It goes without saying that customers are the lifeblood of every business. Without them it’s impossible for a company to stay afloat, regardless of size or stature.
That’s precisely why brands invest such huge amounts of money in marketing, advertising and R&D. These factors all play an important role in drawing in new customers.
But that doesn’t take into account another factor that is arguably just as important once businesses reach a certain size. Customer retention.
Bringing in new customers is vital for business growth. But new customers won’t make much difference if existing customers don’t stick around.
That’s exactly what customer retention and loyalty is all about - making sure your existing customers continue shopping with you.
One of the main reasons existing customers are so important is their sale success rate. It’s much higher than new customers.
Existing customers have a sale success rate of 60-70%, compared to just 5-20% for new customers. - Marketing Metrics
There are numerous factors businesses need to consider to promote customer retention.
Customers expect a certain level of service when interacting with a brand. That includes face-to-face interactions, interactions online, and interactions with advertising and marketing materials
Trust plays a pivotal role in consumers’ development of emotional loyalty towards brands. When brands don’t meet customers’ expectations it increases the likelihood of negative sentiment.
This is especially true with existing customers because they usually have an emotional investment of some sort. Any time your customer service or product misses your customers’ expectations, their opinion of your brand deteriorates.
You can’t meet your customers’ expectations until you know what they are. To do this you should use:
The vast majority of customers have the same basic expectations from most brands. Good customer service, a reliable product, fair pricing, etc.
But it generally takes more work to build a core group of loyal customers who will return to buy from you again and again.
Promotions are great for building trust among your customers because they reinforce positive sentiment and help you live up to expectations. After all, everyone likes receiving discounts and other incentives.
But loyalty programs in particular can have a massive impact on customer retention. In fact, they’re often referred to as customer retention programs for precisely this reason.
Once a customer has created a loyalty account, you can incentivize them with all sorts of rewards. For example:
These examples all use incentives to encourage customers to spend more. Your business gets a boost in sales and the customers receive significant discounts and rewards in return.
The trick is to offer incentives that increase based upon how much a customer spends. This way customers are much more likely to continue shopping with you rather than competitors.
Talon.One's Promotion Engine supports loyalty campaigns, referral campaigns, coupons and much more. These promotions all play an important role in customer retention. If you haven't considered a loyalty program for customer retention purposes, get in touch or find out more in our Content Library.