Reasons Customer Retention Is Important!

Linkedin Thread Started by Nick Bennett

There are countless reasons why customer retention is important for marketers. Here are my top 5:

1. Customer Retention Drives Revenue Growth

According to Bain & Company, a 5% increase in customer retention can lead to a 95% increase in revenue. This is because it costs five times more to acquire a new customer than it does to keep an existing one.

2. Customer Retention Improves Customer Lifetime Value

According to the Harvard Business Review increasing customer retention rates by 5% can increase profits by 25% to 95%. This is because loyal customers are more likely to make repeat purchases, recommend your product or service to others, and give you valuable feedback.

3. Customer Retention Reduces Marketing Costs

It costs six to seven times more to acquire a new customer than it does to retain an existing one. Therefore, by focusing on retention, you can reduce your marketing costs and achieve greater efficiency.

4. Customer Retention Increases Customer Satisfaction

According to a study by American Express, happy customers who have had a positive experience with a company are three times more likely to recommend that company to others. Furthermore, they are also more likely to spend more with the company in the future.

5. Customer Retention Builds Brand Equity

Loyal customers are more likely to forgive a company for making a mistake. They are also more likely to give the company the benefit of the doubt when it comes to new products or services. In other words, customer retention builds brand equity and creates long-term brand ambassadors.

And other jumped in

6. Customer Retention brings down CAC – Happy customers tend to refer more customers’

7. Data related to churn such as customer/account rates, revenue churn

8. Loyalty Customer Rates

9. Velocity to upsell/cross sell comparing or modeling other similar companies

Feel free to add more here or join us in our discussion forums to discuss retention.