How To Measure Customer Experience… CUSTOMER RETENTION

Similar to customer churn rate, customer retention is extremely valuable for company growth. In fact, Bain and Company claims that a 5% increase in customer retention can increase company revenue by 25–95%. It is still very important to drive growth through acquiring new customers, but the cost savings of building long-standing customer relationships are significant in comparison to the effort spent on acquiring new ones. This is why customer retention is a great measurement of customer experience.

Customer Retention

Neglecting existing customers in pursuit of new ones is a common mistake. While customer acquisition is important for business growth, meeting the needs of your existing customer base can be just as critical. Businesses who implement a strong customer retention strategy will reap the benefits.

Compared to new customers, repeat customers tend to spend more and are more likely to try your new products/services. Businesses should therefore work toward building a customer base with trust and loyalty toward their brand, to see their profits increase over time.

Check out these statistics:

1. 61% of small businesses report that more than half of their revenue comes from repeat customers. [Blakesly]

2. On average, loyal customers are worth up to ten times as much as their first purchase. [Marketing Tech Blog]

3. It can cost five times more to acquire new customers than it does to keep current ones. [The National Law Review]

4. A 5% increase in customer retention can increase a company’s profitability by 75%. [Bain & Company]

5. Reducing your customer defection rate by 5% can increase your profitability by 25 to 125%. [DestinationCRM]

6. 82% of companies agree that retention is cheaper to execute than acquisition. [Econsultancy]

7. The average repeat customer spends 67% more in their 31st–36th months of their relationship with a business than in months 0–6. [Bain & Company]

8. 89% of customers begin business with a competitor following a poor customer experience. [Oracle]

9. It takes twelve positive customer experiences to make up for one negative experience. Parature)

10. A 2% increase in retention has the same effect as decreasing costs by 10%. [Leading on the Edge of Chaos]

As you can see above, the impact of customer retention can be felt from your bottom line to your marketing tactics, cost of sales, and customer service. It is a metric, behind which, all of your people can measure and support.

Attracting new customers requires continuously honing your products and services to stay one step ahead of your competitors, and loyal customers can help you achieve this by providing valuable feedback.

Talk to your existing customers—ask them what they like and dislike about your products and services, and what sort of changes could help to improve their experience with you. Acting on this invaluable feedback to meet your customers’ needs and improve your product and service is how you truly set yourself apart from your competitors and spot new opportunities for growth.

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