5 Unique Ways to

Increase Customer
Retention (and
Increase Profits!)
Posted by Toma Kulbytė on 3 December, 2019 - 29 Comments

Post summary:

● The difference between companies that grow and those that

don’t is customer retention. The more customers that you
can keep and continue to sell to, the more likely you are to
achieve your business goals.
● Investment in customer acquisition far exceeds investment
in retention. Yet, selling to an existing customer is 6-7 times
cheaper. So, why are companies spending most of their
budgets on generating new customers?
 ● The biggest challenge for many companies is where to
begin. Here, we share 5 practical customer retention
strategies that you can use to keep your existing customers
happy over the long-term and increase your profits.

For people who work in sales, the number one priority is to find new ways to
increase revenue.

To do this, they need to sell more, which, in turn, means – they need more
clients.

As a result, very often salespeople get so focused on gaining new customers

that they fail to effectively address the need to retain those they already have.

Yet, we keep on hearing, time and again, that it’s cheaper to keep existing
customers than acquire new ones.

Allow me to remind you of just 1 killer fact: according to Marketing Metrics, the
success rate of selling to an existing customer is 60-70%, while the
success rate of selling to a new customer is only 5-20%!

So why do we keep on spending more money on getting new customers?

Customer acquisition vs.
customer retention
The most common pitfall for businesses around the world is that they think
that if they have a great product or service, then customer retention will follow
naturally.

And, while this might be the case in some instances, the harsh truth is that it’s
only a short term strategy. An even harsher truth is that, sooner or later, your
customers may just … leave!

Because if you stop trying, your customers start feeling that you no longer
care about them.

So, what’s the outtake?

You need to keep on trying and earn a customers loyalty, continuously.

Having an effective customer marketing strategy gives you the ability to

identify, track and sell more to the customers who are most likely to become
your long-term sources of revenue.

The businesses that “get this” consciously invest in customer retention,

because they see it as the biggest revenue driver, according to KPMG.

In this blog post we will explain why and how customer retention is essential to
growing your sales, and we will also provide you with five tips and practical
examples of how CRM software can help you carry out the ways to sell more
to your existing customers.

That’s why we’re sharing why customer retention is essential to growing your
business, and will give you with 5 tips (and 5 practical examples) of how CRM
software can help you keep your customers and sell more to them!
Why should you care about
existing customers?
Every business needs new customers.

Yet, the easiest and most predictable source of new revenue is right under
your nose: it comes from the existing customers who already know your
company and have already bought from you.

Here are 5 reasons why you should care about existing customers.

1. Better conversion rates. Existing customers have already bought from

you, so unless they had a disappointing experience, they will buy from you
again. You’ve already established trust, inspired confidence in your product,
and even know something about them, which makes it easier to identify their
needs and predict their moves.

2. Less marketing. You’ll spend less time and effort finding new customers
and convincing them that you are the one they should buy from, which means
– less expenses. To build a long-term business relationship with a new
customer costs 16 times more, than to maintain an existing customer.

3. Room for improvement. You have a golden opportunity to improve your

offering and customer satisfaction rates just by listening to your customers’
feedback. Was your customer service good enough? Did your product meet
their expectations? Was it a good value for money? Just ask, listen and
improve.

4. Higher profits. Selling to existing customers is less focused on price, as

opposed to selling to new customers. And since your existing customers trust
you already, it gets easier to convince them to become interested in even
more of your products or services through up-selling and cross-selling. In fact,
Gartner Group statistics tell us that 80% of your company’s future revenue will
come from just 20% of your existing customers.

5. Lower costs. It’s going to save you a lot of money! According to Bain and
Company, attracting new customers will cost your company 6-7 times more
than keeping an existing customer; while, a mere 5% increase in customer
retention can increase a company’s profitability by 75%!

Businesses should not underestimate the actual value of customer retention

and start being proactive in keeping their customer base.

In other words – the customers you have are your best shot at maximizing
your revenues and making your business more profitable!

How can CRM help you improve

customer retention?
When it comes to CRM, the secret lies in that one word – relationship.

CRM is about knowing your customers – who they are, how they’ve been
marketed to and how they responded. If all goes well, you keep selling to
them, and that’s when the fruitful relationship really starts.

And while CRM software does not manage customer retention by itself, it will
provide you with the tools to help you manage the activities around customer
engagement to improve the customer experience.

The question is what do you really need to do to influence customer retention?

Once you start thinking and putting your efforts into customer retention, it is
essential to consider the reasons and factors that enhance repeat purchases
of your product or service.
Let’s face it: customer retention strategies are not done on paper – you need
to have a wide range of data and information about your customers to be able
to measure and analyze your customers’ behavior.

And for that you need a CRM system!

5 practical examples of
customer retention strategies
You and I are both customers.

And we both want to feel like individuals, not like units of a target group.

To be able to treat customers individually, businesses need to store a lot of

information about them. That is why, having a good customer database that
keeps records of all interactions and transactions is key to building
long-lasting customer partnerships.

