Exposing Customer Churn & Retention
The probability of selling to an existing customer is 60 - 70% compared to a new prospect at 5 - 20% , so clearly our existing customers are valuable, and we need to nurture them whilst developing new customer relationships that will offset organic customer decline and promote market share growth.
Bain & Company report that it costs 6 – 7 times more to acquire a new customer than retain an existing one and McKinsey report that eCommerce spending is more than double with repeat customers which means our existing customers are more inclined to make a repeat purchase at a greater value and they tend to purchase more frequently as well.
Why are our existing customers more willing to spend with us? Because they:
1. have a sense of relationship with our people whether they engage with them digitally or face-to-face. 2. have a connection with our brand and perhaps they may also have a sense of loyalty to it because it aligns with their personal values e.g., their purchase supports businesses in their local community.
3. have not been given any reason to distrust our brand or our people.
4. find it is easy to purchase from us.
5. find the product and service quality meets or exceeds their expectations and represents value for money.
6. believe our products and services remain current in the marketplace e.g., we meet today’s demand to have a presence on social media and listen our teams and customers to gain market insights.
7. witness us Elevating our Customer Service (see earlier VLOG).
So, what impact does all this have on our business’s profitability. Studies by Bain & Company and Earl Sasser of the Harvard Business School report a 5% increase in customer retention can lead to an increase in profits of 25 - 95%. How does this come about?
1. As trust is built with our customers their willingness to spend more and more often increases.
2. Repeat customers are most likely to refer us to others at a rate of 3 – 7 people.
Reduced customer churn and increased customer retention can be achieved with the application of some simple tweaks and we can help you with these so please reach out to us at www.ripple.net.nz. Thank you for watching, bye for now and stay safe.