The Importance of Customer Retention in Business Growth
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It has only been in recent years that marketing analysts have recognised a pattern that led to slower than expected business growth. What they found was that customer retention, building loyalty and engaging customers were concepts far down the list of what they felt was important to business growth. It was all about driving sales, which is good and also effective, but not in the way they were approaching it. What companies were doing was spending an exorbitant amount of money on reaching out to new customers often losing their current customers in the process.
Market analysts have found that keeping the customers you have (customer loyalty) is a much more efficient and cost-effective way to go about growing a business. This led to the development of Customer Relationship Management, CRM, strategies that began to turn the tables leading to massive growth.
While numbers can be manipulated, in the long-term numbers don’t lie. If you want to see just how effective CRM platforms like Salesforce are, look at the numbers. According to one study conducted by Bain & Company, those companies that saw a 5% improvement in customer retention saw increases in profits anywhere from 25% to 95%.
However, that data alone doesn’t tell the entire story. This particular research is just one study conducted by one research group. The findings were picked up by the illustrious Harvard University Business School in the United States and used as a backdrop for developing business strategies revolving around customer retention.
As if that wasn’t enough evidence to convince Australian companies of the benefits of customer retention, what this study also found was that 82% of those companies participating in the research agreed that it was cheaper to retain customers than to work towards acquisition. What company doesn’t want to spend less in an effort to earn more? Australian companies are learning that CRM platforms can help grow their bottom line and if they have never been exposed to an effective CRM platform, help can be found through highly skilled CRM professionals like these Salesforce gold consulting partners.
In recent years, more and more companies have seen the folly of their previous attempts at growth. They are finally seeing that the ROI on customer acquisition is too low to be of value whereas customer retention is contributing toward major, sustainable growth. One of the biggest contributing factors is a different mindset in today’s consumer.
Today’s consumer wants to engage with businesses they deal with and many aren’t even looking at price reductions! Most want to know that they are dealing with businesses that care about their customers and are willing to offer exemplary customer service. If you are seeking to grow your business continually into a long and profitable future, it’s all about customer retention. There’s always room for customer acquisition but only if your current customer base is solid enough to keep the revenue coming in. That’s the bottom line.