If there’s one marketing adage all business owners should know, it’s that retaining a customer costs less than acquiring a new one. That’s why so many companies focus on winning their customers’ trust through initiatives that reward loyalty and retain engagement. If you can build long-term customer relationships, your business is already set for success.
Not convinced that customer retention should be a key part of your marketing strategy? If so, take a look at the following four customer retention benefits for your business.
1. Profitability
We already know that loyal customers spend more money than new ones, but it works the other way around as well. The more you build your brand affinity around your existing customer base, the more loyalty you can expect from them. Take a look at major brands that have managed to survive over the years and you’ll find out that most of them followed this general strategy.
Prioritizing current customers also gives you more leeway in pricing your products. Loyal customers are less susceptible to price changes, which can result in long-term profits.
2. Word-of-Mouth Advertising
This one is simple enough: loyal customers are more likely to recommend your brand to others. Since this type of advertising is both free and organic, it can have a huge impact on new customers. On top of that, consumers who see your brand in a positive light before making their first purchase are more likely to become loyal customers in the future as well.
Even in a pandemic, the power of word-of-mouth is stronger than ever. Though most of these interactions happen online, word-of-mouth is still responsible for 13% of the world’s sales.
3. Brand Exploration
Once you have someone’s trust, they’ll want to know about the other stuff you’re doing. This is why existing customers are 50% more likely to try your new products than new customers.
Why does this happen? There are plenty of potential reasons, but the main one is that loyal customers enjoy feeling rewarded for sticking to a brand. This is particularly true if this reward comes in the form of exclusive access to new products.
4. Effective Communication
Since loyal customers are already familiar with your communication strategies, they tend to be easier to reach. Statistically, this also makes them more likely to engage with your communications. That gives your business a valuable customer base who will consistently offer feedback on your products, read newsletters you send them, and so on.
Loyal customers also tend to be more forgiving of any mistakes your business might make. For example, if your service isn’t up to their standards, they’ll be more likely to hear you out.