What is more critical to build a successful business? Customer acquisition or customer retention? In this moment of digital transformation, social connections and the ‘word of mouth’ have reached a strong impact on the relationship between brands and customers. Thus, marketers need to deal with a strategic decision: spend their efforts and budgets to acquire new leads or to improve customer retention? A conundrum that resembles Shakespeare's "To be or not to be?"
At first glance, in fact, this may seem a nonsense question: in an era where the overall customer journey has become the real deal for innovative companies, it is now undeniable that customer retention has a strong two-way cause and effect linking with digital customer experience. The milestone of this connection is called loyalty.
As a matter of facts, then, retention and acquisition should have - at least - the same consideration, yet many marketers still insist on putting all their money on strategies of mere client acquisition (traditional advertising, just to name one).
If you look at it from a broader perspective, this is the same doubt that SEO specialists encounter when they look at web analytics: should you favor new visitors or returning visitors? As the debate still goes on between acquiring new leads and potential customers, or retaining and nurturing the current clients, the question becomes clearer: which one convert the best?
Luckily, in the age of big data, you can rely on dependable numbers in your search for the right answer. Three key statistics - taken from recent marketing studies - tell the value of loyalty:
The probability of selling to an existing client is between 60 and 70%, while the probability of selling to a new customer is just 5-20%.
It costs 6 times more to attract a new client than to retain an existing one.
A 2% increase in customer retention has the same effect as decreasing costs by 10%. A 10% increase in customer retention result in a 30% increase in the value of a brand.
It is surely cheaper to maintain an existing relation than to create a new one; on the other hand, however, retention is harder to get: you can buy new leads but you can’t buy trust and loyalty.
Retention is not a consequence of product quality or price, but it is “strongly related to the way a company services its existing customers and the reputation it creates within and across the marketplace.” (Wikipedia)
Customer retention is the ability to maintain a profitable relation with clients in the long term, to strengthen that connection, and - as a result - ensure competitive advantage, repeat sales and enduring profits. How can you enhance loyalty? Improving service to avoid pitfalls and guarantee a seamless - yet innovative and compelling - customer journey across all touch points.
In the Age of the Customer, if you really aim at retaining customers, you need to develop the ability to win their love. Here are 6 easy step to get through this process:
Surprise the customer - to stay top of mind, you must be one step beyond their needs and desires. When you sell your products, you always sell yourself, your story and brand identity through your content marketing strategy.
Exceed expectations - empowered customers demand a fulfilling experience. Try to “tell them what they need well before they realize it themselves.” (cit. Steve Jobs)
Drive a sense of innovation - customers expect that you keep pace with disruptive mobile technologies. Try to offer them what they need, when they need it, wherever they are and whatever device they are using.
- Personalize solutions - personalization is not just about service; it involves the overall purchase journey (and proximity marketing is just an example of how to personalize the shopping experience).
Engage emotionally - the customer journey involves both technological and emotional aspects. Try to create a whimsical experience, so that they feel inspired and generate a positive buzz among others.
- Stay human - technology (i.e. the Internet of Things) improves efficiency, but you should never forget that, as they get more and more submerged into a world of smart objects and pervading devices, customers search for human interactions.
In a few words, customer retention is about adopting a proactive approach to understand needs and wants, and deliver real-time answers. Now that personal networks extend to the virtual interconnections of social media, when you retain customers, you are retaining their lifetime value.
Simply put, we find at stake the value of their entire future relationship with your business, in terms of their spending and their power to influence other potential customers. And remember: a loyal customer is forever, at least as long as you are able to engage him with an amazing digital customer experience.
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To help you ensure a strategic advantage to your organization, learn about the DCX 7-Steps Checklist crafted by Neosperience, with requirements and insights for a successful digital transformation.