The idea of customer retention is nothing new. Every business owner wants to make sure they’re satisfied enough not to go to the competition.
Existing customers are vital for the health of many SMBs. They’re the source of stable, recurring income in many cases, reducing the need for businesses to search for more leads.
The website Small Business Trends aggregates a lot of customer retention data. Here’s a snapshot:
The probability of selling to an existing customer is 60-70 percent. The probability of selling to a new prospect is 5-20 percent.
65 percent of a company’s business comes from existing customers.
32 percent of executives say retaining existing customers is a priority.
It costs 16x more to bring a new customer up to the same level as a current one.
82 percent of companies agree that retention is cheaper to execute than acquisition.
Companies lose 71 percent of consumers due to poor customer service.
68 percent of customers leave you because they perceive you are indifferent to them.
What’s striking here is that while most sales come from existing customers and most executives agree that it’s much cheaper to retain existing customers, a whopping 68% of businesses don’t prioritize customer retention.
Customer service to the rescue
We’ve all been there: A rude customer service rep ignores us or gives us the runaround. We decide then and there never to do business with that company — and we tell a bunch of our friends and colleagues about out experience. The negative PR can be enormous.
Survey after survey shows the close link between good customer experiences and high customer retention. No surprise there, right?
But there’s another aspect of customer service that deserves to be mentioned: Meeting the evolving needs of customers.
In other words, you won’t retain customers just by being nice to customers. That’s just table stakes. You also need to make sure that you’re delivering products and services that continue to add more value than those of your competitors. And for that, you need to be communicating with customers on a regular basis — even (gasp) picking up the phone and talking to them, or leaving the building and visiting them. Your customers can give you the insights you need to course correct or to find whole new pockets of untapped value.
Customer loyalty can be a fickle thing. But if you can continue to deliver real value to customers, you’ll simultaneously address your customer retention needs and your business development goals.
And if you think about it for a moment, you really can’t have one without the other.