Here are 5 customer retention techniques you can implement using

your CRM software to keep your customers by your side and increase
revenues on the side!

1. Notice churning signs in advance

The most obvious way to ensure customer retention is to prevent a customer
from leaving.

If you really pay attention, you can always detect the signals of your
customer’s impending departure.

To capture these “warning” signals, you need to identify the key variables of
customer behavior, such as purchase patterns, product usage and history of
customer service enquiries. Then, you’ll need to analyze these signals and
take action to stop your customers before they churn.

All this is possible with a CRM system.

EXAMPLE: Let’s say you want to know how many of your customers didn’t
purchase anything in the last 6 months, which might be a sign of them
considering quitting your services and taking their money to your competitors.

First, create a list of all of your customers, and then create a list of all sales
made within the last six months using your CRM software. By comparing
these lists, you end up with a list of customers who haven’t purchased from
you in more than half a year.

You can now send follow up emails to these customers and find out the
reasons why they are not purchasing, and prevent them from leaving your
business.

2. Target customers with special offers

The more you know about your customers, the better you can tailor your
approach to each individual.

CRM software lets you view a customer’s purchase history, so that you can
determine what kind of offer will be the most appealing to each individual and
increase relevancy, which will keep your brand on your customers’ minds.

What you need right now is identify ways to revive their interest and convert it
into an actual purchase! You can do it by offering them special discounts or
some additional value for your product.

EXAMPLE: Let’s say you want to follow up on the customers who showed
active interest in your product, but haven’t bought anything from for quite
some time.

Using your CRM software, you can create a list of all customers who haven’t
bought anything for a longer period of time, and compare it with a list of all
contacts who subscribed to your newsletter. The result is a list of contacts that
are actively interested in your product, but who, have not shown any signs of
life for a while.
Send them a special offer deal or a discount on a new products and make
them feel that you care and haven’t forgotten about them.

3. Reward your most profitable (VIP) customers

Information gathered in the CRM software can tell you which of your accounts
are your most profitable. These are the customers you really don’t want to let
go of, your key accounts. For this purpose, let’s call them the VIPs.

Knowing who brings you most revenue allows you to allocate your time and
resources efficiently, as well as increase your chances of cross- or up-selling.

EXAMPLE: Let’s say you have a number of incentives to give away. Use them
to reward your VIPs to further increase their loyalty.

It’s easy: just create a list of your VIP customers in your CRM software. Now,
you can start to follow up and let them know about the rewards and incentives
in order to make them feel special, so they continue to be your most profitable
customers, which, if you consider the 80/20 rule, this investment is bound to
pay off!

4. Personalize your follow-ups

A relationship is something that is established between people, and CRM
software makes it easier for you to see your customer as a person and not just
a number.

When you register a new customer in CRM, use the information given,
providing it’s with their consent, so you can personalize the communication in
the future. The more information you have, the easier it will be to tailor your
follow-up strategies.

The effects of personalization cannot be understated, as research from

Econsultancy found that personalization based on purchase history, user
preferences and other relevant information typically found in CRM software
delivers a high impact ROI.
EXAMPLE: Let’s say you’ve met most of your customers already during the
trade seminars you organize. However, there are still some decision makers
who haven’t come to your seminars and, therefore, you want to contact them
for individual follow-ups or maybe up-selling. How do you do that?

First, create a list of all of the contacts you have registered in the CRM
software. Next, create a list of all customers who have attended your seminars
during the last twelve months. By combining those two lists, you are left with a
set of contacts who have not attended your seminars.
Now, you know whom to follow up on with a personal invitation!

5. Keep your follow-up promises

Keeping your promises is the ultimate sign of professionalism in business.

The scheduling features in a CRM software allow you to schedule follow-up

calls or emails in advance, or assign follow-up tasks to members of your team.
By doing this, you’ll be able to keep track of your appointments, as well as
complete any tasks that you said you’d do when you said you’d do them.

EXAMPLE: Let’s say you have a list of customers that you need to catch up
with and possibly update their information.

Time flies and … now it’s time to do it! But, you check your schedule and you
see that you won’t be able to keep your promises to customers on time. In this
case, you can always assign some of your colleagues to follow up on these
customers and, with just a few clicks, create follow-ups in their diaries.

Conclusion
Even though gaining new customers is a sign of business growth, losing
customers is simply too expensive, as the average global value of a lost
customer is $243!

Your existing customers give you a great chance to increase your profits, as
they are more likely to buy from you, than prospects.

And in order to make it happen, you need a tool to keep your

relationships alive – CRM.

With the help of a CRM software, you can gather and manage information on
your customers and also manage activities around customer engagement.
Use the data that the CRM software provides to not only retain customers, but
also to keep them happy and grow profits – all without the added expense of
acquiring new customers.

How do you use CRM software to keep existing customers?

And do you have any customer retention tips that you can share with us?

The more customers you retain, the higher your profits will be. Sign up below
and get a free personalized demo to see how you can use CRM software
to retain customers.