Everyone knows instinctively that it is cheaper to keep the customers you have than to invest resource in finding new customers. According to the Harvard Business Review it is five to twenty-five times more expensive to attract new customers than to just create loyalty in your existing ones – the exact difference depends on the industry you are in.
Whether you are measuring the rate of customer churn or customer retention, the strategic message is clear. Whatever you invest in keeping your customers on board is worth much more than the same amount spent on advertising or marketing with a view to attracting new customers.
But retention is a big problem, where do you start?
Every business is different, but there is one aspect that is shared across all industries and types of business – the customer service function. Customer service is the coalface; this is usually the only part of your business where customers will directly interface so it is critical to ensure that it works well for two important reasons:
- Ensuring you serve customers well creates a favourable impression of your brand. By helping your customers efficiently whenever they need your help or advice, rather than making their life difficult, you create a great platform for loyalty to grow.
- Customer expectations of service have changed in recent years. Customers now expect a more interactive relationship with brands. They will ask questions across many channels, including social networks, and expect prompt answers, but importantly this engagement creates the impressions of a relationship – this encourages people to remain loyal.
Retaining customers requires the right strategy and investment in the areas of your business where you can make a difference. Ensuring the interaction between the brand and customer is as smooth as possible is the first place you need to examine if customer retention is a problem in your business.
What do you think about customer retention and how it can be improved? Leave a comment here or get in touch via my LinkedIn.
Photo by Victor Bezrukov licensed under Creative Commons