It wasn’t that long ago that the U.S. was mired in the worst recession since the 1930’s. Here we are only a few years later and volatility in the stock market continues. While a turbulent economy poses many challenges for organizations, it also brings much needed clarity to the importance of nurturing existing customer relationships.
How can your organization become resistant to the ebbs and flows of economic uncertainty? Make existing customers a large percentage of your growth by shifting your focus to customer retention marketing.
The Value of Customer Loyalty
Consider the following research:
– The probability of selling to an existing customer is 60-70%. The probability of selling to a new prospect is 5-20%. (Marketing Metrics)
– 80% of your company’s future revenue will come from just 20% of your existing customers. (Gartner Group)
– Boosting customer retention by just 5% can increase profits by 25% – 95% (Bain)
If the above statistics tell us anything, it’s that customer retention marketing isn’t just a buzzword or falls into the “nice to have” category. It’s an essential ingredient for cultivating existing customer relationships to improve your bottom line significantly.
Think about it. Customers can express their loyalty in several ways. They can continue to purchase your products or services, perhaps even give your company a larger share of their spend by buying more. They can initiate free advertising or serve as your second sales force by recommending your company to others or serve as enthusiastic references for new business opportunities. Studies have also shown that loyal customers are less expensive to service and are less likely to switch to competitors.
Four Customer Retention Marketing Strategies
At its core, retention marketing is about putting the customer at the center of your business. Here’s four ways you can make your company “bulletproof” from another economic downturn:
1. Understand customer expectations:
Research shows that 80% of CEOs believe they deliver a superior customer experience, but only 8% of their customers agree. Whether it’s with customer satisfaction or Net Promoter Score® surveys, customer advisory boards, or product councils, establish forums to listen to your customers and encourage them to share opinions and experiences. You can also monitor social channels, customer interactions, and online communities for additional insight into the customer experience.
2. Determine if customer expectations are being met:
Are you actually making a real impact? If your company fails to continually solve new and future problems or demonstrate a meaningful return on investment, then customers may be at-risk for defection. That’s why it’s important to objectively analyze the feedback gathered to identify trends and recurring themes weighing on customer satisfaction and loyalty. Of course, this is one role we fill with our clients, but companies can also have success internally if the person appointed can be truly unbiased.
3. Continuously identify how to improve by gathering customer feedback:
Embrace the information gathered from customers and use it to identify actions you can take to position your services as “differentiated.” Emphasize collaboration and co-creation. Ensure that your customers have no doubt in your commitment to their success. This way, competitors that offer similar value at a lower cost won’t be so appealing.
4. Create a customer-centric culture to foster success:
Every member of your organization plays a role in creating a compelling customer experience, or one that fails to deliver on your brand promise. Be sure to set clear expectations for employees to follow. Recognize success, both on a company and individual employee level. Provide ongoing coaching, training, and education. And finally, keep your employees “in the loop” when changes are made as a result of customer (or employee) feedback.
The most effective growth strategies are ones that involve your existing customers. That’s because, all else being equal, companies with a loyal customer base will outperform their competitors. This makes customer retention marketing a necessary ingredient for safeguarding long-term, financial success.
Need more proof that implementing a customer retention marketing program pays off? We suggest you read: The Real Cost of Customer Churn.