In an era of cut-throat competition in all sectors, businesses have been focusing on ways to enhance the customer base.
However, it is also imperative for companies to retain existing or loyal customers.
The second category of customers is an asset for any company, and losing them can be detrimental for business growth.
However, customer retention is not simple, given the fact the customer has many choices.
Besides, the customers have also become aware of services and products, and they cannot be taken for granted.
Understanding the benefits of customer retention
There are a lot of benefits of retaining customers that businesses can avail. These are:
- More affordable than acquisition- There is no denying the reality that companies try to acquire new customers, and it is an ongoing process. However, acquiring new customers tends to be heavier on the wallet compared to retaining loyal customers. A lot of studies have confirmed this theory. You already know about the loyal customers and have a fair idea about their buying patterns and liking etc.
- Loyal customers tend to spend more- Studies have indicated that loyal customers tend to spend more compared to new customers of a brand. They not only buy more frequently but also spend more amounts per order than new customers. So, from a business perspective, the existing customers help bring in more revenues.
- Less difficulty in promoting service/products- For the company staff, developing products to the existing customers is always more comfortable and less time consuming compared to new or target customers. The current buyers already know about the type of products sold by the brand, and they need less convincing- to begin with. The staff need to highlight the USP of recommended products or offer promotions relevant to the interest of those buyers, which is relatively easy. As a matter of fact, the staff need not spend much time in promoting products to loyal customers.
- Word of mouth advertising- Your company may spend a certain amount of money on advertising every year. The advertising is done on many channels, including TV, print media, web, and social media, etc. However, your brand’s loyal customers can also serve as indirect advertising agents. Satisfied customers can do beautiful word of mouth publicity for a brand- as it has often been seen. When they are happy with your products and services, they can share their experience on social media sites which will be noticed by many prospective customers. For this, you do not have to spend anything additionally! Usually, this type of indirect advertising is done by the young and tech-savvy customers.
- Better feedback from engaged customers- For any business, it is necessary to take feedbacks and opinion of the customers and deploy those to enhance service and products. The feedback can be obtained by using support channels like email, chat, and phone, etc. However, loyal customers are better positioned to give you useful feedback about the products and nuances of service, as it is.
- Loyal customers explore the product range better- When you acquire a new customer, he/she may not feel like exploring various types of products in the brand portfolio. So, the sales potential will be limited for such customers-for quite some time. On the contrary, existing customers are more likely to explore the range of products, and they can buy more in the long run. This will lead to enhanced sales and revenue.
- Loyal customers tend to be more flexible/forgiving- Surveys have shown the loyal customers of a company tend to be more flexible and forgiving in nature than the new ones. Despite the best intention to offer quality service to the customers, some problems may crop up at times, unexpectedly. The customers may have to face difficulties because of such unexpected developments. It could be a delay in delivery, a shipment of the wrong product or problem in getting a refund, etc. Software and human errors may be the root cause. However, customers who have been buying products for long may overlook one such incident, and they can be willing to give your brand another chance. This may not be the case with first-time buyers, and they may switch to rival contenders.
- Loyal customers respond better to promotions- Every company indulges in various promotional activities to woo the customers and boost sales. They resort to email marketing, social media campaigns, and even telephone-based promotional calls for this purpose. However, not all customers respond to such promotional activities and offer in the same way. You can never be sure of the response of new and prospective customers. However, existing customers tend to react more positively to promotions. If the promotions are done with a focus on personal preferences and buying habits- it fetches a good response from loyal customers. They may not buy right away, but the prospect of more sales is there.
- Support agents find it easier to tackle loyal customers- From the perspective of the customer support staffs/agents, dealing with existing customers is always easier than dealing with new ones. The agents have experiences of dealing with loyal customers, and they know the right ways to deal with such customers. Besides, they can use the CRM database to find details on the existing customers and figure out the best ways to resolve their issues.
- Existing customers are less price-sensitive- The loyal customers of a brand tend to be less sensitive to pricing than new ones. They are already happy with the products and services. So, changes in pricing such as delivery charge or slight boost in products price may not seem offensive to them. If the brand offers enhanced services or offers them special schemes- they may be willing to spend a bit more. This may not happen with new customers. They may get repelled by higher pricing.
- Existing customers give genuine reviews and testimonials- Every brand resorts to using testimonials and customer reviews on their websites. These are deemed as measures to boost credibility. You can get such useful reviews from loyal customers as they have experience of using services and products of your company. These reviews and testimonials used in brand website are useful in impressing new and prospective buyers.
- Cross-selling works well on existing customers- To enhance sales and revenue, every brand resort to various tactics and cross-selling is one of them. However, it works far better on loyal customers than prospective or new ones. Convincing a loyal customer to buy a suitable alternative product is not tedious.
Ways to boost customer retention
To enhance customer retention rate, companies can resort to a number of tried and tested measures such as
- Offering unexpected gifts and surprises to loyal customers.
- Offering personalized services to existing customers.
- Offering support to customers through several modes or channels.
- Taking feedback from these customers and deploying these.
- Offering loyalty schemes or reward programs for existing customers.
- Offering prompt service for any query or grievances of the customers.
- Using a personal touch while interacting with the customers.
While the support agents play a significant role in boosting customer retention, it is also prudent to use suitable free helpdesk software.