Customer retention has often been overlooked in favour of acquisition, but it’s something no business should be ignoring. The best strategy is to find a balance between acquisition and retention. It’s all very well acquiring new customers, but the real value is in keeping them over time. Which brings us to…
Customer lifetime value (CLV)This is a metric all companies should be paying attention to. In a nutshell, it’s the total worth of a customer to a company over the course of their relationship. It isn’t always easy to measure, as customers move between channels, login under different email addresses, and so on. However, if you have a clear view of CLV then this should inform future business strategy so you can find the right balance between acquisition and retention. The key to increasing customer lifetime value is to focus on customer retention, as a happy customer is more likely to be a loyal customer.
Customer retention: the statsThere are millions of stats on customer retention and related issues. Here’s a selection:
- 66% of consumers say features, design and quality of product or service are the leading factor that determined brand loyalty (Support.com).
- The top three reasons consumers switch brands: cheaper pricing (31%), rude staff (18%) and too many mistakes (16%) (Verint).
- 71% of consumers have ended their relationship with a company due to poor customer service. (KISSMetrics)
- The probability of selling to an existing customer is 60 – 70%. The probability of selling to a new prospect is 5-20% (Marketing Metrics)
- On average, customer retention rates are 18% higher when employees are highly engaged in the retention program. (Thanx)
- According to the White House Office of Consumer Affairs, loyal customers are worth up to 10 times as much as their first purchase.
The benefits of customer retention
- Improved CLV. Customers who stay longer spend more.
- Data. If you are retaining customers, then you have data on purchase history and behaviour to inform future strategy,
- Reviews and ratings. Loyal customers are more likely to leave positive reviews of your products or services.
- Recommendations. Happy customers are more likely to recommend you to their friends and family.
- A reputation for service.