How to Improve Customer Retention and What Are the Benefits
Customer retention is highly important for any business as relying solely on new clientele for growth may prove to be a myopic approach. There are several approaches which may be undertaken to ensure that the firm is able to generate repeat business from its set client base. The main benefit of customer retention is that it takes considerably lower expenditure to generate revenue from established customers than from new clients. Higher Revenue: when a business is able to retain its client, it helps in achieving higher revenue as well. As your clients already trust your business practices and products, you are not required to plan any expensive marketing plan. This feature ensures that your profit margin is more robust than ever. Here are some of the benefits of a loyal customer base.
- Improved Business Image: apart from offering pecuniary benefits, customer retention also helps a firm in generating goodwill in the market. Having a loyal customer base gives a stamp of approval to your products and services. It sends a message to the market and to the prospective clients that your business is trustworthy.
- Lower Marketing Costs: acquiring new clients is an expensive affair as you need to spend a lot of money on collecting data about them, designing appropriate policies and executing them. However, in the case of existing clients, these expenses are reduced considerably. Lower costs mean that you are either able to provide your goods and services at cheaper rate to your clients or able to add to your profit margin. Both the situations are conducive to solid business growth.
- Data Collection: in today’s world, data is king as it is used for making analysis and creating policies. When a business has large customer base, they are able to generate big data sets which are required for proper analysis. It is also a lot easier and less expensive to collect data from existing clients than looking for new people for this purpose. In case of loyal customer base, the frequency of collecting data and analysis may also be kept lower, which further helps in rationalizing the associated costs.
Creating customer following need not be a daunting task. Here are some of the main ways you can ensure that your customers keep coming back for more.
- Know Your Client Base: it is important that you understand the requirements and features of your clients. It will help you in customizing your offerings, motivating clients to keep coming back. Providing customized products to best meet your clients’ requirements is the key to build a loyal customer base.
- Take Extra Care: for generating repeat business, it is imperative that you provide robust customer care. This step ensures that as and when there is any grievance, it is properly handled. The speedy resolution of the issues is also important as any delay may lead the customers to look for alternatives, eroding your client base.
- Offer Incentives: it is always helpful to start loyalty program, where you offer incentives to your clients for making repeat purchases. Such incentives may be in the cash form or non-cash form. The monetary incentives may be introduced through discounts and cash backs while the main examples of non monetary incentives are freebies, early access to new products and free shipping among other features. However, it is ideal to offer a judicious mix of cash and non cash incentives to ensure that the requirements of your client base are adequately met.
- Remain in Touch: it is important that you maintain constant touch with your clients, even when they are not making purchase. This is especially important in the areas where the demand is seasonal. During the lean season, you can remain acquainted with your clients by sending them newsletters about latest developments in your business. However, you should ensure that such communiqué is appropriately customized and is able to pique customers’ interest.
It needs to be noted that offering high quality goods and services is of paramount importance for creating a loyal customer base. However, you also need to undertake the above given strategies to ensure that you are able to generate repeat business from your clients.