Definition Of Customer Retention And How Important It Is To Retain Customers

LECTURE NOTES CREDIT HOURS : 3 CREDIT SEMESTER/SESSION : 4th SEMESTER, 2022/2023 SESSION TOPIC : BUSINESS ORGANIZATION CHAPTER 1 – DEFINITION OF CUSTOMER RETENTION AND HOW IMPORTANT IT IS TO RETAIN CUSTOMER A. Definition of Customer Retention Customer retention is the various actions that companies take to keep customers using their products or services. The surprising thing is, not all businesses prioritize customer retention. Based on data from Forbes, in 2012 many businesses prioritized driving sales, while customer loyalty was the last priority. As much as 25% - 40% of the total revenue of a stable business comes from returning customers. Repeat customers can multiply revenue up to 3-7 times more than one-time buyers. Getting new customers is important, but it's even more important to keep your existing customers. The higher your customer retention, the more profit your brand can get. B. Benefits of Customer Retention Many companies spend time and money to get new customers, because it is considered an easy way to increase revenue. In fact, retaining old customers is faster and more effective. It's easier to sell to customers who already know your brand, rather than spending time on marketing while looking for new customers. Once your company has focused on customer retention, you will find out for yourself that this strategy can be more effective. Your existing customers are already familiar with your brand and have an interest in your products. So, retaining those customers is a key strategy for sustainable growth. In fact, the cost of finding a new customer can be up to five times more than retaining an existing customer. In addition, even a 5% increase in customer retention can increase profits by 125%! C. Building Strong Customer Relationship When your business fails to build strong customer relationships, there is a 20% chance that your customers will leave your product and look at competitors. In some business industries, that percentage can be even higher. The results of customer retention will be seen over time and the slightest change in customer retention can create a big impact. Here are strategies to build strong relationships with your customers: 1. Record inactive customers Many businesses invest time and money into building customer relationships. However, this is often forgotten once there is an initial sale. In fact, as mentioned, the easiest way to grow your business is to keep your existing customers. Start by recording how many of your customers are inactive, rarely buy your brand, and make efforts to improve your customer relationship with them. 2. Bring Back Customers Who Have Gone Away Most of your lapsed customers will be happy to rebuild a relationship with you, if you approach them in the right way. This is the fastest and easiest way to increase sales, because these customers have used your products and services before. So, basically they already have an interest in your brand. You can contact the customer, find out why they haven't bought from you in a while, show them that you are happy to have them back. 3. Provide the Best Service The best way to retain customers is to provide exceptional service. This can also bring in new customers, because your old customers will tell you about your brand whose products are quality and the service is satisfying. Indirectly, they will recommend your brand to new customers or the term becomes a brand advocate. Therefore, always give a quick response to customers, make sure to provide the best service, and fulfill your commitments. D. Conclusion Retention is an important key in the sustainability of the company. Customer retention needs to be seriously considered because they are the most profitable type of customer for your company. One way to retain customers is to have a loyalty program that makes your customers more interested in continuing to make repeat purchases of your products.