Getting a new client takes a lot of work. From executing marketing campaigns to capturing leads to moving them through the sales pipeline, a closed deal certainly seems like a cause for celebration. But do you know how much those new customers are really costing you? While every business needs new customers to stay alive, putting most of your energy and resources into new client acquisition might not be the best way to maximize profits. So what's a more beneficial — and cost-effective — use of your resources? Keeping the customers you already have.
The Value of Customer Retention
Did you know it costs five to 25 times more to acquire a new customer than it does to keep an existing one? Conversely, increasing customer retention by 5% can boost your profits by 25%. Add to that the fact that your chances of selling to a current customer are 60-70%, compared to a mere 5-20% for new customers, and there's no denying that customer retention should be one of your highest priorities.
Creating Customer Loyalty
So, how can you keep the customers you already have? By continually working to delight your clients and increase customer loyalty. While we could go into a great deal of depth on this subject, here are three basic principles for keeping customers coming back:
Communicating with your clients regularly helps them feel valued, reinforces their decision to buy, and allows you to market to them until they are ready to buy again. Not only does frequency matter, but so does the medium. According to a recent survey of U.S. digital marketers by Gigaom Research, 56% hailed email as the most effective digital channel for customer retention, followed by social media (37%), content marketing (32%), and referral marketing (26%). Remember to add variety to your messaging, providing a good mix of educational content, friendly keep-in-touch messages, and transaction-focused communications.
People love perks. In fact, 65% of consumers enrolled in loyalty reward programs feel more valued. They're also more likely to rate a higher customer experience and recommend your business to others. Not sure how this could work in real life? If you're in the real estate biz, it could be as simple as having a Home Depot or Lowe's gift card automatically mailed to your client once they close on their home. You could even enroll in a loyalty rewards program in which clients get access to discounts on home-related goods or earn points that can be redeemed for travel, dining, retail, and more. Check out GiftCardPartners, Loyalty Gator, or Rewardster for more inspiration. Just be sure any program you implement is in compliance with industry regulations.
Change is hard, but embracing it is vital to maintaining a healthy business and happy customers. What worked a few years ago might not work anymore, so you should continually be looking for ways to improve the customer experience. Listen to your customers, know their needs, and identify their pain points. With a customer-centric mindset, you'll be more open to streamlining processes, getting rid of what doesn't work, and adopting new approaches to create a better overall experience for your clients. Check out these additional tips for providing exceptional customer service.
While the need for new clients will never go away, don't underestimate the value that existing customers can bring to your business. Shift your focus to retaining the ones you've already got, and you'll see bigger returns for less money and effort.
Keeping customers happy is a team effort. Let's discuss how we can work together better to increase customer loyalty among our shared clients.