Customer Retention: Are Repeat Customers Important?
Customer retention strategies and loyalty reward programs for existing customers should be a major focus point for businesses. However, only one-third of executives say customer retention is a priority. This has to change. Businesses are undervaluing their most important customer group: their existing customers!
On average, a business will lose 20 percent of its customers annually because they fail to take care of their existing customer relationships. In some industries, this number is over 75 percent! According to a study conducted by Boston Consulting Group, the cost of marketing to existing customers is about $7. The marketing cost per new customer is roughly 5x that, $34. Depending on the industry you are in, it can cost up to 30 times as much to acquire a new customer vs. retaining an existing customer. 82 percent of companies agree that retention is, in fact, cheaper than acquisition, according to a report by Cross-Channel Marketing.
According to KPMG, the most significant retail revenue driver is customer retention. The Pareto Principle states that 20 percent of your customers represent 80 percent of your sales. Existing customers are 3 to 10x more likely to buy than a cold lead (MarTech). Existing customers are 50 percent more likely to buy new products and spend 33 percent more than new customers. Increasing your customer retention rate by just 5 percent can increase profits by 25–95 percent. While repeat customers make up just 8 percent of online e-merchant site traffic, 40 percent of sales can be attributed to them. The importance of customer retention sounds like a no-brainer, right?
62 percent of consumers don’t believe that the brands they’re most loyal to are doing enough to reward them. 80 percent of people who stop doing business with a company felt the company could have done something to retain them.
A happy customer is a loyal customer, and a loyal customer will share their positive brand experiences with their family and friends, leading to an increase in sales, revenue, and brand perception. A repeat customer is the strongest brand advocate your business can have. 49 percent of U.S. consumers say friends and family are their top sources of brand awareness.
People who are referred by a friend are 4x more likely to buy from a business, and one offline word-of-mouth impression drives sales at least 5x more than a paid impression. 92 percent of people trust recommendations from family and friends more than all other forms of marketing.
Repeat after us: Don’t repeat past mistakes. Honour your repeat customers!
In our next post on Customer Retention, we’ll show you how to keep your customers, and how to keep them happy. Stay tuned!
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