Why Is Customer Retention Important for Businesses?

When it comes to brand growth, most business owners and marketing teams will tell you that they allocate nearly 80% of their marketing budget to acquiring new customers. In contrast, very little time or energy is spent on their existing customer base. This is surprising because studies have repeatedly demonstrated that loyal customers not only tend to spend five times more than regular customers but shop at those brands more frequently. Given that only 1 in 5 new customers will make a repeat purchase, it's imperative that your marketing strategy not only caters to your existing customer database, but that focuses on turning first-time shoppers into regulars... fast!

Smart marketing requires that brands focus on growing their customers' lifetime value (CLV). The higher the value the more profitable the business will be. CLV is mainly driven by customer retention. The concept is fairly simple—customers who are happy with the products and services of a company will keep on giving their business to them. The trick is finding a proven method to turn first-time shoppers into regulars and develop customer loyalty.

The main thing to keep in mind when working to retain customers is how to keep them happy. Happy, satisfied customers are created when the product or service you sell delivers fully on its promise, excellent customer service is given, and the price and the value delivered by the brand experience are well matched. 

Increase Revenue

Loyal customers have already decided that they prefer doing business with your brand because they've had positive experiences in the past. In essence, your loyal customers trust your brand and know that your products and services will continue to surprise and delight them. Thus, it's much easier to grow incremental sales with loyal customers because you're no longer trying to grow trust, rather you are complementing their earlier positive experiences with your brand when you make new product recommendations. To quote Zig Ziggler" You can have everything you want if you help other people get what they want".  

Gain Referrals

When you have delivered a series of positive experiences to your customers, they will advertise your business for you. Word-of-mouth advertising is the strongest and most influential form of marketing that exists. Your customers are friends with people who share their common interests and needs that represent your target market. So it's only natural that they would want their friends to know about their favorite shops or service professionals so that they can have a positive experience. Loyal customers will effectively bring new and qualified customers to your brand for free.

How to Grow your Business

It's obvious that customer loyalty is an invaluable asset to your business that helps accelerate your revenues. The trick as we discussed above, is how to turn your first-time customers into repeat shoppers and turn them into your brand advocates. For all businesses that are seeking to grow their bottom line, implementing a rewards program is an exceptional way of streamlining the customer loyalty process by rewarding all the behaviors that are meaningful to your business. Let's explore the best methods available to attract and keep more customers, connect with them effectively and grow your business. 

Customer Loyalty Programs

A customer loyalty program is a great way to keep customers coming back to your establishment—a tactic that’s especially helpful when a customer is trying out your business for the first time. A simple loyalty program like “buy three items, and get your fourth free” will make your business a better choice for customers since they know they’ll be rewarded for it in the long run. There’s a variety of rewards programs you can put into place, including tiered programs where customers can climb the ranks by spending more, and point systems that give them rewards on a rolling basis according to how much they spend.

Customer Referral Program

In addition to a customer loyalty program, you can implement a customer referral program to encourage customers to refer their friends and family. When they refer someone and that person signs up, the customer will receive an incentive—a $50 credit, for example. To make the deal even sweeter and ensure that the people they refer actually go through with signing up, you can provide an incentive for them as well. Nothing works better than creating a win/win situation.

Targeted Special Offers

While loyalty programs and incentives can help guarantee that customers keep on coming back, offering special deals and discounts throughout the year will show them that you value their business—and valued customers are happy customers. When you show your most loyal patrons that you appreciate their business, you’ll decrease the chances of them looking elsewhere for a better deal, and ensure that they stay loyal to your brand, especially when the offers they receive from you are relevant to them and answer to their needs.

Customer Retention Solution for Your Business

Looking for the perfect customer retention solution to suit your business? Speak with a loyalty expert today to discuss your unique program needs. Our platform can help you design the ideal loyalty program for your customers, increase your word-of-mouth advertising and give your referrals a boost. When you learn how to leverage your own customer base, you’ll be amazed at the results; let Kangaroo help you reward customers and foster a band of loyal customers. Contact us today to learn about our customer retention solutions, and why we’re the ideal loyalty program partners for your business