Importance of Customer Retention

Importance of Customer Retention

Hands up – who wants new clients?

Yep that’s pretty much everyone. Yet finding new customers is hard, so why do so many small business owners channel their energy into getting new clients all the time?

It’s a myth that new customers are the key to business success. Sure it is important to grow, but in order to do that you need to put existing customers first. Here’s why.

Existing customers were once shiny and new too. They’ve stayed with you making more than one purchase. Probably told their friends about you, who likewise bought a product or service from you. That friend then made more purchases and told their friends about you, who went on to buy from you. And so on.

Sounds obvious doesn’t it? Yet many small business owners forget this is the foundation their business is built on.

It costs a business x25 more to acquire a new customer than it does to sell to an existing one

Benefits of Customer Retention

Nurturing the customers you already have will help improve your offering to give people better value, increase customer satisfaction and give them a reason to buy from you again, even if your competitors are cheaper!

It’s for these reasons that happy customers go and tell people all about you. Make recommendations to friends and family, rave about you to complete strangers. However they do it, the word is out. The people who hear about you from an actual customer (one who has gone through your sales process and had a positive experience) are more likely to come check out your website than the ones who have an online advert put in front of them knowing absolutely nothing about you. Repeat business from people who love what you do just can’t be bought with a Facebook Ad alone.  Here’s how to power up your ad. 

Once a customer introduces their friend to your business, that friend then visits your website, takes a look around, maybe starts the sales process but doesn’t finish it.  You can then put your ad in front of a ‘warm’ lead.

Your ad in the friend’s newsfeed acts as a reminder, it should say to them “hey, do you remember this website you checked out, come take a look at our special offer” or “don’t forget to finish your purchase”. Not literally of course, but hopefully you get the picture!  

The idea is that this ad will prompt them to come back and make the sale. For example:

  • 40 customers each tell 1 friend about you
  • Half of them visit your website. You get 20 unique website visitors.
  • None of the leads buy anything
  • You target all 20 website visitors with an ad
  • 10 of them buy something in the first two weeks of the ad campaign
  • 5 of them buy something two weeks later
  • Now you have 55 customers – who each tell one friend… 
  • In the meantime the original 40 plus 5 of the new customers have made more purchases
Lead Magnet Attracting customers

This is a simplistic example. Converting leads like this does take time. But it comes directly from having a good relationship between existing customers and your brand. Flip the story on it’s head and you can see the damage a bad relationship can do to your business. 

Existing customers are more likely to spend at least 67% more with a business than a new customer

So nurturing your existing customers leads to business growth. Ask them for feedback on what could be improved, are there other services/products they’d like to see. Is the feedback constructive? Did they come up with good ideas you can implement? Don’t just listen to what they have to say, but show them you have listened and taken action where appropriate. Be transparent about addressing concerns and above all don’t take it personally.

By looking after existing customers in this way you are giving them the best possible experience of being your customer, which increases retention.They start to trust that you’ll fix problems to their satisfaction, even before it happens. And happy customers will proactively spread the word, essentially marketing your business for free!

If a business has customers, they have an audience and if they have an audience they can create lookalike audiences.

Customer Retention Ideas

  • Client onboarding/offboarding process
  • Customer feedback form 
  • How to guides or FAQ on your website
  • Complaints procedure
  • Prepared sales script (if you sell services)
  • After sales process
  • Easy to understand returns policy (if you sell physical products)
  • Loyalty/referral scheme
  • Back up plan for if social media or website crashes
  • Clearly defined cancellation or refund policy
  • Weekly Q&A sessions
  • Email communication plan

To sum up, retaining customers not only generates recurring revenue, but sends you new customers too. They provide the data you need to plan and tailor marketing activity, promotions, special offers etc specific to YOUR business and making it a success.

So if you’re struggling to make consistent income, take a step back and think about how customer retention will transform your business.

Need some inspiration for your retention strategy?
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