Many business owners, managers, and even specially trained marketers seem to ignore the staggering potential of repeat purchasers, preferring to focus on new customer acquisition instead. But customer acquisition can be extremely costly, and what’s more, it often represents a hidden cost to the business (i.e. it is much harder to quantify but still equates to real money being spent). Whilst customer acquisition is certainly important (you obviously can’t sell any products without customers!), to neglect your existing customer base is to miss a massive opportunity for further (and more frequent) sales. But just how important is customer retention? Check out these facts...
1. Acquiring a new customer can cost up to five times as much
as retaining existing customers (Webber, 2008).
2. On average, 80% of your company’s future revenue
will come from the top 20% of your most loyal customers (Jao, 2014).
3. The chance of selling to an existing customer is between 60-70%, while
selling to a new prospect has only a 5-20% success rate (Charlton, 2015).
4. Increasing customer retention rates by just 5%
can increase profits by up to 95% (Charlton, 2015).
5. 71% of customers will end their relationship with a
company due to poor customer service (Charlton, 2015).
So as you can see, customer retention is absolutely vital in maximising your profits. Additionally, with happy customers, your exposure will grow organically due to word of mouth (without the need to waste your entire marketing budget on expensive acquisition attempts!).
Interested in finding out more about customer retention and how to improve it? Keep your eyes peeled for our E-Seller’s Guide to the Post-Purchase Experience, coming soon!