There had been times when customer retention wasn’t as much of a priority like these days. Those times are now gone. Why? Business owners and marketers have started to realise that the cost to acquire a new customer is increasing, perhaps due to competitive and saturated markets. Bain & Company´s research has shown that increasing the customer retention by just 5% can make a huge impact on your business [1].  That means you can boost your profits by 25%-95%.

A Cross-Channel Marketing Report states that 82% of companies agree with that customer retention is cheaper that customer acquisition itself [2]. It also adds that despite this figure, the majority of marketers still tend to focus on acquisition. Why? We don’t know exactly. A fair assumption might be that we are accustomed to wanting more customers, and ignore the ones we already have? Or perhaps we lack the right tools or education? Customer retention can be understood as a lifetime value of a customer or a potential to achieve a profit from the customer as long as they are bound to the company´s brand.

Further research, conducted by American Express shows that 66% of customers have no problem in spending 13% more on a product when they believe the company provides top-notch customer service. Additionally, about 75% of customers are willing to spend more, if they had a positive experience [3].

So what does that tell us about customer loyalty?

Having a long list of loyal customers is the holy grail of your business because you can always expect a steady stream of revenue. Especially knowing the 80/20 rule – whereby (plus or minus) 20% of your top customers contribute to 80% of your revenue! So, customer retention should be your top priority. Good customer retention is crucial for the growth and expansion of any business. Customer retention can significantly improve your sales and profit. Many business owners are wondering how to increase sales and it seems that the answer was underneath your note all this time. The simplest way to do this is with customer retention!

How to increase customer retention?

We will start by analyzing the process of customer retention. In many cases, business owners and managers think that providing services or products that meet customers’ requirements is enough to keep their customer coming back for more, but that’s not the case. Customer retention is much more complex and involves different activities. First of all, you should enhance customer satisfaction by delivering reliable customer service and product quality. Next, you should motivate every client to keep using your products (or services). Finally, find nifty methods to encourage your customers to recommend your business to others.

While we are talking about this, we should mention customer satisfaction in e-commerce as an example. To improve customer satisfaction, many e-commerce websites are using the same tactics. They are offering free toll numbers, 24/7 live chat support, creating help pages, offering different payment options and few other things. The fact is that companies that are practicing these things manage to get better customer satisfaction and ultimately better overall customer retention and loyalty!

Obviously, customer satisfaction is not the only thing that can improve customer retention.  For instance, you should remember that it’s not all about your products/services, it’s about providing help to your customers. So you should be able to provide useful information to them for free (maybe in a blog section on your website, or a forum). In addition, it is a wise move to stimulate direct action by adding a call to action buttons and boxes in the right place. Finally, you can also find a suitable way to reward loyalty. A simple gift should be enough to increase customer retention.

Increasing sales with customer retention

So, if you want to increase sales with customer retention, you must take care of a few things. To start with, you should resolve any customer issues or disputes promptly. Keeping your e-commerce website or any type of business free of hassles is one way to boost sales and keep your customers coming back. As we said before, you must maintain customer satisfaction at a high level all the time too. In the end, feel free to ask your customers for referrals and don’t hesitate to award them for their activity.

We hope that this article will help you understand the importance of customer retention and how it affects sales.

[1] http://hbswk.hbs.edu/archive/1590.html

[2] https://econsultancy.com/blog/65872-15-fascinating-insights-from-econsultancy-s-2014-reports/

[3] http://about.americanexpress.com/news/docs/2012x/axp_2012gcsb_us.pdf