Customer Retention

Customer retention refers to the activities and actions that companies and organisations take to reduce the number of subscribers to a service who discontinue their subscriptions to that service within a given period of time.

For example, if one out of every 20 subscribers to a high-speed internet connection discontinued his service within a year, the annual churn rate for that internet provider would be 5%.

Various customers retention strategies are needed to continue keeping those customers. Some of these strategies are: target customers with special offers, rewarding your most profitable customers, personalising your follow-ups and scheduling time with your customers.

Customer Retention Benefits:

1. Growing Revenue

Customer retention often is faster and on average, costs up to seven times less than customer acquisition.

Selling to customers with whom you already have a relationship is often a more effective way of growing revenue because companies don’t need to attract, educate, and convert new ones.

2. Sustainable growth

Companies that shift their focus to customer retention often find it to be a more efficient process because they are marketing to customers who already have expressed an interest in the products. Moreover, they are engaged with the brand, making it easier to capitalize on their experiences with the company. In fact, retention is a sustainable business model that is key to sustainable growth.

According to studies done by Bain & Company, increasing customer retention by 5% can lead to an increase in profits of 25% — 95%.

The likelihood of converting an existing customer into a repeat customer is 60% — 70%, while the probability of converting a new lead is 5% — 20%, at best.

3. Feedback

Feedback is critical for SaaS business and the more customers are engaged the better the feedback they can provide.

Customers who provide feedback are often willing to give brands the benefit of the doubt. They’re telling you how to earn their business repeatedly. As research has shown, people who have complained and seen their issue resolved are 84% less likely to decrease their spend.

Conclusion

Customer retention allows you to grow as a business, increase revenue and receive feedback from customers. This way you can provide a better service and keep them satisfied.