Customer retention is about trying to keep more customers for a longer period of time so they spend more at your business over their lifetime; it’s about keeping loyal customers instead of just recruiting new ones.
Customer retention is the opposite of customer acquisition, which is when a retailer tries to get new customers. It takes more than acquisition alone to grow your business sustainably, and without the ability to engage and retain customers over time your business is bound to flatline.
That’s why customer retention is so important. Knowing what it is and why it’s important can mean the difference between your brand’s success or decline, making it one of the most powerful terms you’ll ever learn as an ecommerce merchant.
However, customer retention doesn’t happen overnight—this is why many merchants don’t believe in it. While acquisition is easy to see an increase in revenue, the type of customer engagement retention relies on is not quite so straightforward because it takes time for merchants to see positive results from retention strategies.
You can start to see the benefits of customer retention in as little as six months.
Why customer retention?
A study conducted by the Harvard Business Review found that “increasing customer retention rates by 5% increases profits by 25% to 95%.” That’s a pretty significant jump!
Customer retention usually costs less than spending on acquisition strategies, and successfully retained customers are more likely to refer other customers to your business. Also, referred customers usually have a higher lifetime value than customers that were acquired through conventional channels too.
Keep this in mind: the number one goal and purpose of customer retention is to increase profit. However, there are other great outcomes of retention, like customer satisfaction, loyalty, and brand perception. So if you’re wondering, “why customer retention?” Know that investing in retaining your current customers is an investment in increasing your profit, and what business doesn’t love that?
Using strategies, tactics and tools to kick-start your customer retention plan
Now that we know what retention is, how do we go about achieving it? We have three methods to increase customer retention: strategies, tactics, and tools. Navigating the retention space is confusing, but it is easy when you approach everything as a retention strategy, tactic, or tool.
It’s important to know how strategies, tactics, and tools work together to create a bullet-proof customer retention strategy.
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