Acquiring a new customer could cost up to 7 times more than keeping a customer loyal. Sales teams are drawn to fresh, new business and can sometimes take for granted customers' apparent brand loyalty. One experience, however, can turn a loyal customer into a former and lost stranger. Read on for key strategies that drive customer loyalty to reap greater and recurring revenue.
Loyal customers are highly profitable. Bain & Company research found that "increasing customer retention rates by 5% increases profits by 25% to 95%". They purchase a certain product or brand consistently over an extended period of time.
Furthermore, these satisfied customers are highly likely to become informal brand ambassadors recommending you to potential customers. The value of retaining a customer already devoted to your product impacts your bottom line and positive brand perception.
Why winning back lost customers matters
A study by Harvard Business Review revealed that companies lose 50% of their customers on average of every 5 years. Yet, the most alarming thing is that a lot of companies don't know why.
Also, another study made by Marketing Metrics shows that you have a:
- 60-70% chance of selling again to an actual customer.
- 20-40% chance of winning back a former customer.
- 5 to 20% chance of selling to a new prospect.
How many customers can you afford to lose?
In the same Bain report concludes that the cost of customer acquisition versus customer retention could reach as high as 700%. For each customer lost your sales force must make a repeated effort to acquire a new one.
Here are strategies to understand why and to focus attention on keeping these prized customers:
1. Research why your consumers leave
Any business decision must be backed up by facts and your knowledge. It's not possible to improve something if you don't know what's wrong with it.
There's always a reason, it can be due to price, customer service's quality, one bad experience or a faulty product/service. Merely investigating why will give you an edge to avoid the same mistake, take corrective measure, and lose less customers.
Knowledge is power and it's key for your company to take the right actions.
2. Analyze and improve your customer service
Sometimes losing customers is not 100% your company's fault, but it is 100% your company's responsibility. Therefore, it's crucial to know why they left and fix it. According to an interview conducted by Forbes, 86% of customers would pay more to have better customer service and to feel more valued by the company.
To achieve that you'll have to improve your customer service. The goal is to train those employees who are in direct contact with customers on how to manage different situations. The scenarios can range from an angry to a confused customer. Identify mistakes and propose how to fix them or improve them. In doing so, you strive to provide excellent service and customer experience, making customers happier and thus, more loyal.
3. Communicate your improvements to customers
Learn from your customers. At the end of the day, they are the ones that have real experiences our products or services. They find best uses, flaws, give us feedback, and share with us or with others different ways to improve them.
Brands that listen to them, make the required changes, and communicate them impact market perception. If you tell an unsatisfied customer that you've made the changes and that you'd like him to try it again, you'll increase chances of winning him back.
Customers like to be heard and to know that they had something to do with the improvement of a product or service. When a customer knows that he's been listened to, chances are you will not only get him back, but increase the chances of gaining another loyal customer.
Transparency and communication are two things that customers higly value.
4. Keep in contact with customers
An email, a text message, post on social media or a phone call to ask them how they feel and if they like the improvements shows that you listen and care.
A number of angry or unsatisfied customers still feel resentful even when they return. Give them time, be patient, and rebuild the relationship through establishing trust and consistency. The key here is to be transparent, stand by your word and instil excellent customer service.
5. Be consistent
If you fix a problem, but you fail in other areas of your company, then all your efforts amount to nil. Follow these steps to understand ground operations, real customer interactions to know exactly what is worth improvement to keep valuable customers loyal.
Which strategy do you use to keep customers loyal?