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Customer Retention for Growth

Customer Retention

Any business – big or small – increases its turnover in 4 ways:

  1. Retaining customers
  2. Gaining more customers
  3. Increasing the frequency of transactions per customer
  4. Increasing the value of purchases or the range across which such purchases are spread. For example, getting a customer to buy a product and then its accessories at a later stage.

This means that three out of four promotional or growth opportunities involve effective customer retention. Yet, where do most of us focus our promotional effort and money? On attracting new customers.

It’s been found that repeat customers spend, on average, 67% more than new customers. Not only do our existing customers offer the largest scope for boosting our business, they are also the most cost-effective group to promote to because:

  • They have already proved their willingness, ability and authority to purchase. We don’t have to spend as much promotional money just to establish whether they are worthwhile prospects.
  • They are already familiar with our products and services. This means a reduced selling task. Why spend money advertising to them about how great our products or services are? We should rather use the money to get them to buy more frequently.
  • They are familiar with our business, what it stands for, its location and purchasing environment. We don’t have to use expensive advertising space spelling this out to them.
  • They are familiar with our staff. Provided the latter are competent and friendly, there’s less need to sell that aspect as well.
  • They are familiar with us or our management team. If a good relationship exists, the selling task is easier. Remember that face-to-face selling is not merely the most effective promotional method, it’s also the most expensive!

Unfortunately, these factors are also the basis for an old business truth which goes: Your customers are your competitors’ best prospects!

Why?

  • Because the product or service has already been “sold” – it is known that the customer is willing to purchase
  • It is known that the customer has the necessary authority and financial means to make such a purchasing decision
  • They need less selling and promotional effort than a cold prospect. All our opposition has to do is to convince our customers that their business is the better place to buy from.

That’s why we dare not refrain from promoting to our existing customers, but we should communicate in a different manner – in ways which will make them feel “special”.

We need to nurture our relationship with them, we must get to know their individual preferences and interests so that we can communicate with them more effectively. A Customer Retention Plan or some form of customer retention program is essential.

Customer Retention

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