Why Is Customer Retention Important?
The Customer Retention Rate (CRR) measures the number of customers you have over some time. It is the inverse of the rotation rate, which measures the number of customers you have lost in a single interval.
While customer acquisitions help you build a customer base, creating one-time purchases should not be your goal.
Businesses often spend more resources to get a customer, and these outrageous costs invalidate any revenue you get from that sale. Instead, you should focus on developing relationships with your current customers to maximize profits. Here’s why:
- The probability of an existing customer buying is 60-70 percent. For new opportunities, your sales potential is only 5-20 percent.
- About 80 percent of a business’s future profits come from only 20 percent of its current customers.
Factors for Customer Retention Statistics
Implementing a customer retention strategy is essential for any healthy company that wants to maximize its profitability. However, creating a loyal fan base is not an easy task because customers can remain unmoved. So, what are the factors that affect retention and how do they contribute to humility? Identifying these factors is very important in identifying areas that you need to pay more attention to.
- Customer Satisfaction: Customer satisfaction is always dictated by the quality of customers’ expectations and their experiences. Experiences that meet or exceed expectations can lead to satisfaction while failing to meet them can lead to depression.
- Customer Success: Customer success depends on how you can resolve their pain points. As long as they can achieve their goals through your products or services, they will most likely be your customers.
- Customer Reliance: As more and more customers rely on your products and services, it can be difficult for them to leave and look for alternatives.
- Difficulty in exiting: Most businesses lockout customers leaving through contracts that make it expensive. But the most positive way to do that is to provide incentives to customers who have been staying for a long time to improve retention.
Customer Retention Statistics 2021
General Customer Retention Rate Statistics
Customer retention figures are not required because the 100 percent customer retention rate is excellent but unattainable. So, what is a reasonable retention rate sufficient to keep the target? It depends on your business. That’s why you can measure your retention rate against others in your industry to see how you stack up against your competitors and colleagues. Let the customer retention stats we provide services as your guide.
- Only 28 percent of small businesses plan to allocate the bulk of their marketing budget to customer retention.
Of the 429 small business owners surveyed, approximately 335 respondents (78 percent) said most of their marketing budgets were earmarked for customer acquisitions. Some of these businesses were still new (less than a year old).
- Customer acquisitions are 5 times more likely to retain existing customers.
As mentioned above, the amount of resources it takes to gain new customers makes any customer relationship unprofitable. Profits can only make when the size of the purchase or the value of the service you provide increases and the cost of obtaining them decreases.
Conclusion
Customer retention serves as an indicator of your company’s overall health and growth prospects. A high retention rate indicates that your business is at its peak, while a low retention rate indicates that something is wrong and something needs to be changed before it is too late.
Whether you need more incentives, better customer service, or improved customization, use our customer retention stats as a 2021 guide to improve our strategies. If you plan to implement a client retention strategy and do not know where to start, we have provided you with security.
Thrive Internet Marketing Agency is a full-service digital marketing agency that uses the power of customer retention statistics to help you maximize profits. Adjust your marketing goals and build trust among your customers with the help and expertise of our experts.
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