According to a research by Invesp, there are only 18% of companies that implement the strategy of customer retention. Meanwhile, the majority focuses on customer acquisition. However, the same research shows that the success rate of gaining new customers is only about 5-20%. The number is quite reversed with the profit that customer retention can achieve, 60-70%. How so?
Departing from that research, this article would like to show the assumptions that cause a lot of companies target customer acquisition instead of improving their retention. Then, this article would also like to discuss the importance of customer retention and some of its strategies so that you can generate more sales in the future. You can also implement a Sales Application to boost your sales.
Table of Content:
Table of Content
Customer Acquisition Increases your Profit Quickly
Customer acquisition means attracting new customers. The research result mentioned above does not mean that you should stop gaining new customers at all. In fact, customer acquisition is the first thing that moves businesses.
The first basic step to gaining new customers is to identify qualified potential customers and promote the product or service through relevant media. If the strategy is executed precisely, companies will gain promising new customers.
However, the two processes are not cheap because they require thorough research and sometimes expensive promotion platforms. That is why companies that tend to focus more on customer acquisition spend more money than earning more profit. Moreover, if companies keep looking for new ones, the lifetime value of the existing customers might decrease and cause losses to the company.
Why is Customer Retention Important?
For a company that is going through a continuous growth, the focus of the marketing should shift towards retaining the customers. Customers who have consumed the company’s products or services repeatedly may have a longer lifetime value, help the companies to create personalized content, promote the brand, and join the referral program.
Furthermore, customers that previously have purchased your products have a higher buying rate compared to the new customers. In fact, 50% of the existing customers have the tendency to try new products and spend 31% more compared to the new customers.
These numbers can be achieved at five times cheaper than customer acquisition. However, still, only one-third of businesses man that prioritize customer retention. This is because of several reasons.
First, the strategy of retaining customers is quite different from the customer acquisition. The latter depends on the ability of the companies to reach and attract new audiences while the former is more about ongoing engagement, personalization, and value provided over time.
By analyzing factors such as the purchase and search history and feedback from the customers, companies can implement better personalized marketing strategies. This personalized program can deliver the value that the companies want to the specific customer. In short, customer retention is to offer products to the right people with the right content.
Customer retention strategies that you can apply
Here are some of the efficient strategies to improve customer retention:
Email Marketing
Ongoing email marketing is one of the most cost-effective ways to retain customers. So, it’s better if companies share new content, relevant offers, and updates if available.
Send the email when your customers are about to run out of your product, leaving items in a cart, when it’s been a while since their last transaction, or on a special occasion. You can manage when to send your company’s email marketing easily by using Marketing Automation Software so that everything is scheduled.
Loyalty and Reward Program
It’s obvious that people love promotion programs. Providing points that can be redeemed for products, discounts, and referral programs is the best way to attract new customers. The referral program is quite unique because it can make customers purchase your products while helping you gain more customers.
Customer Appreciation
Many companies appreciate their customers at certain times by giving them discounted prices for products they know and love. This will show how companies take customers’ contributions seriously.
Implement a CRM System
A CRM system is a technology innovation that supports every activity and strategy for companies to manage interactions with existing and potential customers. CRM helps companies to build a strong relationship with the customers that will eventually affect their retention rate. Through email, phone calls, and meetings, the CRM system can track all deal stages and reasons for closed lost and closed won offers.
Conclusion
Getting new customers is a good strategy to build business however it comes with limitations. With no attempt to ensure that customers are going to back, customer acquisition will not be that useful. Companies should find a way in which customers feel that they are important and special. Therefore, companies will have a strong brand advocate to keep up with the competition, grow, and be successful.
Start using the CRM System by HashMicro to seamlessly monitor every move in your company so that you can grow your business to its full potential. Keep track of all sales activities such as meetings, follow-ups, tasks, and various updates in only one tool. Try the free demo now!
