14 Sep Common Myths about Customer Retention
The concept of customer retention has made a huge impact on business strategies in recent times. E-commerce companies, no matter how big or small, are starting to realize the importance of effective retention strategies as a more cost-effective and potentially more successful way to build a stable customer base.
However, customer retention strategies can only live up to their potential when thought out and implemented correctly. Unfortunately, many marketers are unable to fulfill that potential, or worse, fail to see the distinct advantages customer retention programs can bring to their business. In what follows, we will try to dispel a few common myths surrounding customer retention and attempt to clarify the real truth behind those myths.
1) Customer retention is a nothing more than a necessary cost with no real ROI
One big mistake many online and offline companies make is attaching no or very little importance to customer retention. Many marketers see customer retention as an unnecessary cost that will gain too small a margin for the business to be of any significant value. Research has shown, however, that retaining only one customer could potentially increase your profits fivefold. Yes, the Return on Investment (ROI) is 5X for Customer Retention. At the same time, it teaches you valuable lessons on how and when to reach out to existing customers, so they will keep coming back and multiply your revenue over time.
2) Customers automatically stay with you if they like your company
Consumers can be fickle beings and even the most loyal customers should never be taken for granted. As soon as you take your eye off the ball and stop sending marketing emails and regular newsletter updates, you are taking the risk that your customers will forget about you. Even the most loyal supporters of your brand, business model or level of customer service need a reminder from time to time that you are still around and will continue to give them the great deals and quality products they are looking for.
3) With the right marketing strategies it is possible to retain 100% of your customer base
Every company has to accept the fact that not all customers will be there for the long haul. Despite your continued efforts, many consumers will always inevitably be on the look-out for the best deals around and continuously undercutting the competition is never going to increase your revenue in the long run. It is, therefore, better to cut your losses and focus your attention on the worthwhile customers that put quality and service above price.
Not only is it not possible to retain your entire existing customer base, it is also not something you should be aiming for. The profit margins you make on more valuable customers will more than make up for the loss of a few less valuable customers here or there.
4) Customer retention and customer recovery are one and the same
Despite what some businesses believe, customer retention is a marketing tool and should not be left in the hands of your customer service department. In other words, customer retention should not begin when the consumer is already half-way out the door.
If you only start focussing on customers when they are threatening to leave, not only will your success rate drop dramatically, it will also make the customer in question see right through your ploy and make them feel undervalued because you didn’t make the time or effort to keep them interested before.
Instead, start focusing on your existing clientele on a regular basis, even if they still make regular purchases. Using proactive strategies will help you sell more and more regularly and at the same time make your customers feel important to you and your business.