Managing customer retention is an incredibly potent means of establishing sustained growth for your business. According to research from Harvard Business School, increasing customer retention rates by 5% increases a company’s profits by a whopping 25-95%.
As the world has moved online, customer acquisition has been more difficult than ever. The ecommerce boomed as businesses came online during the COVID-19 pandemic. Even as pandemic mandates lift and regions reopen, businesses continue to follow consumer demand online, continuing the influx of ecommerce.
With advancements in technology and the growth of available marketplaces have made it easier than ever to buy and sell online. Businesses are flocking to ecommerce in never before seen, record numbers; Online stores are popping up daily, with an estimated 12–24 million ecommerce sites across the globe.
This thronging of businesses to ecommerce is resulting in increasing difficulty to be found by new customers. The increasing competition for customers is resulting in the rising costs of customer acquisition. Online business owners are reporting that it’s becoming tougher to
get a decent return on advertising spend with the increases of digital advertising costs.
This is where the value of customer retention shines. It's 7 times more affordable to retain a customer than it is to acquire new ones. Retained customers, being already aware of the value of a product and service of your business, buy more frequently and spend more than new customers.
Customer retention serves brand ambassador purposes - representing the business brand in a positive light, helping to increase brand awareness and sales. When customers are satisfied and content, they often become loyal customers - voluntarily leaving reviews and referring their friends and family, bringing in new customers, free of charge!
In the current era of paid, fabricated, and coerced reviews, people trust companies, organizations, institutions, and leaders less than they ever have before. The quality referrals and positive word-of-mouth reviews from retained customers serve as invaluable vouchers and advocates for business.
Customer retention is a huge asset to your business that requires effort. If you want your business to succeed over the long term, you have to build relationships with your customers through customer communication. The efficacy of a business' customer communication will determine the difference between a transactional relationship and a more genuine, personal connection — the kind that leads to customer retention, loyalty and brand advocacy.