I recently listened to an interview on Steven Bartlett’s Podcast, The Diary of a CEO, featuring Rory Sutherland, a renowned writer and vice chair of Ogilvy UK. Rory shared an interesting insight about when and where businesses should begin developing their marketing strategy in order to achieve growth. According to him, many businesses make the mistake of focusing on acquiring new customers first, when in reality, talking to existing customers is far more profitable.
So why should we prioritise customer retention over customer acquisition? Well, your past and current customer’s are a valuable asset to your business – they already know your brand and have made purchases from you before. It’s crucial to maintain strong relationships with them to ensure their loyalty. Unfortunately, many small businesses tend to spend most of their marketing budget on acquiring new customers rather than nurturing the ones they already have.
Your business growth lies in customer retention
But here’s a thought: by shifting your focus towards existing customers, you can achieve better results. Consider these statistics:
- Boosting customer retention by 5% can increase profits by 25-95%.
- Companies have a 60-70% chance of selling to an existing customer, compared to a 5-20% chance with a new customer.
- 65% of a company’s business comes from existing customers.
- It costs 6 to 7 times more to acquire new customers than to retain the existing ones.
- After a single bad experience, 72% of customers switch to a competitor.
- Businesses lose over £60 billion each year due to lost customers resulting from poor customer service.
By changing your strategy and focusing on customer retention, you can make the most out of your marketing budget and avoid wasting time pursuing leads that may not be the best fit for your business.
However, staying in touch with every customer on a personal level may not be feasible for most businesses. However, digital marketing offers a solution. It allows you to maintain regular contact and nurture relationships with your customers, even if it’s not on a one-on-one basis.
By utilising content, email, and social media marketing, you can achieve success in various ways:
- Maintain communication with your current customer base.
- Send reminders about upcoming events and seasonal tips to keep customers engaged.
- Present a professional image that extends beyond just the inbox.
- Reconnect with clients whom you haven’t spoken to in years to explore new opportunities.
- Increase referrals from satisfied customers.
In summary, here are our top three tips for customer retention:
1. Recognise the value of your existing customers
They can become your most loyal supporters and effective advertisers. While acquiring new prospects may be exciting, retaining customers is more profitable.
2. Prioritise customer service
Providing exceptional service is crucial for keeping existing customers. In fact, 40% of survey respondents stated that better overall customer service would prompt them to spend more with a company, while 35% mentioned quick access to information.
3. Listen to your customers
Strengthening relationships with your customers reduces the likelihood of them leaving. Engage with them through various marketing channels to boost retention rates, foster brand loyalty, and develop long-lasting connections.
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