. The best way to have success retaining your current and previous customers is to implement standardized routines throughout the customer journey.

What is Customer Retention?

Existing customers are 50% more likely to try new products, and spend 31% more than new customers.

So what exactly is customer retention?  It isn’t just about minimizing customer churn or increasing revenue in the short term.  A customer retention plan is a way to increase profitability in the long run. Thinking ahead of time about how you will keep your customers coming back for more will help you to create a loyal band of customers dedicated to your brand, products and services. Your customer retention activities aren’t something you commit to for a short period of time, you don’t stop engaging with your customers at the end of the quarter. It’s a long-term strategy that should work together with your traditional marketing and everyday customer communications.

It’s a well-known stat that it costs 7x more to gain a new customer than to keep an existing customer. This is because the barrier to entry is much higher for top of funnel prospects.  The fact of the matter is customers don’t buy from brands they don’t know or trust.

‘Customer engagement’ and ‘customer loyalty’ are difficult to measure accurately so marketers tend to focus on activities that can give them hard, reliable & impressive metrics. However this doesn’t mean that retention isn’t important it’s an integral part of many successful and prosperous businesses.

Still not convinced that customer retention is more important than customer acquisition? Here are five benefits of designing and implementing a customer retention plan:

  1. Customers buy from brands they trust

According to the Pathwwway internet gaming provider and customer retention specialist, existing customers are 50% more likely to try new products and spend 31% more, when compared to new customers.

You’ve already done the hard work with your previous customers and clients. You’ve guided them through the sales funnel from prospect to customer. Slowly and steadily each step of the way you’ve built trust and strengthened your customers relationship with your brand. You’ve built the relationship and spent the time & money doing so.

Having a customer retention plan will ensure that all that hard work doesn’t plateau after one sale and your customer will be coming back for more. As soon as you have a customer base, even if it is just one customer, retention should be on your agenda.

  1. Customer Acquisition is costly

Did you know that it costs five times as much to attract a new customer, than to keep an existing one? Acquiring new customers is critical to business growth but it’s a strategy that comes with a high cost.

Once you’ve factored in outbound marketing, inbound marketing as well as salaries for a sales team, you’ve got a budget that’s looking rather large. To keep the ball rolling and to keep acquiring new customers you must continue all these activities and continue to add more into the mix.

Having a retention plan gives you access to a market that is more likely to buy again or try out a new service you’re offering. All without the endeavor of a new and costly marketing campaign.

3 . Satisfied Customers Talk

Loyal customers are the best kind of customers because customers who stick with your brand become your best marketers. It’s a well-established fact that, satisfied customers tell nine other people about their positive experience. Satisfied customers who are loyal to your products create positive impressions via word of mouth marketing and send referrals your way. By implementing smart retention strategies you can increase the number of advocates you have and boost customer acquisition by simply treating your previous customers well.

  1. Work on building those customer relationships

Are your customers initially enthusiastic about there first purchase and then fall off the radar? Studies have shown that once a customer purchases your good or services at least three times, the chance of them buying from you again increases to 50%; a great incentive to prioritise retention over acquisition.

Some customers need a little push to make the second or third purchase. Demonstrate your value and build relationships with your customers by keeping in touch. Consistent and thoughtful communications will gently increases the chances of converting that potential sale to a closed one.

A targeted marketing campaign or a clear thoughtful customer journey can work wonders at retaining these customers. Specific targeted campaign is a lot more cost effective than creating & implementing a campaign to acquire new customers. 

5 . There’s no ‘best’ way

You might be thinking, “What’s the best way to implement customer retention so I can increase sales, generate referrals and boost engagement? Should I offer a loyalty points system? Could I make my services more personalized? What abut social media, is that the key?”

When it comes to keeping your customers onboard there’s no one size-fits-all approach. Any retention activities you put in place need to make sense within the context of your business, such as those used by Pathwwway, which  focus on with internet gaming, when dealing with those clients only. It needs to integrate into the nature of your business model and with your customers.

However, there are two well-documented simple and effective ways to keep your previous customers engaged. The two pillars of any successful customer retention plan are to deliver quality products and impeccable customer service.

If you want to start seeing the benefits of customer retention start with making sure you are delivering those qualities to your customers and they’ll be coming back for more.