Monday, September 24, 2018

20 Facts & Stats Your Business Should Know About Customer Loyalty & Retention

  Alexe John       Monday, September 24, 2018
It probably goes without saying that customer retention is absolutely critical to the long-term success of any business. Clearly, any business that loses a large number of customers each year is simply throwing money away.

That’s mostly because it is much easier to sell to existing customers than it is to continuously go after new ones.

Did you know that the average value of a lost customer is $243? This means that every customer retained can increase the revenue of your business by $243, which is quite a large number if you think about it.

In this report, we are going to discuss 20 additional key customer loyalty and retention facts that you should be aware of…

… and what they ultimately mean for the success of your business.



  1. The probability of selling to an existing customer is 60-70%, while the probability of selling to a new prospect is 5-20%.
The fact is that selling your products and services to existing customers is much easier than trying to sell to new customers; so it certainly seems strange that so many businesses choose to go after new customers all the time and practically ignore the ones they already have.

If someone has bought from you before, they are already aware of your business and, providing the customer had a good experience, a degree of trust has been established between both parties.

Just think about what happens when you go to buy a new product yourself and you have lots of brand choices in the market. If there is a brand available that you have bought from previously (and were completely satisfied with), you’ll tend to buy from that same brand again.
  1. It costs at least 5 times more to acquire a new customer than retain an existing one.
In order to acquire new customers, most companies spend a lot of money on different marketing strategies. Whether it’s content marketing, Facebook advertising, newspaper advertising or TV/radio ads, successfully marketing to new customers can work out be extremely expensive.

By comparison, marketing to existing customers often requires much less time and money because you already have them in the door. In addition, you can gather useful information about your long-term customers and use it to manage marketing budgets and campaign-spend more efficiently.
  1. A 5% increase in customer retention can increase a company's profitability by 25-100%.
By boosting customer retention, you can significantly increase the profits of your business.  When you factor in the lower costs involved with retaining customers vs. dishing out large amounts of money to acquire new ones, the difference can be an instant profit booster.

If you want to improve the profitability of your business, you must concentrate on improving customer satisfaction and making your overall offering as good as it can possibly be. When a business is able to instill confidence in the customer’s mind about its brand, the outcome ultimately is an increase in revenue and profit earning capacity. If implemented in the right way, customer retention programs and initiatives can be of great benefit your business.
  1. 80% of your company's future revenue will come from just 20% of your existing customers.
This number is quite astonishing if you really think about it.  A major chunk of a company’s revenue comes from existing customers. On average, loyal customers buy from you more often – and they also spend more money on purchases in the long run. 

Customer-centric marketing is the key today for the long-term survival of any business. Even if your business increases customer retention by even the smallest of margins, you can dramatically increase the revenue you generate.
  1. For every customer who complains, there are 26 customers who don’t say anything.
If someone has a complaint, the chances are that a lot of your customers feel just as dissatisfied about the same thing, but choose not to say anything to you. Not hearing a bunch of complaints may sound like a good thing, but this is not always the case.  Therefore, even one small complaint can alert you to serious failings in your business that need to be addressed.

If your business wants to boost customer retention and loyalty rates, you absolutely MUST take every complaint seriously and use it as an opportunity to improve your overall offering. Customer complaints provide you will valuable insights into how your business can improve your products and customer service. By finding these issues and solving them, a business not only builds up better relationships with customers but also sets itself apart from its competition. Ultimately, improving customer satisfaction will lead to increased loyalty, more revenue and better profitability.
  1. 82% of customers have left a company because of a bad customer service experience.
No business sets out to offer bad customer service, but many times, customers leave a brand in favor of something better. Bad customer service happens when a business loses sight of what’s important to providing a great overall customer experience. Bad service moments are unavoidable for any business, but this can be dealt with through good service recovery.

