Customer Retention in the age of COVID-19
Bain & co.
There has been a widely known fact that focusing on retaining customers is a far more profitable business than spending tons of resources on customer acquisition with a transactional relationship. Many businesses still fail to address the issue of customer loyalty and do not take it into consideration when they create their marketing plan.
This is strange, considering the fact that a 5% increase in customer retention can lead to a 25 to 95% increase in profitability with the cost of acquiring a new customer being 5 to 15 times as expensive as retaining a customer with existing customers having profitability of around 60-70% versus new with 5-20% profitability and existing customers spending 33% more. It would make sense that companies would prefer to put their resources into customer retention then? Only 18% of companies focus on customer retention, while 44% focus on customer acquisition.
In fact, the last years the churn-rate has increased by 12 percent, and businesses could easily save over 35$ billion related to customers who did unplanned switching, mostly due to poor customer experiences. This is another evidence that many businesses say they put the customer first, but it seems to be far from reality. While the price is still the most common reason for churn - it has declined as such by 8% since 2018 which shows that good customer experiences are growing in importance now and in the future. And the widely known ‘fact’ that we are less loyal than it used to be is starting to become a myth. You just need to provide your customers with the right customer experience.
Want to learn more about ways to increase retention? Read these
https://terminus.com/customer-retention/
https://www.campaignmonitor.com/blog/email-marketing/2019/07/customer-retention-new-marketing/
https://blog.alexa.com/retention-marketing/
https://blog.hubspot.com/service/customer-retention