Why Focusing On Customer Retention Can Help To Scale Your Business
One of the most important aspects in developing a business is customer retention. Why? Simply put, it’s because all growth starts with a customer. But that assumes you continue to retain your existing customers. If you are not, then it becomes cyclical where your self-created growth runs out at some point and you find yourself back at square one.
The Secrets of Customer Retention:
In the blog post, they talk about the importance of customer retention and how it can help when scaling your business. A point they make is that acquiring new customers is expensive and time-consuming, so we need to work hard to keep current customers happy, as well. This will also lead to stronger word-of-mouth and referrals.
Strategies To Improve Your Customer Retention Rate:
There are many strategies to improve customer retention and it’s important that you choose the ones that are most relevant to your business. For example, if you offer a subscription service then make sure cancellation is difficult. Consider developing an app with customer feedback in mind by prompting users for their input when they enter or leave their username and password.
Why Retaining Customers Matters for Business Growth:
Customer retention is important to the growth of a business because it can prevent customer losses. This includes both service-based companies and sales-based companies. For service-based companies, customer retention is crucial for retaining customers who buy recurring products or services from the business. Because those types of businesses rely heavily on monthly customer payments, any significant increase in cancellations will put them at risk for going out of business. Customer retention also reduces customer churn for sales-based businesses. Once a customer becomes disengaged, it becomes significantly more expensive to try and get them back which often results in lost opportunities that could have otherwise been converted into a long term purchase of the company’s product. Ensuring engagement with your current customers will help to prevent that from happening as it allows you to maintain and grow your current revenue sources without having an opportunity cost associated with one time investments like advertising costs and labor expenses associated with acquiring new customers.
Examples of Companies that are Winning in the Market with Strict Retention Strategy:
When it comes to managing and sustaining customer retention, we are not only talking about one-on-one conversations. When we say a focus on customer retention, we’re talking about developing policies that exponentially improve the word-of-mouth for your company. Brands like Nordstroms among others are winning the market with their strict focus on customer retention by treating their customers with courtesy and dignity. At Nordstroms, they have relaxing chairs in their customer service department with an upscale cup of coffee waiting for you to get the help you need from any staff person close by. This customer service strategy positively impacts both employee morale and business profitability.
Techniques for Increasing Your Customer Lifetime Value:
Focusing on customer retention can help to scale your business. Techniques for increasing customer lifetime value include segmentation, a customer life-cycle plan and consistent follow-up efforts. Segmenting helps you to find potential customers who are likely to purchase from you and then tailor your marketing messages accordingly. A CLCP predicts that when you pursue the customer’s perspective, you will soon find which points in their decision-making process are the most crucial for influencing their purchase decision. Establishing a contact program at each point of importance enables you to stay in touch with desired customers as they progress through the purchasing cycle.
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