Customer retention is the biggest sales issue businesses have.
Most industries see a loss of 20-40% of their customer base each year. The cost of acquisition is so close to the lifetime value of every customer it’s a means of haemorrhaging vast amounts of their profits.
“On average, businesses spend six months recruiting and onboarding a new customer, and just one month making money out of them”, explains Tim-Peniston Bird, Founder & CEO of Orangutan, leaders in strategy, reward and technology for businesses. “Whereas customer retention can add 80% to the lifetime value of every customer”.
So, what are the problems that keep businesses stuck on the new business hamster wheel, to the detriment of the largely untapped goldmine that’s already on their books?
Why do so many businesses suffer poor customer retention issues?
Spending lots of time and revenue attracting and onboarding new customers has become standard sales form. Then, businesses stop caring when the deal is sealed and start neglecting the business they’ve gone to the expense and trouble of winning.
The focus isn’t on customer retention. But it should be.
Time is wasted and revenue is lost on a conveyor belt of stuttering relationships with clients that get off to a flying start then dry up.
Take the banking sector as an example. Banks lose customers because their customers experience poor service or feel ignored.
The only communications customer receive from their banks are –
It’s not good customer service. It offers nothing that creates loyalty or demonstrates a reason for a customer not to discover first hand if the grass is greener on another side.
What can you be doing right now to unplug your customer retention bottleneck?
Customers are continuously questioning the value of what they’re receiving from you. So, you need to keep in touch with them, proactively reaffirming why they signed up with you. And, in addition, why they should reward you with their loyalty and also with referrals.
Does your business –
- Have customers that think you offer a poor customer experience?
- Fail to recognise and reward customer loyalty?
- Lack quality communications about the benefits of being and remaining a customer?
- Make it difficult for customers to take advantage of rewards and incentives?
If the answer to any of these questions is yes, you’re missing a serious trick.
Poor customer retention isn’t just stifling growth, it’s destroying growth. With the costs of customer acquisition growing exponentially, the huge focus on customer retention that makes a seismic difference to businesses is pretty poor. It’s a no-brainer for businesses to re-evaluate their approach to sales through customer retention, one of the quickest solutions to help increase their sales.