What follows is Part One of a three-part series about customer retention. In this post, we discuss why this is an important topic followed by a discussion about apathy after the sale. The series concludes with a discussion around how to maximize customer retention.
At Clarity Coaching, we argue that, in addition to your reputation, credibility, and your marketing calendar, your customer retention strategy is one of your most valuable intangible business assets whose importance cannot be minimized.
Customer retention is important because it can:
- Increase your revenue
- Improve your profitability
- Help you differentiate from the competition
- Enhance your employee retention
- Empower your employees
When you do not focus on customer retention, you open yourself up to a plethora of lost opportunities including:
- Up-sell opportunities
- Cross-sell opportunities
- Down-sell opportunities
- Referral and word-of-mouth marketing opportunities
- Innovation opportunities
Depending on your industry, The Customer Service Institute estimates that 50%-65% of your business comes from existing customers. Whether that is true for your particular business or not, it should demonstrate the fundamental importance that customer retention efforts should play in your business.
Still need more convincing? Studies show that:
- an overwhelming majority of dissatisfied customers never return AND tell five to seven people about their bad experience.
- increasing customer retention from 10% – 15% can double revenue.
- it costs five times more to acquire a new client than to keep an existing one.
- businesses that focus on service are more likely to survive and thrive than those who emphasized price or product.
In Part Two of this series will discuss why customer retention is so often neglected.