Why Customer Retention Matters

6.09.2021

For many businesses, the key goal is to drive growth by acquiring new customers. However, the probability of selling to a new customer sits somewhere between 5-20%. While that number rockets all the way to 60-70% when it comes to selling to an existing customer.

Simply put, keeping existing customers happy and satisfied is one of the most efficient ways of driving business growth.

So, where do we start?

Harnessing customer feedback

We need to first start by understanding how our customers are feeling. Are they satisfied with us? Would they recommend us? Do they want to stay with us in the future?

How and when we ask our customers for feedback is important. Here are some top tips when it comes to collecting customer feedback:

 

Timing

It’s important not to spam your customers with endless surveys. Aiming for 2-3 surveys a year is a good starting point. This will give you enough information to gauge customer perception, without overwhelming them.

 

Personalisation

Make sure the questions you are asking are relevant for the customer you are speaking with. For example, if you are asking how they found their recent purchase but they haven’t made a recent purchase, they’re going to switch off because it’s not relevant for them. Check that every question you are asking is appropriate for the recipient.

 

Setting goals

A good measurement for success is response rate. Generally speaking, a good response rate is around 30%. You can work out your response rate with this simple calculation:

Response rate % = number of customers who completed the survey / total number of customers you sent it to x 100

By going into this with a goal in mind, it will help keep a clear purpose and measurable outcome.

 

Adapting to customer needs

It goes without saying, the happier a customer is, the more likely they are to be loyal to your business, and as a result the more likely they are to increase spend.

Customer retention goes beyond a biannual survey. We need to be constantly listening to our customers and adapting to meet their changing needs.

Think about wider macro issues and how these might be affecting your customers. Is there something you can be doing to help solve this issue, or at least lighten the load?

Listen and adapt.

 

Rewarding loyalty

Its human nature to want to feel valued and that applies to customers too. Your most loyal customers are one of your businesses greatest assets so it’s important to show them your appreciation from time to time. And it doesn’t always need to be a grand expensive gesture, just remember it’s the thought that counts.