Regardless of if you have been in business for a short while, or many many years, you know it’s easier and cheaper to sell to existing customers than trying to find new ones. When it comes to growing a startup, often times entrepreneurs are too focused on gaining new customers that they miss the mark. They fail to effectively address the need to retain the customers they already have.
The tool this week is:
- Understanding the Importance and Value of Customer Retention
I have a few statistics to help you see the role customer retention plays in helping a company grow a healthy bottom line. According to Bain and Co., a 5% increase in customer retention can increase a company’s profitability by 75%! If that doesn’t seem too impressive, Gartner Group statistics tell us that 80% of your company’s future revenue will come from just 20% of your existing customers. Lastly, I want to point out that attracting new customers will cost your company five times more than keeping an existing customer. It’s cheaper, easier, and more effective to retain current customers than it is to acquire new ones.
Customer retention is an integral part of corporate success because it increases profits. Your satisfied customers will become your loyal customers who repeatedly patronize your company, in turn increasing earnings. There are many ways to keep your clients happy, and depending on your industry, customer base, corporate goals and so on there are plenty of methods to choose from. Regardless of your size, services, or even industry, personalization and good customer care play a very large role in customer retention. Offering excellent customer care is necessary for a company to maintain a good reputation and be financially profitable. Your company will have more growth opportunities with satisfied customers, and will be at a lower risk of failure.
Once you understand the importance of customer retention, you will begin to view your clients a little differently. Taking care of the clients you already have is imperative to building up your small business. Instead of putting all of you money into gaining and attracting new clients, take the time and money to show your current clients that you appreciate their business.