You have a killer product or service in place.
You’re acquiring dozens, hundreds, or even thousands of customers every week.
But there’s one area you’re struggling with: customer retention.
Customer acquisition is important, and you’re probably already investing a lot in an effort to attract new business.
But what’s the point if you have a poor retention rate? If you want to build a positive brand image, reduce your marketing costs, and grow your business, you can’t afford to ignore your existing customers.
At Podium, we’re passionate about the fact that strong customer relationships are at the heart of a thriving business. When you prioritize connection rather than keeping your eyes only on the prize—a sale—you go from a business selling a product to a brand selling a lifestyle. And that’s when the true growth happens.
8 Stats That Prove the Importance of Customer Retention
A lack of focus on customer retention leads to failure for many businesses. Loyal customers are worth their weight in gold—and we’ve got the numbers to prove it. Let’s take a look at 8 stats that will change the way you do business.
1 – 44% of businesses focus their time and efforts on customer acquisition, whereas only 18% focus on customer retention.
If you have a good customer acquisition strategy in place, you may be acquiring customers at the speed of light. But what’s the point if they’re not coming back for more?
If you want to build a positive brand image and see long-term growth in your business, you need your customers to purchase from you again and again. On top of this, you want your repeat customers to recommend your product or service to their friends or family members.
According to SEMRush, about 44% of businesses focus on customer acquisition. But only 18% put forth the much-needed efforts to retain existing customers.
Businesses can increase customer retention rate by:
- Delivering top-notch customer service.
- Personalizing their customer experience.
- Implementing text message marketing in their marketing strategy.
- Showing gratitude to their customers.
- Asking customers for feedback and acting on it.
Want more tips on how to build a customer retention strategy? Check out our guide: The Secret to High Customer Retention.
2 – About 89% of companies have reported that delivering excellent customer service plays a major role in customer retention.
Run an Indian restaurant in California? No matter how delicious the food tastes, if you and your staff members don’t listen to your customers’ problems, if any, then they’ll never come back again.
Sell leather bags in New York? Your customers don’t just expect you to provide them with a superior quality leather bag. When they visit your store, they want to be treated well. They want your staff members to help them explore different options. Post-purchase, they want you and your staff members to be as attentive to you as they were before the sale.
No matter what kind of business you run, if your customers don’t feel like the star of the show when they interact with you, you might just lose their business to one of your competitors.
Over 89% of companies claim that delivering excellent customer service plays a major role in customer retention.
To deliver great customer service, it’s important to:
- Listen to your customers.
- Put yourself in your customers’ shoes.
- Be friendly, professional, and attentive.
- Help your customers help themselves.
- Respond quickly. (Hint: Podium can help you make sure every customer gets a response within mere minutes.)
Want to dive deeper into creating a stellar customer experience? Check out: How to Deliver Proactive Customer Service.”
3 – The probability of selling a product or service to an existing customer is around 60% – 70%
Selling to new customers is never easy. From awareness to conversion, there are multiple steps in the process of converting a potential customer.
The probability of selling to new customers stands around 5% – 20%. It makes sense—there are so many steps in the customer journey. When marketing to acquire new customers, you’ll focus on everything a customer does from the moment they begin searching to the moment they make a purchase.
The probability of selling to your already-existing customers is much higher—between 60% and 70%. That’s because marketing to existing customers begins the moment a customer makes their first-time purchase from your brand. They’ve already found you, done the research, and purchased from you before. Now, it’s all about engagement—don’t let them forget you exist.
Start by encouraging happy customers to leave reviews. Not only will this keep your current customers engaged, but it will also help you stand out to other customers who are still in the research phase of the customer journey—it’s a win-win for your brand
4 – Over 58% of customers that are a part of a brand’s customer loyalty program purchase from that brand at least once per month.
If you want your business to survive in the long run, you need to focus on customer loyalty. And one of the best tactics to build a pool of loyal customers is by running a customer loyalty program.
58% of customers who are a part of the brand’s customer loyalty program purchase from them at least once per month. Say you sell a $100 product and have 100 customers enrolled in your brand loyalty program. Statistically, it’s likely that about 58 of them will purchase your product at least once per month.
Let’s calculate the revenue you’d be generating by running a brand loyalty program:
58 x $100 = $5,800
Some additional benefits of running a brand loyalty program include:
- Improved customer engagement.
- Increased customer loyalty.
- Increased sales.
- Reduction in attrition rate.
- Happy customers lead to word-of-mouth (free marketing).
5 – 74% of millennials will immediately switch to a different retailer if they receive poor customer service.
We live in an ever-competitive world where customers are constantly bombarded by businesses trying to sell to them—via emails, texts, phone calls, billboards, and more. All it takes to lose a customer to the noise is one bad customer experience.
Don’t let your competitors steal your customers.
By not listening to your customers’ problems, you risk losing them permanently. By positioning yourself as a customer-centric company and delivering superior customer service, you’ll be showing your customers you care—which is what the modern consumer craves.
6 – 46% of customers look for businesses that provide communication options other than phone calls (like text).
Consumers prefer purchasing from businesses that provide alternatives to speaking on the phone, such as text and chat.
Think about it—the modern consumer is busy. A phone call has the power to completely disrupt someone’s day. Alternative communication methods like webchat or text messaging allow people to communicate with businesses while going about their daily to-do lists—no need to pause and find a quiet place to talk on the phone.
By offering customers the communication channels they prefer, you separate businesses from your competitors.
With Podium, local businesses can not only run effective text message marketing campaigns but also allow their customers to reach out to their customer service executives via text. And no matter which channel you’re receiving a message on, Podium brings every conversation into a single thread, helping your customer service department respond instantly over text.
7 – 60% of consumers claim ease of business is one of the top reasons they purchase again.
Customers want their experience with a business to be simple and easy. Most customers won’t go out of their way to contact a business if it would be easier to purchase from someone else instead. And once they get in contact with you, if the experience isn’t quick and frictionless, you’ll probably never hear from them again.
If you want to retain your customers, you need to prioritize delivering a great user and customer experience both online and offline—and one of the key elements of a great experience is speed.
Respond to and resolve problems quickly. That’s how you’ll win the modern customer’s heart.
8 – Acquiring new customers is seven times more expensive than retaining already-existing ones.
Now let’s circle back to the real reason retention matters—it’s cost-efficient. It saves you money and makes you money.
When compared with customer retention, you’re paying seven times more to acquire new customers.
Focus on the people who already buy from you. Strengthen those relationships. Start a loyalty program. Send them happy birthday texts and personalized discounts just because.
As those existing relationships evolve, your sales will increase, and new customers will come to you organically.
How Podium Can Help You Boost Customer Retention
So now you know the importance of retaining customers. Where do you go from here?
At Podium, we want local businesses to win the game, which is why we offer a suite of tools focused on growth, communication, and payments. Whether you want to improve your online reputation or offer top-notch customer service, Podium can help you get there.
We don’t want you to just take our word for it. We want you to witness the power of Podium firsthand.