By Erika Morford
How to save the existing clients?
Working with customers who have already made a purchase or have used your goods and products is much more profitable than attracting new users and customers. Current customers are loyal to your company, which gives a great competitive advantage. Also, if a buyer or user has a problem (need for a product or service), it is more likely that he will prefer to contact you rather than spend time and effort searching for a new company. This is explained not by laziness, but by the properties of the human brain.
Why try to keep a customer?
- Profit from old customers is up to 65% of the company’s total revenue
- The probability of selling the product to the current customer is three to five times higher than for a beginner. Old customers purchase 65-70% of cases, newcomers – 10-20%.
- The average check of a regular customer is 65-67% higher than that of a beginner.
- The cost of retaining old customers is five times lower than the cost of attracting new ones.
How to evaluate customer retention strategies
To understand how effectively a company retains customers, it is necessary to calculate two indicators. They are: customer profit (value) and customer retention rate. Both indicators are expressed in numbers and are calculated by formulas.
Customer Retention Rate denotes the company’s ability to build long-term relationships with current customers. To calculate this indicator, the number of newcomers who came during the period is taken away from the number of customers at the end of the period. The resulting number is divided by the number of customers at the beginning of the period. The higher this indicator, the more effective methods of working with clients.
Lifetime Value shows the profit that the buyer brings to the company for the entire time of cooperation. To calculate LTV for a period, revenue for the settlement period is divided by the number of customers in this period. The indicator helps to evaluate how effective the methods of attracting and retaining customers are to analyze the level of customer loyalty. With it, you can increase the profitability of the company, improve marketing strategies.
How to plan to keep old customers
Before developing a strategy, you must present the target audience. Describe the potential customer of your company. Try to make the image as specific as possible: specify age, education, gender, marital and social status. Think about what your client likes, what offers he may be interested in, and what will cause irritation and a desire to unsubscribe from your newsletter. Based on this information, strategies are being developed to attract customers and retention programs for current customers.
If the business brings a stable profit, and the CRR is high, do not give up new methods of customer retention, regularly check the effectiveness of the selected methods. So the marketing strategy can be tailored to changes in the market and customer needs.
How to attract and keep customers: proven methods
All methods that are aimed at retaining old customers can be divided into four main categories:
- communication with customers;
- work with the product;
- simplification of registration, payment;
In each category, there are reliable ways to retain customers that can be implemented simultaneously or gradually.