Getting customers in droves is great for all businesses — it helps them boost their sales and generate more revenue. However, retaining those customers is even more critical. No business owner wants their customers to be one-time buyers; They want to have loyal customers who stay forever!
A high customer retention rate ensures a business is profitable with a steady supply of new sales. It's an indicator that your brand has a strong and lasting relationship with your customers. Therefore, many brands invest in strategies that help them improve customer retention. To that end, they conduct customer satisfaction surveys to have in depth knowledge about their customers.
What is your customer retention rate?
Customer retention refers to the rate at which customers stay with your brand for a specific period. The average customer retention of a business is 95.5% per month. This number may seem great, after all you're keeping the vast majority of your customers each and every month. However, that 4.5% of customers that you are losing should worry you.
If you do the math, losing 4.5% of your customers each month means you're losing 54% of your customers over the course of a year. Even though it looks like you are retaining most of your customers each month, you're actually losing more than half of them throughout the entire year. And that's not good for business.
Why is customer retention important?
There are several reasons why losing 54% of your customers over the course of a year is a bad thing, even if you are constantly adding new customers to replace them. For starters, acquiring a new customer is 5-25 times more expensive than retaining an existing one. Additionally, retained customers buy more often and spend more than your newer customers.
Consider this example to get a better picture: for equipment dealers, the revenue a customer generates dramatically increases when they go from year two to year three of working with a dealer. Customers purchase 2.9 times more equipment, 9.1 times more rentals, 4.1 times more services, and 5.6 times more parts in the third year. Similar numbers hold true for a wide variety of industries. As little as a 5% increase in customer retention can skyrocket your revenue by 25%-95%. If you want to expand your business, boost your revenue, and keep your costs under control, then customer retention is crucial.
How to improve customer retention: customer satisfaction surveys
The best way to boost your customer retention rate is to understand what your customers need and how well your business provides it. Using customer satisfaction surveys, conducted by a third party, you can learn more about your customers and easily boost your customer retention rate. It's important to have them completed by a third party because customers tend to be more honest about a company if they're not talking to someone from the company.
Customer satisfaction surveys can increase your customer retention rate by over 20%.
Retaining your existing customers is just as important to your business as gaining new ones. Conduct customer satisfaction surveys to understand what your customers are thinking and how you are doing. They will help you create a long lasting connection with your customers, boost your retention rate, and greatly increase your revenue.