Service Customer Reviews With A Budget
Why Dedicated Resources Are Needed for Customer Retention
It’s a tale as old as time in the business world. Companies spend so much of their budgets on customer acquisition that they don’t have adequate funds left over for customer retention.
This all-too-common imbalance is damaging to a retailer’s reputation. No retailer wants to come across like it only cares about initial sales while paying little regard to customer experience. This is especially true considering how much value consumers place on excellent CX.
For example, 64% of customers say experiences are more important than prices, and 74% of consumers are at least somewhat likely to buy based on experiences alone.
Not reserving enough of your budget for customer retention is also detrimental to your business’s finances.
Statistics show that acquiring a new customer can cost five times more than retaining an existing customer. Additionally, the success rate of selling to a customer you already have is 60–70%, while the success rate of selling to a new customer is 5–20%. Imagine the financial losses that result when your focus is singular.
While customer acquisition is essential, this post will cover more of why it’s critical to budget enough funds to support customer retention by responding to reviews.
What is the value of a loyal customer?
The value of a loyal customer is unmatched, considering the bulk of your business is supported by previous customers.
Stats show that 65% of a company’s business comes from previous customers and that when you increase customer retention by only 5%, you can boost profits by 25% to 95%.
Not only do loyal customers increase profits, but customers are even willing to pay higher prices for better customer service. American Express found retained customers will pay a 17% price premium for excellent customer service.
How do you gain customer loyalty?
The most obvious ways to gain customer loyalty include the following:
- Provide personalized experiences. Stats show that 91% of consumers are more likely to shop from retailers who recognize, remember, and provide them with relevant offers and recommendations.
- Provide personalized experiences. Stats show that 91% of consumers are more likely to shop from retailers who recognize, remember, and provide them with relevant offers and recommendations.
- Provide personalized experiences. Stats show that 91% of consumers are more likely to shop from retailers who recognize, remember, and provide them with relevant offers and recommendations.
These focus on what you can do to support and create happy customers, but what about the unhappy ones?
What do you do about the customers that have already gone down the sales funnel, had a bad experience, left a bad review, and started seeking out competitors?
What is the cost of a negative review?
It’s easy to talk about strategies to retain customers who are already happy; it’s more challenging to speak about customers leaving out the back door with a sour taste in their mouths and letting everyone know about it.
But, here’s the thing.
It’s not hard to argue that retaining these unhappy customers is even more critical to your bottom line than creating loyal customers out of already happy customers.
Here’s why:
- 94% of consumers say a negative online review has convinced them to avoid a business.
- Four out of five consumers have changed their minds about a purchase after reading negative online reviews.
- 84% of consumers trust online reviews (good or bad) just as much as they trust friends.
Unanswered negative reviews have the power to divert customers away from your brand, cancel an indented purchase, and convince potential customers to look to a competitor.
It’s clear reviews play a powerful role and affect your bottom line, so it’s critical to strategically monitor and respond to reviews.
The real value in customer retention comes from responding to reviews
The answer for increasing customer retention is to reserve a portion of your budget for what matters most — responding to reviews, negative, neutral, and positive.
The truth is your customers want to hear from you. That’s why they are writing a review — to let you know what you did something right or wrong in their eyes and to challenge you to see if you’ll do something about it.
Responding promptly is how you let your customers know you care about their experiences. The best part? It pays off in terms of sales, loyalty, and retention:
- 41% of customers say that when retailers reply to their online reviews, it makes them feel the company really cares about their customers.
- Businesses that respond to just one customer review earn 4% more revenue on average.
- People spend around 49% more money at businesses that respond to their customer reviews.
Bottom Line
70% of people will leave a review if you ask. This means there can be both financial and social implications involved in not allocating enough money to online review responses. Hiring a review response management team will help you stay on top of asking for and responding to reviews — and save you money in return.
Originally published at https://www.letusrespond.com on February 25, 2021.
