Customer retention refers to engaging the existing customers to continue buying the products or availing of the services over a longer period of time.
It is very important to build stronger relationships with the existing customers for better lead generation. This way the customers trust the company and are likely to be loyal to the brand.
When the companies try to satisfy the customers with their products, they will buy often and will act as your brand advocacies.
Hence retaining the existing customers is vital for the growth of the organization.
Importance of Customer Retention
According to the statistics, it is quite easy and cheaper to retain existing customers than to acquire new customers. The company is likely to spend five times less money on customer retention when compared to acquisition costs. According to a Harvard business review, an increase in customer retention by 5% will impact the profits positively by 25-95%.
Also, most of the brand’s future profit comes from 20% of the existing customers. These numbers prove that the companies need to devise strategies to retain the existing ones rather than acquire new customers.
Top 3 Benefits of Customer Retention
It is quite true that selling a product to a new customer is expensive and is more difficult than selling it to the existing customer. Companies need to understand the innumerable benefits of retaining customers. Maintaining customer loyalty and building trust paves way for stronger relationships with the customers.
1. Increase in sales numbers
Customer loyalty has a direct impact on the sales numbers of the business. The loyal customers are more inclined to buy your products and they act as word of mouth for your brand. If the company launches a new product, the existing ones are more likely to try your product which will increase your sales even in the product introduction stage.
2. Low Marketing Cost
Marketers need to spend several bucks to tailor offers and discounts to attract new customers. The company needs to allocate a marketing budget to advertise the product or the service. When it comes to selling the products to your existing customers, you can definitely save some dollars and your marketing costs are cut by a significant number.
3. Improve brand Image
Building a positive brand image will attract more customers. When you give importance to retaining the customers, these customers act as your loyal advocates and are likely to build your brand image and promote your brand to their friends or family members.
6 Customer Retention Strategies
The business needs to build customer retention strategies in accordance with the business goals and objectives for a better business future outlook. To devise strategies, the companies need to do the following:
1. Set goals
The company needs to set goals for the business. These goals help direct the activities of the employees and help them concentrate their efforts to achieve the goals. The important thing while you set goals is to keep in mind the existing customers, their interests, and their wellness. The more loyal the customers are, the more they are inclined toward the brand.
2. Understand the customer expectations
The business needs to have a good understanding of what your customer expects from your product or your service. The companies need to reflect on some of the questions such as:
- What are the needs and requirements of the customers?
- How do the customers perceive your brand?
- What are the customers’ interests?
- How often do the customers buy?
- How can you respond to the customer’s feedback?
Answering these questions and understanding the expectations of your existing customers will help the businesses to enhance the experience and build satisfaction over time.
3. Build trust and Loyalty
It is very important to provide a positive buying experience for the customers which will help them to come to us again and again. The buying experience seems to be much more important than the product or service performance nowadays. When you greet the customers, address their issues, and enhance their experience, the company/ the brand is likely to build trust among the customers. They are likely to be more loyal over time. The loyal customers indicate that the customer lifetime value is increased.
4. Respond – respond – respond
Communication is vital for any business. It is very important to respond and resolve the issues of the customers. Responding to their queries will help build satisfaction. A good response whenever required by the customers, will make them comfortable with the brand and they will appreciate your efforts.
5. Use of Social Media
Staying connected with the customers is very important. The world today is much more connected, and you need to share content about your product or service. You can make efforts to educate the customers by sharing appropriate content about your offerings.
6. Feedback
Always take feedback from your customers. The feedback might be positive, negative, or neutral. Respond to feedback politely and find ways to rectify the negative comments. The company needs to find ways to improve and build its brand positively. The more you respond to feedback, the more you receive loyalty and satisfaction scores from the customers.
What is CRM?
CRM is a technology that helps manage customer interactions. It helps you to stay connected with the customers and build stronger relationships with them. CRM is a vital business tool for growth that will improve the profitability of the firm.
CRM And Customer Retention
Since we all are aware that CRM is a one-stop-shop that helps in enhancing customer relationships. Therefore, it is true that customer retention can be effectively done with the help of CRM. The main objective of the CRM software is to retain customers, build stronger customer relationships and attract new customers at a lower cost. Wondering how CRM helps in retaining customers. Here’s why:
1. CRM is a centralized repository of customer data
The CRM Software contains all the information about your customers, clients, and contacts. This information can be accessed by the employees of the organization. You can have a 360 view of the customer information such as the tasks, appointments, orders, tickets, opportunities, and much more. The more you know about the customers, the better you can serve them. All the departments can coordinate, and work effectively based on the data from the CRM system.
2. The business can actively target its customers
Every product has a target audience. Not every product suits everyone. The business will have a target audience and are likely to concentrate its marketing efforts on those audiences. The CRM system helps you to send email campaigns, where you can send personalized emails to a bulk audience. CRM helps you to focus your marketing efforts and thereby increasing the revenue of the firm.
3. With CRM, you can leverage the marketing efforts
Marketing your product or service is much more important for the firm. The company needs to understand customer behavior before marketing the product or service. CRM helps you understand the behavior and expectations of the customer. With CRM, you can promote the product at the right place, right time, and to the right set of audiences.
4. CRM helps you to classify the customers
With CRM, you have a complete history of the purchase patterns and the purchase behavior of the customers. You can understand which customers are likely to purchase more often. The firm can classify the customers based on their purchase behavior. The higher purchase indicates that the customers are attracted to the brand. Hence concentrating on these customers helps with retaining them for a longer period of time.
5. With CRM, you can never miss a follow up
The business needs to keep a follow-up on the leads. The members of the organization need to create tasks, assign follow-ups, set up reminders, and find a sure-shot way to convert those leads. You need to invest your time and efforts to build stronger relationships with the customers. The more the customers trust the business, the more you are likely to flourish.
Conclusion
It is a highly competitive world today, where it is quite difficult to differentiate between brands and build a brand image. The rivals come up with many different strategies to attract customers. Hence rather than focusing on acquiring new customers, it is very important to retain the already existing customers. Businesses need to invest in a good CRM solution that helps to retain customers in the most profitable way possible. You can definitely rely on a good CRM solution when it comes to customer retention. Remember, Customer retention and CRM goes hand in hand, and it is vital for the growth and profitability of the business.