Shot #43: Customer Retention: Why & How?
Hi 👋,
I see I lot of new community members on the list this week. Hope you will enjoy reading this shot. 😃
(Concept credits: Marketing Management by Philip Kotler)
Here you go..
We have heard a lot about customer retention and why it is important.
But to give you a standpoint, let me share some insights 📝 with you:
Acquiring new customers can cost up to 5X more than retaining the existing ones.
5% reduction in customer churn can increase profits by 25%.
Profits tend to increase over the life of a retained customer due to repeat purchases, referrals, reduced cost of servicing, etc.
Satisfied customers are the company’s CUSTOMER RELATIONSHIP CAPITAL. Let’s say your company gets acquired by a larger company. In that case, the larger company will not only pay for your physical, IP & digital assets but also for the satisfied customer base
Now you truly get it, why retention is important. 😎
The companies that have created very large customer relationship capital have excelled at these 4 strategies 👀:
Reduce customer churn ⏳: Having a knowledgeable sales & support team will improve customer satisfaction. Resulting in reduced customer churn.
(Hint: Optimise your TAT (Turn Around Time) by training your staff)
Increased longevity of the customer relationship 🤝: A customer that is more involved with the company is more likely to stay around.
E.g: Honda- Approx. 65% of new Honda purchases replace an older Honda.
(Hint: Can you build a community around your product where you can share free knowledge?)
Increase share of wallet 💸: Sales from existing customers can be increased with new offerings and opportunities.
E.g: Harley Davidson sells more accessories like gloves, biker jackets, helmets and sunglasses than motorcycles.
(Hint: Can you create or collab with a new product/service that is a value add to your primary product?)
Focus on high-profit customers 🤑: The most profitable customers should be given privileges. They should be made feel special. Period.
(Hint: Simple thoughtful gestures like birthday gifts, pre-launch product testing or exclusive event invites can send a very strong positive signal to them.)
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Thanks,
Luv
Co-founder ExperienceSaga.com