Getting new business is great but if you're losing old customers as fast as you're finding new ones, you're simply creating customer churn. The key is to build your business around a growing band of loyal customers.
The fact is that existing customers are better for your bottom line. Loyal customers cost less to look after, they spend more and they often bring in new customers through their endorsements.
However, you can't take your existing customers for granted. To build a loyal customer base you need to keep in regular contact, offer great customer service and respond to any issues as soon as they arise. Above all, you need to understand your customers so that you can meet their changing needs and keep them on board.
The benefits of using a CRM system
This kind of customer relationship management is far easier - and more successful - with the help of a professional sales or CRM system. Many of the key tasks involved in customer retention can be automated so that no one slips through the net. A modest investment in the right software can improve your results many times over
A system like Bitrix24, for example, can boost your customer retention rates, improve your efficiency and cut your marketing costs. By centralising customer data, it gives you a complete picture of who your best customers are so you can focus on meeting their needs, easily and cost-effectively. With features like customer feedback gathering, task automation and personalised interactions your business can deliver exceptional service and build lasting customer loyalty.
Here are nine reasons why you should focus on customer retention - with the help of a dedicated CRM system:
1. Cost savings
Studies consistently show that keeping existing customers is better for the bottom line. There are several ways that focusing on customer retention can make your business more profitable:
- It can cost five to 25 times more to acquire a new customer than keeping an existing customer, according to Harvard Review.
- Existing customers are more likely to repurchase and to try a new product; studies suggest that the probability of converting an existing customer can be as high as 60% compared to less than 20% for a new prospect.
- Increasing customer retention by just 5% can boost profits by 25%-95%.
A professional sales automation platform can show you where the most profitable sources of revenue are.
2. Revenue stability
Repeat customers are your best customers. They provide a steady revenue stream that creates a regular cash flow - the lifeblood of any business. What's more, having lots of returning customers allows you to make accurate sales forecasts, manage staffing levels and order the inventory you need when you need it. Regular customers also tend to be less price-sensitive, so it is easier to increase prices, especially at times when businesses are facing rising costs.
3. Building loyalty
Loyal customers become brand ambassadors for your business. They don't just buy from you on a regular basis, they recommend your business to their friends and family. An automated sales and marketing system can help you identify your most loyal customers; then you can make sure you are doing everything you can to keep them happy - keeping in touch, providing great service and rewarding them for their loyalty.
4. Customer insights
Sales analytics can help you understand your customers better and improve retention. With a sales automation platform, you can find out who the big spenders are, spot those that have lapsed and identify the regulars that are the bread and butter of your business. Analytics can be eye-opening – get valuable insights into customer behaviour and performance analytics and discover who your most profitable customers are (the answer might surprise you).
5. Customer communication
The methods you use to nurture your existing customers can be much cheaper and simpler than the strategies you might use to target new prospects. Your CRM system has all the information you need about your regular customers; with those details you can send regular email newsletters, offering useful content as well as flagging up new products and special offers. Keeping good records in a CRM system also opens up opportunities to target offers to individuals and niche groups, allowing you to personalise your communications and send automated follow-ups.
6. Customer service
Service is key to customer retention and it can be a great way to differentiate your business from competitors. That service must be consistent; one bad experience can be enough for a customer to walk away. Neglect can also be damaging and this is where a CRM system can help you to keep existing customers sweet. You can improve retention rates by setting up a loyalty programme or offering rewards to key customers.
7. Feedback loop
Asking customers for feedback can reveal if there's a mismatch between their expectations and what you are offering. That in turn gives you the chance to keep more details of customer preferences on your CRM system so that you can better meet their needs.
8. Upselling and cross-selling
Existing customers are your best prospects – if you flag up other products or services that your customers might be interested in, they will see that as good customer care rather than a hard sell. With the data you collect in a sales automation system, it's easy to spot opportunities for upselling and cross-selling. Always make sure your sales efforts are carefully targeted and consider using rewards as an incentive.
9. No more churn
Customer churn keeps businesses busy but it doesn't build growth. Enterprises that focus on new customers at the expense of old ones are often operating on the back foot and missing key trends in the market. By learning more about your existing customers, you can focus on their needs, adapt where necessary and create a strong foundation for growth.
There's no doubt about it, happy customers make for happy businesses. Growing a loyal customer base isn't just good for your bottom line, it creates a positive and fulfilling workplace for you and your team.
Copyright 2023. Article written by Rachel Miller, Marketing Donut.