Advantages of customer retention
The earlier section introduced you to the need for customer retention and briefly looked at the advantages of the same. In this section of customer-retention.co.uk, we’ll look at the various advantages of retaining customers in greater detail.
Possibility of repeat business
This is probably the most obvious advantage of customer retention. Effective services that lead to customer satisfaction will make your customer coming back to you again, thus giving you repeat business. Repeat business is a win-win proposition for the business / service provider and the customer. The business reduces the cost of customer acquisition, while the customer reduces the cost of finding a reliable vendor and thus also saves on costs associated with switching vendors.
Reduced costs for customer acquisition
Acquiring a customer has certain associated costs. These include the costs associated with advertising, following up, sales demos, travel and meeting costs etc. Having a repeat customer means that the customer is already aware of your processes and can predict a certain quality of output, thus minimising the costs involved in new customer acquisition. Having a repeat customer also has the potential to open up another channel to advertise your business – word of mouth. Word of mouth advertising / recommendations are perhaps the most important outcome of having a satisfied customer.
Fostering greater interaction between business and customer
Today’s markets are increasingly moving away from mass produced standard products and services, towards a more customised market, where products and services are tailored to meet customers’ specific requirements. Having a repeat customer is an opportunity for you to build a more focused relationship based on your customers’ specific needs and requirements. Being ensured of having a customer who comes back, you have more confidence to suggest improvements, provide insights to better understand their needs and consequently design products and services that are relevant. Having a repeat business also provides an opportunity for the buyer and the seller to co-create products and services.
Having more delighted customers
Effective customer retention strategies allow you to move from the zone of customer satisfaction to customer delight. Studies have shown that customer delight is achieved only when there is a perfect synergy between the buyer and seller – when the seller understands exactly what the buyer needs and the buyer understands what the seller can deliver exactly what he needs. If you are able to delight your customers, you have better chances of them coming back to you, since they now know why you are different from the rest of competition.