September 20, 2022 Renny Doyle

The Importance of Customer Retention

We all love to put on our marketing hats and go after new customers. It’s a fun challenge that reaps some great rewards, but it’s important to remember that your best customers are often sitting right in front of you in plain sight.

Who are these amazing customers? They are your existing customers. You’ve already turned them into fans of your business and services, and that comes with some serious benefits.

First of all, they want to spend more money with you. It is easier to convince them to do business with you again. The longer you nurture your relationship with them, their value to you becomes greater. Not only will they return time and time again, but they’ll spend more and refer their friends too!

Here are a few fun facts regarding existing customers…

• The probability of selling to an existing customer is almost 70%. The probability of closing a new client is under 20%.
• 65% of most company’s business comes from existing customers.
• On average, 80% of future profits comes from the top 20% of your existing customers.
• On average, repeat customers spend over 30% more than first time customers.

Focusing on your existing customers will help keep your customer retention rate high. This is the percentage of customers that have continued to use your services overtime. Why is this important? A higher retention rate is directly associated with higher profits, as you don’t’ need to spend time and resources looking for new ones. You simply need to keep your existing customers happy.

Your existing customers do more than just spend money with you, they add real value to your business. If and when it comes time to sell your business, a prospective buyer will be less concerned with a few old polishers, pressure washers and bottles of chemicals. Your loyal customer list is where the real value lies. This is also why software is so important. It allows you to keep track of your returning clients, their spending habits, and their value to your business and potential buyers.

Let’s not forget that your existing customers are your biggest fans and your best salespeople! More than 75% of your loyal customers will refer their friends and family to you. That’s huge and it comes in a variety of ways. Word-of-mouth, social media, reviews, etc. Did you know that over 80% of people trust recommendations from friends and family and are more likely to purchase that product or service?

Moral of the story? Your existing customers are your best customers. Because of their tremendous value, the focus of your time, money and energy should be on retaining your existing customers by building a relationship with them and increasing their satisfaction and loyalty. Now that sounds like a fun challenge!