A study, conducted by Bain & Company, along with the Harvard Business School, shows that, [inlinetweet prefix=”” tweeter=”” suffix=””]“Increasing customer retention rates by 5% increases profits by 25% to 95%[/inlinetweet]. Yet a lot of brands are willing to ignore customers who voice concerns or complaints about their products and instead focus on obtaining new customers.
It doesn’t take much to keep customers happy, sometimes they just want their voices to be heard. However, there are still too many brands that ignore social media posts from current customers or worse, they have a BOT respond. What’s more concerning is that[inlinetweet prefix=”” tweeter=”” suffix=””] businesses need to retain customers for at least 12 to 18 months to break even on their investment.[/inlinetweet]
What’s driving customers?
1ne: Wages are basically flat and because of increases in the cost of benefits, like health insurance, most consumers are taking home less money. They feel that brands “have to earn” their business.
2wo: Social media allows customers to complain in a passive aggressive style.
3hree: Competition is becoming more intense. Private label sales continue to increase at the expense of national brands. Even P&G is slashing ad budgets.
What can brands do?
1ne: [inlinetweet prefix=”” tweeter=”” suffix=””]Empower customer service people to solve customers’ problems immediately[/inlinetweet].
2wo: Listen on social media and respond in internet time.
3hree: If your brand is more focused on obtaining new customers rather than retaining current customers you could be losing a lot of business. Gartner Group projects that, [inlinetweet prefix=”” tweeter=”” suffix=””]“80% of future profits come from just 20% of your existing customers[/inlinetweet] ,” and Marketing Metrics has found that, “The probability of converting an existing customer is 60%-70%, while the probability of converting a new prospect is only 5%-20%.
4our: Act quickly to identify issues with your brand/product and to make changes. Time is your enemy as customers have little patience.
Consumers are still frugal when it comes to who gets their hard earned money. Marketers have to change the way they think around current customers.