7 Reasons How Customer Retention Can Lead To Better Demand Generation Than Acquisition

Now grow your demand up to 40% just by nurturing existing customers.

Both customer acquisition and retention are indeed important for sustainability and progress for any enterprise. However, most marketers find it satisfying to gain a new customer because they are delighted to witness a pay-off from all the money, time, and effort that is invested into the marketing campaigns. This makes the efforts required to improve the retention of existing customers take a backseat.

Studies suggest that retention offers a much higher ROI for most business models and is often much more cost-effective than its counterpart- around 80% of a company’s revenue is created by 20% of its current customer base. Moreover, boosting customer retention rates by 5% increases profits from 25% to 95%.

This shows that it is smarter to invest more resources in customer retention while implementing your growth strategy. To understand this better, it is imperative to consider a wide range of variables to ascertain how retention can improve your current business situation. Here are 7 reasons why:

1. It’s cost-effective as opposed to customer acquisition-

The costs associated with repeated products/services are significantly lower. Around 70% of enterprises believe that it is cheaper to retain a customer than to acquire one, while others suggest that the cost of acquiring a new customer can be as much as 7 times more expensive.

By targeting existing customers- with a demonstrable interest in your product and willingness to buy it- you are giving yourself a much stronger chance of making a sale. Studies have proven that the probability of converting an existing customer is 60–70%, whereas the likelihood of converting a new prospect is only 5–20%.

2. Saves you time to focus on other priorities-

It is more feasible to upsell/cross-sell to an existing customer than it is to sell to a new one because, for the existing customer, all the barriers to purchase have already been overcome. The regular customers believe that you are a trustworthy enterprise with products or services that are beneficial. You have already offered them a pleasant experience previously and because of this, they are much more likely to make future purchases and generate more business for you. In comparison, persuading potential leads into becoming customers sometimes requires a lot of time and effort, which ultimately costs more.

3. Enhances brand advocacy-

Customer loyalty is priceless- it can even result in further customer acquisition for your company. Word-of-mouth advertising is one of the most credible forms of advertising your product/service. When your existing customers advocate your brand in their social circles, it increases your chances of having potential buyers. Studies show that investing in customer retention can increase an enterprise’s profitability by 75%.

This proves that if you treat your existing customers well, you will consistently reap the benefits. After all, your customer base is a growing source of referrals for new customers.

4. Retention has a better ROI-

In many cases, the upfront costs of customer acquisition make many enterprise-customer relationships unprofitable in the beginning. It may only be several months or even years later, with strong retention processes in place, that these relationships generate significant returns. Research shows that engaged consumers buy 90% more frequently and are 5 times more likely to indicate it is the only brand they would purchase from in the future. On average, they can deliver 23% more revenue and profitability for your enterprise rather than the new customer.

The point is, a customer becomes more valuable over time- and a robust retention strategy will enable you to keep your current customers for longer.

5. Growing significant customer LTV-

A customer’s lifetime value (or LTV) is the projected value of that customer over the entire course of his relationship with your company. It’s no secret that loyal customers who consistently purchase from your brand are almost always more valuable to your company than one-time buyers. A strong customer retention strategy enables you to maximize the LTV of your customers by encouraging them to bring their business back to you, again and again.

6. Ease of experimentation:

As loyalty is fickle, too many changes in your product/service can repurchasing difficult. However, once you have established a core base of engaged customers, your brand can expand its boundaries with new experiments or new launches. Once a brand has proven itself with one product/ service, customers are 6 times more likely to try a new product/ service from the brand as soon as it becomes available. In fact, existing customers are 50% more likely to try new products, according to a study.

7. Engaged customers provide scope for improvement:

As feedback is critical to the success of any enterprise, it is important to also consider and act upon it if necessary to satisfy your customers. The existing customers who provide feedback are often willing to your brand the benefit of the doubt. They indirectly showcase to you how to benefit from them repeatedly. Interestingly, customers who have shared their complain and seen their issue resolved are 84% less likely to disassociate themselves from the brand.

Retain customers beneficially with GigIndia

GigIndia’s smart process ensures that your existing customers are engaged efficiently on every level. We work with enterprises to increase their retention rate by 40%, deepen their relationship with customers and increase their lifetime value (LTV) by 50% through-

• Automated lead scoring
• Analytical modelling
• Seamless integrated CRM with sentiment analysis
• Check progress in real-time progress
• Scale-up/down at ease
• Pay-per-generated-demand model at 100% variable cost
• Professionally trained & certified customer relationship executives
• Flexibility to scale up/down operation within 3 business days

With a comprehensive set of demand generation features for enterprises of all sizes and kinds, our on-demand customer support representatives can manage more customers in less time with an AI-driven technology.

To make customer-centricity a reality with GigIndia, visit our website at www.gigindia.in