Customers are the lifeline of any business. That’s why it’s easy to get swept up into continuous campaigns of finding new clients! However, keeping the customers you already have happy and satisfied so they come back and keep purchasing is critical to business success. Studies show that not only is it far cheaper to retain current customers than to seek out new ones, but it’s more profitable for your business in the long run.
Customer retention often falls to the backburner in terms of priority. Here are eight surprising stats about customer retention to prove how important it is!
1. If a customer has purchased from your company once, they’re likely to purchase again
According to research, if a customer has made a purchase from your company, then there is a 60 percent chance they will make an additional purchase. This is valuable since the chances of a random person clicking onto your site becoming a paying customer are only about 20 percent.
2. New customers are more expensive to find than current customers are to retain
Research shows that recruiting new customers costs over five times more than retaining current customers. Additional research suggests that it is 16 times as costly to build a long-term relationship with a brand new customer than it is to gain business from an existing customer.
3. Many executives don’t prioritize customer retention
Despite the huge impact that customers have on a business and the importance of customer retention, less than 33 percent of business executives consider customer retention a priority. This obviously leads to lost customers.
4. Lost customers cost your business money
The average global value of a lost customer is $243 USD.
5. American businesses lose a lot of customers annually
Research suggests that American business will lose around 15 percent of its customers every year of operation.
6. Not all of your existing customers will convert into future profits
Customer retention is obviously important, but it’s valuable to keep in mind that not every customer is going to be a lifetime customer. 80 percent of future profits are believed to come from only 20 percent of existing customers. In fact, losing customers is somewhat natural! 27 percent of small business owners surveyed revealed that approximately 11-20 percent of first-time customers never returned to their business. However, it’s possible to retain even the most difficult customers!
7. Customers will stay longer if they feel valued
30 percent of customers admit to switching businesses because they experienced no reward for their loyalty. Without a reason to stay, they simply went with a more convenient company, product, or service.
8. Courteous, efficient customer service is key to customer retention
Customers are willing to change companies after an instance of poor customer service. 47 percent of customers surveyed admitted to switching companies after a single instance of poor customer service. According to another survey, 82 percent of customers in the United States quit doing business with certain companies entirely due to a negative customer experience. More than half of Americans have backtracked on a planned purchase due to bad service. Additionally, a “totally satisfied” customer delivers 2.6 times as much revenue as a customer who is only “somewhat satisfied.”
A company skilled at customer retention will expend far less time, money, and effort in order to thrive than a company who doesn’t care about keeping their customers. Customers who are made happy will eagerly return to the same company to do more business. Customers who are appreciated are easier to retain. While new customers are important, it’s arguably more important to take care of the customers you already have.