If customer service is an issue in your business, you should carefully consider what is needed to improve things. You might shuffle responsibilities, or you might take on new staff to increase the number of people dedicated to providing customer care.
  1. 91% of unhappy customers will not do business with you again.
Statistics show that most businesses fall short of reaching customer expectations for a myriad of reasons. But it is critical that these reasons are found and addressed as soon as possible to cut down on the potential damage it could do to your bottom line. 

Given the fact that nearly every customer who is unhappy will not do business with you again (this is mostly true in situations where customers are not getting any help with their problems), your top priority has to be customer satisfaction.  If your business falls short on providing a good level of basic customer care, it’s time to take action right now to turn that around. Furthermore, for those customers who choose to stick around even if they’re unhappy, it takes about 12 positive experiences to make up for one unresolved negative experience.
  1. 47% of customers would take their business to a competitor within a day of experiencing poor customer service.
If a business offers exceptional products and services, customers are bound to stay loyal to the brand. The problem nowadays is that retaining customers can be difficult thanks to a growing amount of competition in the market and a surge of better products coming up every single day. A single bad experience on your part could send your customers running to your competitors… never to return.

The best way to ensure customer retention is to put your customers first at all times. Getting to know your customers on many different levels is key.  Once you know who they are and what they like/dislike, you will be more equipped to satisfy them overall.
  1. 67% of customer churn is preventable if the customer issue was resolved at the first engagement.
It doesn’t matter how fantastic your service generally is, there are going to be times when something bad happens and the customer is less than 100% satisfied.

While customer issues are sometimes unavoidable, the way that you then deal with the issue is actually the most critical part. If the issue is rectified quickly and the customer sees that you have gone ‘above and beyond’ in dealing with the problem, they are going to gain a positive impression of your company - and highly likely to stay loyal to your business.

Contrast that with a business that provides a poor customer service experience and fails to solve the problem in an efficient manner. Clearly the customer is going to take their future business elsewhere.

Keeping your customers at the forefront of your operations is critical. This includes addressing problems, responding to questions, and acting on feedback in a quick manner.
  1. Consumers tell an average of 9 people about good experiences and tell 16 (nearly two times more) people about poor experiences.
A multiplier effect is very common in customer service experiences. What this means is that customers have a tendency to speak about their respective experiences with a brand, both good and bad – and they are likely to shout the loudest about bad experiences.
  1. 80% of companies say they deliver "superior" customer service. Only 8% of people think these same companies deliver "superior" customer service.
Going by the numbers provided in the above statistics, it was clearly concluded that most companies have no clue as to what the customers want. So not only are they drowning in assumptions about what their company’s customer service is like; they also have no knowledge of their customers’ expectations. There is clearly a huge gap here between perception and reality.

The answer to this dilemma is quite simple. By focusing on the right kind of measurements and relying on actual data, the pathway to positive customer connections can be met.
  1. Resolve a complaint in the customer's favor and they will do business with you again 70% of the time.
This really goes back to the point we made earlier about how resolving customer issues quickly and efficiently creates a positive experience and can make a customer loyal to your brand, despite the fact they initially experienced an issue.

Satisfying the needs of your customers is not an easy task, but it is one that every business needs to try and find a resolution for. Resolving a complaint in the customer’s favor will help to ensure that they do business with you again, and this is true 70% of the time.

There are usually two aspects to complaints from consumers. One is rational and the second is emotional. Resolving complaints requires dealing with both of these aspects for the best results.
  1. 77% of consumers like it when brands demonstrate their appreciation.
It is a general human tendency to want to be appreciated, and this holds true in business scenarios as well. When your customers feel appreciated, they are more likely to continuously do business with you.

The question is: how do you cultivate the sort of culture that brings back customers? A study by TD Bank polled more than 1,000 consumers in the US and found that most people think it’s best that companies convey direct  interaction with them. Consumers across all age groups said that one way that appreciation should be conveyed is by simply saying “thanks” directly to them.
  1. More than half of customers would consider increasing the amount of business they do with a company for a loyalty reward, and 46% already have.
Loyalty programs are one of the best ways to boost customer retention and loyalty levels. By providing people with an incentive to stay loyal to your brand, they are much more likely to make repeat purchases and spend more money with your company.

