To growing businesses, a great customer retention strategy is a make or break factor. Too many young companies focus on the wrong number - specifically, the number of new customers acquired. While it’s important to have a growing customer base, it’s more important to maintain great relationships with the customers already earned.

RETAINING CUSTOMERS IS PARAMOUNT TO EVERY BUSINESS

The power of a great customer relationship is indispensable for four key reasons: it’s cheaper, no research is needed, it’s long-term and it can become a free part of your sales strategy. Let’s break that down:

IT WON’T BREAK THE BANK

Customer retention is cost-effective. Return customers spend more and buy often. According to HubSpot, only a 5% increase in customer retention can increase company revenue by 25-95%. On the flip side, it’s 5-25x more expensive to acquire a new customer than it is to retain an existing customer. 44% of companies have a greater focus on customer acquisition than retention. Don’t be one of them - the numbers don’t lie. Keeping customers will result in a greater ROI.

NO RESEARCH NEEDED

Do you know what’s awesome about returning customers? You know them. They’re a business's bread and butter. There’s no guessing game involved in customer retention - the relationship has already been established. From there, it’s all about authenticity. According to Stackla’s Consumer Content Report, 86% of consumers say authenticity is important when deciding what brands they like and support. There’s no need to waste all your resources on new customer outreach when less money can be spent on a bigger return. Low lift strategies like sending personalized messages yield big results.

IT’S LONG-TERM.

Finding new customers puts too much focus on short-term sales and fast cash. Customer retention, on the other hand, relies on long-lasting relationships. Think about it like this: long-term customers usually interact with a business in more ways than just buying the product. They actively connect with the business - through a company website, messaging, and social media. The best businesses personalize these interactions, allowing the customer to have an experience with the brand. This makes customers feel special. Nobody wants to feel as though they’re just another number.

CONGRATS! YOU’VE GOT A BRAND NEW SALESPERSON.

With a great product comes great customers. By investing in returning customers, a brand has the opportunity to propel their product through word of mouth marketing. Having customers as part of the sales team is incredibly effective. Referrals convert at 3-5 times higher than other marketing methods. People trust people. 92% of consumers trust recommendations from others, even people they don’t know, over branded content. Referred customers have higher lifetime values, are more loyal, and have higher margins each year than other customers. Customer retention is a cycle. Build a relationship with one loyal customer, and your business has the potential to gain five more without spending a dime.

It goes without saying, consistent growth is essential to new businesses, but growth doesn’t mean just getting new customers. It means developing and nurturing loyal relationships with current ones. This will increase cash flow just as much, if not more, as gaining new customers, and will make for a more sustainable business model.