Why employee engagement is important for improving customer retention

When talking about customer retention, this refers to actions and activities that your company takes to prevent customers from going to a different source to make a purchase. In other words, you want to build a base of as many viable customers as you can so that when interested in buying a product or service you sell, they visit your business first.

Create Loyal Customers

The number one reason that customer retention is essential for your business is that it builds loyal customers who return to your company time-after-time when interested in what you offer. The goal is to keep the existing customers you have or those you’ve already invested in through various marketing strategies.

When you consider that it costs five times more to acquire a prospect than it does to hang on to your current customers, you can see there is a significant cost-saving factor. In fact, for some industries, the cost to acquire a new customer jumps to a whopping 30 percent compared to focusing on existing customers. Think of it this way, for every 5 percent increase in customer retention, your profits rise between 25 and 95 percent.

Instead of making the mistake of thinking that you need to invest more money and time on prospects, recognize how vital customer retention is to your business growth. That doesn’t mean you should give up on trying to sway prospective customers. It’s just that you should give the majority of your attention to the ones you have.

Spend Less on Marketing Efforts

There is a substantial cost difference between going after prospects and keeping your current customers. Because of that, you can scale back your marketing efforts, which saves you money. Something else to consider is that since your existing customer base is already familiar with the product or service you sell, you would not need as many people to provide customer support, which results in additional cost savings.

Repeat Business

With customer retention, you will see an increase in repeat business, which equates to more generated profit. Not only do loyal customers return to a company they trust, but over time, they typically increase the amount they spend, up to 33 percent compared to newly acquired customers. Also, your existing customers are 50 percent more inclined to buy a new product or service from you.

A loyal customer is someone satisfied with your company, including your service, support, price, policy, and product or service offered. In their minds, your business cares about them and what they want. For that reason, it is essential that you conduct research and generate reports that indicate what it is your faithful customers buy. It is just as important to gather information periodically about what new offerings they would have an interest in purchasing.

Word of Mouth Advertising

When your customers buy something and feel completely satisfied, they will quickly share their experience with family, friends, co-workers, neighbors, and almost anyone who will listen. For instance, a company that sells trendy and comfortable women’s shoes at a competitive price will attract people. Before long, you will see the same women coming back to buy more.

When happy with a purchase, women will tell everyone that your company is the place to go for incredible shoes at affordable prices. As a result, you benefit from word of mouth advertising without spending a dime. Look at recent statistics that show just how significant the impact of existing customers to your business.

• Of all consumers in the United States, 49 percent say that family members and friends are their primary source of brand information.
• When someone refers a friend to your business, that individual is four times more likely to purchase something from you.
• As high as 92 percent of people trust a recommendation offered by a family member or friend.
• Just one person spreading the news by mouth about your business is enough to drive sales up five times compared to paying for advertisements.
• Retained customers who feel satisfied with your company are likely to refer other customers. That means spending less on marketing to acquire prospects.
• People who become customers due to a referral have a higher lifetime value than prospects acquired using other methods.

Premium Prices

As mentioned, loyal customers have no problem spending more on things you sell. Over time, they become less focused on money and more on ending up with a superior product or service. To them, the combination of outstanding support and quality offering is more important than saving a few dollars.

Customer Feedback

Social media is more than just a way for people to connect on a personal level. Retained customers often post comments on various platforms in response to having a positive buying experience. Studies show that as much as 97 percent of consumers say the chance of them becoming a loyal customer would increase if the company used their feedback. That statistic shows how critical is to have a place on your website and social media sites for customer comments.

At the same time, 55 percent of consumers in the U.S. say that if a company ignores their feedback, they will not likely make an additional purchase. When focusing on your existing customers, make sure that everyone who leaves a comment, good or bad, receives a response.

Are You Excited Yet?

In looking over the information provided, you should feel ecstatic that you have a way to build your company and achieve higher business success with very little financial investment.

The best way to accomplish that goal is by increasing brand and customer loyalty, but how do you do that? It all comes down to how well your employees engage with the customers they serve. That does not mean working robotically to make a sale but genuinely taking an interest in the customer and what he or she wants to buy.

For that, you need a way to teach your employees the right way to engage with customers, which comes from superior online training courses. Through that, you will notice a marked improvement, not only in customer loyalty but also to your employees’ attitude while at work.

When it comes to improving customer retention, employee engagement is crucial. At Go1, we offer a broad range of online training courses on this very topic, created and presented by experts with a ton of experience. Incorporate eLearning into your company and watch what happens.