Customer acquisition is usually cited as a top strategy for many brands. However, customer retention is just as important in contributing to the bottom line. In an age where consumers have hundreds of choices when choosing products and services, maintaining brand loyalty has a massive impact.
Here are some amazing statistics on customer retention and loyalty:
- According to Marketing Metrics, if a customer has previously made a purchase from your company, there is at least a 60 percent chance that the customer will make at least one more purchase. Meanwhile, if a new visitor clicks on your site, the chances of that person becoming a paying customer are only 20 percent at the most.
- Brands spend up to 11 times more on recruiting new customers than retaining existing ones (Brand Keys)
- A loyalty increase of 7% can boost lifetime profits per customer by as much as 85%, and a loyalty increase of 3% can correlate to a 10% cost reduction (Brand Keys)
- 67% of consumers said good customer service encourages them to stay longer with a brand and/or spend more money (ICSC)
- Recruiting new customers costs five times as much as retaining current customers.
- It is 16 times as costly to build a long-term business relationship with a new customer than simply to cultivate the loyalty of an existing customer.
According to Adobe, the top 10% of your customer base is spending 3x more per order than your average customer while the top 1% is spending 5x more per order. The same study also found that repeat customers:
- Are buying nearly 30% more items per order than first-time shoppers
- Are 9 times more likely to convert than first-time shoppers
- Generated three to seven times more revenue per visit
- Spent 47% more than first-time shoppers during the holidays
Not only are repeat purchasers spending more, but they’re also much more likely to return with every purchase.
- After 1 purchase: 27% chance of returning
- After 2 purchases: 45% chance of returning
- After 3 purchases: 54% chance of returning
- Customers who spend more on their first purchase are twice as likely to convert
As the price of customer acquisition increases and the benefits of customer retention being so plentiful, businesses are placing more priority in customer retention. According to recent research by Brightback, 97% of companies have increased their focus on customer retention marketing. However, some companies feel there is room for improvement.
Two-thirds (68%) of B2B respondents are confident that their company prioritizes customer retention appropriately, though 29% believe they could do better. On the other hand, half (49%) of the B2C respondents feel their company could do better while just a bit fewer (44%) feel they are prioritizing retention appropriately.
Customer Retention Tactics
Customer retention tactics and objectives vary greatly between B2B and B2C companies.
When it comes to customer retention objectives, B2C brands’ highest priority is improving customer satisfaction through better customer experience and support. For B2B brands, educating customers to facilitate usage of services and onboarding new customers effectively ranked highest.
According to Brightback’s research, 58% of B2C brands believe that offering bundles or special deals to at-risk customers is the most effective tactic. According to B2B brands, testing a range of discount offers to customers at the point of cancel is the most effective tactic.
Customer loyalty and retention ultimately comes down to providing exceptional customer experiences and personalization communications across channels. Personalization and customer experience strategies are important components to initially acquire customers and ultimately, keep customers. Consumers want to be known and valued by brands and they will ultimately decide to do business with those companies that take the time to do so.
However, personalization has evolved well past greeting customers by first name. Success is dependent on data and the technology to integrate and activate this data in near real time across systems and channels. Data points should include the basics such as internal CRM data (demographics, purchase history and contact details). But even this is no longer enough.
Many databases are often missing important details or data quality has degraded and information such as contact details may be wrong. Third party data should continuously be brought into the mix to fix incorrect data, fill in the gaps and append missing insights such as lifestyle, behavioral data and in-market purchase indicators.
Implementing the right technology platform is also key to maintaining customer loyalty and sending personalized communications. Customer Data Platforms are making a huge impact in this area, offering quick and seamless data integration from multiple points and channels to create a comprehensive customer view. Based on this 360-degree customer view, brands can send timely and relevant communications based on individual preferences.
A study by Forbes Insights of over 400 marketing leaders found that nearly half of marketers that use a CDP believe that it helps drive customer loyalty — while a study by The Relevancy Group identified the top tactics enabled by CDPs in the graph below.
- 44% of organizations surveyed by Forbes Insights report that a customer data platform is helping drive customer loyalty [Forbes]
- 62% of companies that leverage a CDP use it to enable individualized personalization in email, 55% for advertising and 53% for real-time targeting
Brands understand the importance of acquisition, but for those not already doing so, customer retention must become a priority. Better experiences and stronger personalization will not only drive new customers to the door but will keep those customers engaged, loyal and making repeat purchases.
Interested in learning more about creating winning customer experiences and boosting your customer retention? Download our free Customer Experiences eBook, full of great stats, strategies and practical guidelines every marketer needs to know.
Learn how Porch Group Media can help you get to know your customers better and reach them across channels to boost your marketing success. Contact us to get started!