Customer acquisition and customer retention strategies are two key parts of a business operation. And while new businesses need to push hard for the first, it’s important to consider the importance of the second in the medium and long term.
“Considering” is the right term, since customer retention is in no way a universal winning strategy. Some business models just don’t lend themselves to repeated customer interactions.
Real estate agencies can’t expect people to buy new houses every year, for example. But if retention is something your company can reasonably invest in, here are some reasons why that might be the best move.
1. Save money and effort
It’s much cheaper, and often easier, to get old customers to return than it is to turn cold leads into new customers.
Anyone who has already spent money with you is more likely to do it again. You should always aim to satisfy your customers; however, that principle holds true even when you don’t.
Familiarity is a powerful thing. People like to avoid surprises, and even when they aren’t satisfied with your service, they might rather try working with you again than risk another seller who might do a worse job.
By tapping into the familiarity built between your brand and the customer, you can make more sales with much less investment, boosting your profits.
2. Get word-of-mouth advertising
A customer who keeps going back to your store is much more likely to recommend it to other people. Again, familiarity plays a role here. It’s easier to recommend a brand when you feel personally invested in it.
On top of that, repeated purchases keep reminding the customers of everything your brand is doing right. That gives them a new boost of excitement, which may well turn into the customer telling their friends about their experience at your store.
3. Increase customer satisfaction
A lot of the strategies that improve customer retention also improve customer satisfaction. After all, if you want to keep them coming back, them making them happy is vital. Making customers feel valued and seen is also important.
Today, technology makes customer retention much more manageable. Using digital tools to contact customers, personalize their interaction with your company, and manage interesting loyalty programs can both make customers happier and make them feel valued.
Using digital tools, all of this can be achieved with little effort and cost after the initial set-up.
4. Loyal customers are more engaged
Are you trying to get more followers on social media, or maybe get valuable feedback from customers? Well, it’s much easier to ask this and other favors from loyal customers.
Interestingly enough, asking for small favors also makes them feel more invested in your brand. Customers who agree to help and the time investment needed to help your brand will feel much more favorable towards it.
The best thing you can do to boost retention is to make a client feel like they are your accomplice.
5. Returning customers spend more
It should come as no surprise that returning customers tend to spend much more than newcomers. You have already earned their trust, after all. You can also drive up sales by offering customers discounts and a store card.
Since returning customers also require less marketing spending, selling to them is great for your profit margins. And if you are looking for other ways to boost your revenue, you should check out the investment guides on Teach Me! Personal Finance.