Customer loyalty programs let your customers know that you value their business. They are a great way to increase the relationship between your business and its customers; ultimately, this leads to more spending down the road.
  1. 60% of mobile coupon users say they will “gladly switch brands to use a coupon.”
Many consumers are highly price sensitive, meaning that they will gladly switch brands if a cheaper discounted offer comes along. A research paper by GfK MRI called The Survey of the American Consumer found that 60% of mobile coupon users would switch brands in order to use a coupon, which clearly shows that these people have little or no loyalty to the brands they buy.

In a nutshell, coupons are a great way to boost sales and keep more customers coming back. The psychology behind them is extremely powerful, which has been proven over the decades. Therefore, consider adding mobile coupons to your customer retention strategy if it fits the mold of your business.
  1. 80% of U.S. Gen Z consumers are willing to sign up for loyalty cards in exchange for deals/discounts.
There is a big potential payoff for companies that are willing to cater to the high maintenance crowd in the 21st century. For Gen Z, loyalty programs today are not just about freebies but rather being part of a special community.

Signing up for these programs automatically makes customers use their benefits and get exclusivity in services such as free shipping, exclusive perks, and big discounts. Companies love this trend since it creates a positive feedback loop that gets members spending more and makes it less likely for customers to take their business elsewhere.
  1. 25% of employers have seen an increase in customer loyalty after increasing employee educational requirements.
The value of higher education in the workplace has been on a steady rise. In recent years, many organizations have significantly increased their educational requirements for hiring new employees.

Potential employers have now realized the need for educated and qualified individuals because they help serve customers better in their shopping experience. This directly leads to higher customer retention levels. More innovation and increased customer loyalty are the two main benefits of having highly-qualified individuals work for your company.  So this is something that should be strongly considered if your employee-base has room for improvement.
  1. 27% of small business owners estimate that 11-20% of first-time customers don’t return to their business.
Every small business nowadays knows the importance of customer retention and the paradigm is finally changing towards applying marketing strategies to evolve with competition. A lack of resources still forces many small businesses to not operate on the scale of big businesses who have more resources at their disposal.

Increasing the return rate of these first-time customers for small businesses would have a dramatic impact on their revenue, which is why customer loyalty programs are seeing an increase in popularity and adoption over the last few years.
  1. 48% of consumers cited SMS as their preferred means of receiving loyalty messages, followed by email (22%) and app notifications (20%).
It is definitely important to be aware of how consumers like to receive communications from your business these days so you can use the most effective channels. Despite this, many businesses continue to assume customer preferences and thus miss out on big opportunities.

SMS stands for “Short Message Service,” which is also known as Text Message Marketing.  It’s generally used when sending short message to mobile devices.

Research has shown that while SMS is the preferred messaging channel for loyalty programs, only 21% of brand marketers were actually using it as a means of communicating with their customers.

Therefore, you should definitely use this method if you are running a loyalty program. Not only does it instantly connect you with your customers, it’s a powerful way to send in a flood of sales without doing a lot of additional work or ad-spend.
  1. 57% of brands indicate that they will increase loyalty program budgets going forward.
Businesses are spending ever-increasing amounts of money on loyalty programs and retention initiatives. But while this is happening, many marketers are also still struggling to figure out exactly how this should fit into their overall marketing strategy.

One thing is for sure; as more companies jump on the loyalty train, competition will stiffen for any company that is not doing anything to keep their existing customers happy and coming back.

Conclusion

Customer retention is absolutely critical to the long-term success of any business, and we very much hope that these facts and figures have given you much food for thought.

At the end of the day, achieving loyalty to your business isn’t really rocket science. It is about listening to your customers, providing the best experience you possibly can, and using every opportunity to continually improve those vital customer relationships.
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Thanks for reading 20 Facts & Stats Your Business Should Know About Customer Loyalty & Retention

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