When it comes to cost, companies know it’s cheaper to retain a customer than to acquire them.
In fact, the two numbers aren’t even close.
Recent statistics from KissMetrics show that it costs 7X as much money to acquire a new customer than it does to retain an old one.
The same study also showed that brands still focus the bulk of their marketing energy and budget on the acquisition stage, despite the cost and commitment involved. The same group of respondents also said that customer acquisition was their most important marketing goal.
The lure of new customers is strong, of course. You want to expand your brand’s reach, your company’s revenue and your own ultimate goals.
But why is customer retention so often overlooked? Why is keeping a client not as important as gaining a new one?
In this blog, we’ll explore some of the reasons why customers ultimately leave.
1. You’re Too Focused on Being Price-Competitive
It’s great to offer low prices.
Offering a solid low price is a great way to attract cost-centric customers and gain a lot of initial attraction from comparison shoppers.
But prices fluctuate. And customers who are only looking for the lowest price won’t stay with you when one of your competitors eventually, inevitably offers a lower price than you.
To stay competitive and retain customers for the long term, you have to focus on providing more than the lowest sticker number.
If you don’t offer more substantial things, like great customer support, high-quality products and services, special discounts and continual improvement to your model, the only thing standing between having a customer and losing them is a lower price from a competitor.
Don’t leave yourself vulnerable to loss by only offering your customers one thing.
2. You Aren’t Responsive to Customer Complaints or Concerns
In the world of the internet, bad reviews are on display for all to see.
It’s also easier than ever to compare the prices and reputations of multiple companies. Unless you’re in a highly-specialized industry, the competition you face online is steep.
Your customers expect outstanding customer service and receptiveness to their complaints and pain points. Companies who don’t respond, especially on social media, can seem aloof or apathetic to their customers’ complaints.
In the era when complaints can be posted and responded to on social media within minutes, companies who don’t take the time to address unhappy customers will pale in comparison to those who do.
3. You Don’t Consider Lifetime Value
What if you could gain the lifetime loyalty and business of a customer?
How much revenue do you think you could generate, and how much positive word-of-mouth promotion do you think they would give you?
We’re talking about a lifetime customer here. That could be 10, 20, or 30 years of business. The potential returns on such a long-lasting relationship are far higher than those you would enjoy through landing a new customer who isn’t guaranteed to stick around.
Unfortunately, it’s difficult for most people to visualize value that takes a long time to materialize. We like things to be instantaneous.
When we think about new customers, we think about that additional bump in immediate revenue and profits. We think about our end-of-year numbers looking better than expected.
When you’re hyper-focused on the here and now, you miss the huge value that a satisfied lifetime customer brings to your company. Most of the time, that value is far greater than a one-and-done purchase or short-term client who was never planning on a long-term contract with you.
4. You Don’t Evolve with Trends or Technology
With the increasing power of technology, trends comes and go faster than they ever have before.
Your target audience’s interests, habits and needs may change year to year, or even season to season. You have to be able to meet them where they’re at and appeal to them, despite these changes.
Are you using the same marketing materials, slogan and platforms you’ve used for years? Do your products and services work the same way and meet the same needs?
If your answers to these questions is “yes,” it may be time to revisit your brand’s techniques, especially if you aren’t growing or expanding. Your audience may have moved on from the same-old, same-old, and you have to follow them.
Customer retention is a great way to bolster the long-term health and viability of your company.
Are you focusing enough energy on keeping your customers happy?
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