Customer retention and loyalty are discussed a lot when it comes to business strategies. Having a strong focus on retention can improve customer engagement, boost sales and increase brand awareness. No matter your industry, business size, or product range, encouraging your customers to return time and time again is so valuable. Many organisations fail to set up a customer retention strategy or don’t understand the importance of having one in place.
To help you see why loyalty should be your priority, we’re sharing 11 surprising stats that prove why customer retention is key:
- Companies in the United States lose $136billion every year because of consumer switching which could have been avoided. That is a considerable amount of revenue going to competitors because businesses are not focused on improving customer retention and reducing churn. CallMiner
- The chance of making a sale to an existing customer is around 60% to 70%, whereas for a brand new customer, there is just a 5% to 20% chance. Prioritising existing customers in your sales strategy is an easy way to improve profits and boost sales. There are many ways to reengage with customers that have purchased from your business in the past, and these strategies are much more likely to give you a good ROI. Altfield
- Customers who are a member of a loyalty programme will spend on average 12-18% more every year, compared with non-loyalty customers. When a consumer joins a loyalty programme, it means they not only value the business but will feel a sense of trust and emotional connection to it. Fundera
- Word-of-mouth marketing is a very powerful tool for any company. Consumers generally trust recommendations from their friends, family and peers, and are more likely to spend their money with businesses that others have been satisfied with. A huge 60% of loyal customers will discuss their favourite brands and businesses with their social circles. Yotpo
- Not only is encouraging return business easier than attracting new customers, but returning consumers are also likely to spend more. Returning clients spend 33% more on average than new customers. When your business makes customer retention a priority, you could quickly see your average sale price increase as customers come back time and time again. Bain & Company
- Retaining customers is all about providing excellent customer service and leaving them satisfied with your business. 33% of customers would consider switching companies following just one instance of poor customer service, and 60% would go after two to three instances. That gives you very little chance to make mistakes, so customer satisfaction should be a top priority. American Express
- Probably one of the most impressive customer retention statistics of all is that just a 5% increase in retention leads to an increase of at least 25% in profit. Loyal customers are by far the most profitable sector your business has, so putting your efforts into keeping them is crucial for success. Bain & Company
- The most significant deciding factor for customers considering using a business again is customer service. In fact, 93% of customers are more likely to make a repeat purchase from a company that offers excellent levels of service. Consumers want to be valued and treated well by the businesses they choose to purchase from, and a bad experience can see customers gone forever. HubSpot Research
- We’ve already discussed how customers will tell their social circles about businesses they are loyal to, but we must remember this works both ways. When a customer has a negative experience with a company, they will tell on average 15 people about it. In contrast, customers will share a positive experience with just 11 people. This means that a negative customer experience will not only deter that individual from returning but many more.
- A customer that has built an emotional relationship with a business will have a Customer Lifetime Value, or CLV, that is 306% higher than those that do not. Engaging and connecting with customers on an emotional level is more valuable than ever. Motista
- Customer retention and loyalty is not something that can happen overnight. It takes time to build these lasting relationships with consumers. In fact, 80% of customers said they gradually gain loyalty for brands over time, following good customer experiences. InMoment
It is clear to see that satisfied, loyal customers bring a tremendous amount of value to a business. Not only are they more likely to return time and time again, but they are more likely to spend more and recommend your products or services to friends. Customer retention is a low-cost, high-return marketing strategy that every company should be prioritising. Building a base of loyal customers isn’t always easy, but it is well worth the effort!
Written by Lara Harper