You already know that the loyal customers on your roster are among your most profitable. Not just because they (presumably) buy the most products or services, but also because the time and resource investment you must make to keep them happy is less than onboarding new customers.
But what you may not realize is just HOW important it is to keep your loyal customers on the bus. There are three key aspects to this, and all of them play a role in confirming why customer retention should be a top business priority.
-
It’s Not Just About Current Profits
As noted by CMO.com, 80 percent of a business’s future profits don’t derive from future customers. Rather, those hefty profits are generated from today’s loyal customers – both because they typically buy more as the relationship deepens, and because they’re a lucrative referral source (more on this below). What’s more, even a small increase in retention can lead to significant profits down the road. A study by Bain & Company and Harvard Business School found that just a 5 percent boost in retention can drive up profits 25-95 percent.
-
Loyal Customers Turn into Brand Ambassadors
Loyal customers who recommend businesses to their network aren’t just being helpful – they’re functioning as an inspired and unpaid pre-sales force. As noted by Forbes, between 80 and 90 percent of profitable referrals come from a business’s highest-value and most loyal customers.
-
The Cost of Customer Acquisition is Probably MUCH Higher Than You Think
As noted by KISSMetrics.com, it can cost up to 700 percent more to acquire a new customer vs. retain one. These costs include (but aren’t limited to) marketing and advertising campaigns, time and resources invested by employees to nurture prospects along the buyer’s journey, and in some cases having to offer loss leaders or products/services at very low margins in order to bring a new customer into the ecosystem.
The Bottom Line: Don’t Ignore Customers on the Bus!
The core message from this look at customer acquisition and retention isn’t that one is more important than another – because adding profitable customers (or potentially profitable customers) is always in a business’s game plan; especially since customer churn is a part of life, and losing loyal customers can happen as well – though hopefully this is the exception rather than the norm!
Rather, the message is that most businesses aren’t paying enough attention to their current customers -- not because they take them for granted, but because there’s so much more heavy lifting involved in customer acquisition. While this is understandable, as noted above, it’s a huge mistake that could have severe consequences down the road.
Learn More
At Leap Clixx, we design and deploy targeted inbound marketing programs and campaigns that help businesses target new AND existing customers – since they’re both on the bus, and as such need to be engaged accordingly in order to happily stay on board. To learn more about our customer retention strategies and solutions, contact us today.
Want more Inbound Marketing tips and tricks? Check out our FREE downloadable eBook "A Guide to Inbound Marketing Best Practices":
Topics: Inbound Marketing
