7 Shocking Facts About Customer Retention
Challenges of Customer Retention
Online sellers deal with multiple challenges every day, but one of the biggest challenges involves customer retention. Many online sellers can get customers to shop from them at least once, but then they struggle to get them to shop again in the future. If you are struggling with customer retention, you should check out the following seven facts. Each fact highlights the importance of customer retention, and some include tips that will show you how you can keep shoppers from ditching you for your competitors.
Most Sales Come From a Few Customers
Did you know that the majority of the sales you make as an online retailer come from a small group of your customers? The Pareto principle states that
in most events 80% of the effects are the result of 20% of the causes. According to How to Get Online, this principle can be applied to online shopping, as it is believed that 80% of an online seller’s sales come from 20% of its customers.
This statistic represents an important idea that online sellers needs to be aware of: a majority of your revenue will come from a few of your most loyal
customers. According to Inc. Magazine, repeat customers could spend at least 33% more than a brand new customer would. Customer retention is important for online retailers, because your most frequent shoppers could be making you the most money.
Email Marketing is an Important Tool
If you want to improve customer retention, email marketing is an effective tool to use. According to Small Business Trends, 80% of businesses rely on emails for improving customer retention. Emails allow you to easily reach out to your customers, and they allow you to send personalized messages to match your customers’ needs and interests.
Emails can be used to send your customers information that is relevant to the products you sell, and this can convince them to purchase items from your
collection. You can also send welcome emails to new customers to let them know that you care about them. Email marketing is an effective tool for an
online seller, so if you are not taking advantage of it you might have trouble retaining your customers.
Shoppers Feel Ignored
One of the biggest reasons why many customers stop shopping at a particular store is because of perceived indifference. According to Bloomtools, 68% of customers leave a business because they believe that the people who work there do not care about them. The simple act of not giving your customers enough attention can have disastrous results on your customer retention.
If you want to avoid dealing with this problem you should try to keep in contact with your clients. Seek out customers who buy from you frequently and send emails thanking them for supporting your business. Show your customers that you care about them, because if they start feeling ignored they might be inclined to shop somewhere else.
Loyalty Programs Work Wonders
One good way to improve customer retention is to set up a loyalty program for returning customers. According to Invesp, 69% of consumers choose retailers based on the ones that offer good loyalty or rewards programs. These programs are enticing because they allow customers to get money or rewards for sticking with a particular retailer for a long period of time.
Give your customers money back depending on how much they spend on your products. You could also give your most loyal customers gifts or discounts as a way to say thank you. Loyalty programs give you the chance to give back to your most frequent shoppers, and they make people want to stick with your business.
Customers Remember Bad Experiences
Offering your customers a good experience is crucial if you want them to shop from you again in the future. According to Small Business Trends, 82% of customers stop doing business with a company because of a bad customer service experience. Examples of bad customer service include being rude to shoppers and not resolving their issues in a timely manner.
Negative thoughts stick with people for a long time, so if you give your shoppers a bad experience it could take at least a couple of years before they try to shop from you again. You can avoid this by making sure that your customer service representatives are friendly, understanding, and helpful. If one of your customers does have a bad experience, try to make amends by either apologizing for the poor service or sending out a discount code.
It Costs More to Acquire New Customers
Another reason why it is important to keep your current customers around is because it actually costs more money to attract new ones. According to Invesp, it could cost a company five times as much to acquire new customers than it would to keep older ones. To entice new customers you usually need to use expensive marketing strategies, but with your current customers you just need to convince them to stick around.
Despite this, most companies place a greater focus on acquiring customers than retaining them. Gaining new customers is important for any business, but things can get costly if you cannot get some of those customers to shop from you in the future. If you want to save money in the long run, it is important that you keep your customer retention as high as possible.
Small Progress Goes a Long Way
Even the smallest improvement to your customer retention can lead to a massive increase in profits. According to Small Business Trends, increasing customer retention by 5% can lead to a 25% – 95% increase in profits for your business. This goes hand-in-hand with a previous point that stated that returning customers tend to spend more than your newer ones.
This means that keeping even a small portion of your old customers around can lead to a notable increase in profits. Always strive to make your customers happy, and offer good prices they cannot get anywhere else. If treat your customers with respect you will reap the benefits in the near future.
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