However, many companies fail to achieve sustained growth or even the much-desired expansion despite gaining new customers. If that is the case for your brand, you may need to review your customer retention strategy .
If you're wondering whether it's really necessary to have a retention strategy in your company, you can turn to statistics. According to Harvard Business Review , acquiring a new customer costs between 5 and 25 times more than retaining one.
Another statistic that reinforces the importance
list of ethiopia consumer email of increasing customer retention rates in organizations shows that when this rate is increased by just 5%, the increase in profits ranges from 25% to 95%.
Does this mean you shouldn’t worry about acquiring new customers? Not at all. The important thing to understand is that acquisition should work as an addition, not a substitution, if you want your brand to increase ROI .
A quick look at the numbers tells you that it is cheaper and more profitable to retain a customer than to acquire a new one. Taking this reality into account, you should ask yourself if you have a good customer retention plan.
Don't worry if your answer to this question is not definitive. In this post we show you powerful strategies to retain customers. We also teach you how to calculate the customer retention rate.
In addition, you will be able to discover what customer loyalty is and what the difference is between customer loyalty and customer retention. You will also learn about success stories in the implementation of customer retention strategies.
What is a customer retention strategy?
Retention strategy as a business philosophy
Literally, the word retention means the action and effect of retaining. It occurs when an element, a product, a human being is contained in a certain space, in the power or under the influence of a certain person or organization.
The corporate sphere is characterized by the application of various retention strategies. In the economic area , we can see the case of monetary benefits that are retained and do not immediately reach the worker.
In the area of human resources, the talent retention strategy is widely used . It includes the actions that organizations develop to keep their best employees engaged and happy.
Customer retention is defined as a company's ability to retain — for a given period — customers who have already made at least one purchase . ( Zendesk )
This type of retention requires an integrated strategy. The customer retention strategy must involve the entire organization and have the undisputed leading role of the marketing department and the sales force .
Why create a customer retention strategy?
According to a report cited by the White House Office of Consumer Affairs, the probability of selling to a new customer is 5 to 20 percent, while the probability of selling to an existing customer is 60 to 70 percent.
There is a general consensus that customer retention increases revenue. According to a Gartner report , 75% of businesses support this claim.
On the other hand, according to a report by Accenture , 80% of customers who change brands say they would not have made that decision if the company had implemented more actions to retain them.
This means that when a customer retention strategy works, it becomes a solid path to customer loyalty. And retaining customers is not the same as building customer loyalty.
Customer loyalty is the upper stage of the sales funnel . At this level, the user not only consumes your products or services, but also promotes them spontaneously. This way, they become a brand ambassador .
The difference between customer loyalty and customer retention lies on the emotional level. A loyal customer establishes an emotional bond with the brand, while a retained customer stays, but does not yet know exactly why.
Another substantial difference between loyal and retained customers is that the former prefers you over the competition, while the latter buys from you and your competitors without making a commitment to either.
The customer who buys from you more than once can become a loyal customer. Having this type of consumer is the dream of any entrepreneur, but remember that there is no way to retain a customer if you don't retain them.
Do you need more reasons to develop or refine your customer retention strategy? If you are already convinced and would like to know if your retention strategy is effective, continue reading and you will find out.
