Did you know that 70 percent of companies in America say that the cost of keeping a customer is cheaper than acquiring a new one? The cost of getting a new customer can be up to seven times more expensive than keeping one you already have! Those are some crazy numbers. And the biggest unknown right now is how the current economic situation is going to impact that cost.
Business owners want to see growth, and new customers are often viewed as the most valuable opportunity for a company to do that. But this isn't true. If you have an established business with a good customer base, why worry? If you are profitable from your current customers, why put more energy into new customers that won't necessarily buy from you?
If you are an individual or business owner, this is important information for you. Here are a few reasons why it's more important to keep a customer rather than get a new one.
1. Like we mentioned above, it's cheaper
Bringing in new customers is going to involve a lot of hard work and money. Costs associated with existing customers are significantly lower than with new business. If you target the customers you already have, you have a much higher chance of making a sale. Studies show that the probability of converting an existing customer is around 70 percent, while the likelihood of converting a new one is between five and 20 percent. Those are really low numbers.
Marketing to your existing customers will bring down your ad spending and will also allow you to focus on what those customers might want to see. Show these customers that you appreciate their business and email them some coupons or offer a free product for a birthday. This will show your appreciation, and it will attract these customers back once more. Having relationships with your customers is a really important aspect of any business. These relationships will keep customers coming back and will increase the chances of them recommending you to friends and family.
2. It's fast!
Acquiring new customers can take some time. You have to put out ads and wait for people to see them. Then, people might go to your website or store and not make a purchase right away. People like to research and price check. They might think that they can get your product elsewhere for less money, and since they don't have an existing relationship with you, there is nothing stopping them from going elsewhere for that product.
Existing customers have already bought from you before, so they might just need a little nudge to make another purchase. Offer a sale or email them a promotion right to their inbox. They already know your company is trustworthy and that they can benefit from your products. If you have already given them a pleasant buying experience in the past, they are much more likely to make another purchase and give you more business.
Ultimately, the time it takes to draw in new customers will always be longer than the time it takes to convince an existing customer to make a purchase. Your existing customers just want to see consistency and value. If you continue to provide them with these elements, they will keep purchasing your products.
3. It puts your business in a better position
Having a high customer retention level will always give your business a great reputation. It shows that you care about your customers, that you offer valuable products, and that you have a successful business. It also grows data so you can see what kind of customers you have. You will be able to see the pattern in your customers, why they are attracted to your business, and what kind of ads they respond best to.
If you neglect your existing customers, they have a reason to shop with competitors. Statistics show that 61 percent of consumers will take their business to a competitor if they feel that a business relationship has ended. Retention is absolutely essential to the success of any business because it will keep your current customers happy, and it will lead to increased profit. It will also set you apart from other companies. Having a reputation for customer retention is one of the best reputations you can have!
Customer loyalty and engagement are two very important aspects of any business. Once you've built your customer base, retention should be a high priority. Also, the more customers you have, the more important retention becomes. Your company's future revenue depends on these existing customers and your relationships with them. Most business owners don't realize how important these relationships are, and they focus on the wrong things. If you keep your existing customers a high priority, then you have the key to success.
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