The Value of Customer Retention in 2022

Did you know that 65% of a company’s business comes from existing customers?

Furthermore, 82% of companies agree that customer retention is cheaper than customer acquisition.

However, if this is the case, why are so many modern businesses focusing the majority of their efforts on attracting new customers?

Within the below blog, we are going to show you the importance of customer retention in the year ahead. Plus, we reveal our top tips for retaining your loyal customers in 2022 and beyond.

What is customer retention?

For those who are not sure what customer retention is, let’s take a closer look at this crucial digital marketing strategy.

Customer retention refers to the actions taken by a business to increase its number of repeat customers as well as to increase the profitability of each existing customer.

There are a number of different customer retention strategies that you can adopt to try and encourage loyalty to your brand, depending on what type of products and services you offer.

In stark comparison to customer retention, you have customer acquisition, otherwise known as the process of attracting new customers to your business.

You can find out more about customer retention vs. customer acquisition in our Knowledge Hub.

Why is customer retention important?

As mentioned briefly in the introduction, customer retention is much more cost-efficient than customer acquisition. In fact, it can cost as much as five times more to attract a new customer than it does to retain an existing one.

Furthermore, your probability of selling to an existing customer is around 40% more likely than converting someone who has never made a purchase with your business before.

Need more reasons to plough your efforts into customer retention?

We have lots more stats to show you!

Existing customers are 50% more likely to try your new products than new customers.

Existing customers spend on average 31% more compared to new customers.

A 5% increase in customer retention can increase your company revenue by between 25% to 95%.

Also, retained customers are more loyal than new ones, and they are more likely to refer your business to family and friends.

How to calculate your customer retention rate?

As one of the fundamentals of digital marketing, every business owner and marketer should know how to calculate customer retention.

If you do not yet know how to do this, don’t worry, the formula is simple:

(Number of customers at the end of a period – number of customers acquired during that period) / number of customers at the beginning of the period) x 100

For example, let’s say you have 10,000 customers at the beginning of the period, and you acquire 5,000 new customers during that time but lose 2,000. That means you have 13,000 customers lefts.

Therefore, your equation would look like this:

(13,000 – 5,000) / 10,000) x 100 = 75

So your customer retention rate is 75%.

When it comes to what is a good customer retention rate, this is highly dependent on the industry that you operate within:

Retail: 63%

Banking: 75%

IT: 81%

Insurance: 83%

Media: 84%

What digital marketing techniques can you employ to increase customer retention?

Now that you know why customer retention is so important, the next step is to find out the fundamentals of digital marketing that can help you achieve your customer retention goals.

While you can find many customer retention strategies online, it is worth remembering that the world of business has changed irrevocably in the last few years.

What was once a fairly even playing field between physical and digital businesses has become a dominant digital marketplace that relies heavily on online marketing techniques.

Fortunately, it is never too late to start paying attention to your existing customers and providing them with the attention they need to become loyal shoppers and brand ambassadors.

Demand feedback

How can you possibly improve your business if you don’t first know where you are going wrong? If you want to retain customers, you need to know what they like about your business and where they think you can improve.

Although most businesses know the importance of customer feedback, not many have the tools in place to actively receive it.

If you are not getting as much customer feedback as you would like, there are several ways in which you can encourage more reviews, including:

• Asking users to participate in user testing and focus groups
• Sending out customer feedback surveys via email marketing
• Using social media for product reviews

Create a company newsletter

Did you know that email marketing remains one of the most cost-effective digital marketing techniques available?

Simple yet highly fruitful, you can build stronger relationships with your customers and encourage brand loyalty by sending out a regular company newsletter to everyone in your email subscription list.

For businesses that don’t have the time to generate personalised emails, there are several free automation tools that you can use to send relevant updates and offers to all your customers at once.

Start a customer loyalty program

While it can become all too easy to focus your efforts on existing customers who you think may jump ship at any moment and head over to your competitor’s sites, you must not forget to reward those that continue to be loyal to you.

One of the simplest ways to keep your existing customers happy is by implementing a customer loyalty program. Also known as customer retention programs, customer loyalty programs are designed to motivate customers to make more purchases more often in order to earn rewards.

A win-win for both your business and its customers, the right customer loyalty program will help you gain more repeat business and reward your customers for their loyalty.

While most loyalty programs offer monetary rewards, these don’t have to be big in order to see results. If you are a small, independent business, even a small reward can be enough to catch the attention of your customers and keep them coming back for more.

In fact, if you are a small business, offering a loyalty program shows that you really care about your customers. Much more than any global corporation with an unlimited ad budget does!

Strive for innovation

Do you know the difference between Google or Amazon and the average online retailer? It’s not vast amounts of money but, moreover a drive to succeed.

While we understand that a small business’s day-to-day running can often take priority over your vision for the future, if you want to retain customers, you need to make sure that you are taking the time to innovate.

While you may have several best-selling products or services that your loyal customers have loved for many years, this does not mean that you can rest on your laurels and give up on creating anything new.

Build trust with blogs

If you want to retain more customers, you need to make sure you are trying to build a good level of trust between them and your business. Unfortunately, this is easier said than done, with consumers being warier of businesses than ever before.

However, there is one proven marketing technique that helps build trust in your brand, which is the art of blogging.

While most businesses now have a blog, only a small minority are doing what they need to do to make it a successful trust-building tool.

One of the most critical processes of building a successful blog is in attracting a loyal audience, a sort of online community. However, you can’t achieve this if people do not trust both your business and your blog.

There are many ways that you can ensure your blog helps your business rather than hinders it, including:

• Write content that is original and relevant to your audience
• Be 100% transparent when reviewing or recommending a product or service
• Be accountable and always deliver on your promises
• Don’t be afraid to experiment with vlogging

Be active on social media

You need to put your brand at the forefront of your customer’s minds if you want them to remember you and remain loyal. Social media offers one of the easiest ways to get your business out there and seen by a wider audience.

Therefore, social media should definitely be a part of your overall customer retention strategy.

Below are some of the digital marketing techniques that we use to retain customers on our social media pages:

• Share any positive reviews or comments with all your followers
• Put social buttons on your footer, checkout page, and contact us page
• Showcase any special offers or deals on your social media pages
• Create a buzz around a new product or service with a social media competition
• Personally name and tag your loyal customers and thank them for their custom

If you would like more ideas on how to retain your customers or any other aspect of digital marketing, Book a call with our friendly and knowledgeable team here. We can’t wait to hear from you and help you build your brand online.