According to marketing expert Neil Patel, customer retention is “the process of engaging existing customers to continue buying products or services from your business.” In other words, the purpose of customer retention is to reactivate inactive customers.
Customer retention is different from customer acquisition or lead generation, because customers you retain have already been converted once. Because they have experience with your brand, it’s much easier to reactivate inactive customers than it is to acquire new ones.
Businesses don’t tend to focus on inbound marketing for customer retention. This is probably because it’s difficult to measure results from customer retention efforts, while it’s fairly easy to monitor your results from basic performance marketing that targets new prospects.
The following are five benefits to focusing on customer retention.
1. Spend Less Money on Marketing
It costs more to find and attract new customers than it does to sell to existing ones. People who are already familiar with your business—familiar enough to have made a purchase already—will be comfortable buying from you again if they’ve had a good experience. If someone is unfamiliar with your brand, it takes them much longer to get comfortable enough to buy.
2. Spend Less Money on Support
Besides this, when people are already familiar with your products, they’re less likely to require customer support, saving you money in that department as well.
3. Get Valuable Feedback
Another valuable asset the repeat customers bring to the table is helpful feedback. Your loyal customers are the ones you want to listen to when you update products. Their opinions are valuable, because they represent your ideal audience.
4. Charge More for Premium Products
Repeat customers are more willing to pay premium prices for advanced products. With their existing familiarity with your brand, they know they can trust you to deliver real value—making them your best audience for high-ticket offers.
Additionally, by offering existing customers a product that you aren’t releasing to the public yet, you can turn a substantial profit, while making your customer base feel really special. Research shows that 94% of Americans will take advantage of an exclusive offer not typically made to the general public.
5. Get Word-of-Mouth Advertising
Happy customers often do your marketing for you in the form of word-of-mouth advertising. This kind of promotion is dramatically more valuable than any you could ever buy, as people are much more likely to take a friend’s recommendation than they are to respond to an ad.
Instead of pouring money into advertising, you can focus on delighting your current customers—not only will they keep buying from you, but they’ll bring their friends, too.
For these reasons and more, it’s a good idea—and a profitable idea—to reactivate inactive customers through customer retention. One of the most effective ways to practice customer retention is by hiring a customer call center, or direct response call center. In spite of email’s and chat’s popularity, customers still like to use the phone when dealing with a company they trust.