Businesses spend a lot of money on their advertising and marketing, trying to cast their net wide to reach as many potential customers as possible. This can be a lengthy and expensive process, so it's worth giving special attention to your existing customers.
When you break it down, it makes sense; you've already got them over the line once, so making them stay is the smarter, quicker and more cost-effective focus for your marketing and advertising. That being said, the extent to which returning customers can save you time and money can be surprising even to businesses who are already making existing customers part of their marketing efforts.
We've compiled a list of the most surprising customer retention statistics we could find, making sure that you're well informed on just how invaluable repeat customers are to your business.
Saves you time
1. 58% of customers belonging to loyalty programs tend to buy from the brand at least once a month.
2. 64% of retailers say they connect best with customers through their loyalty programs.
3. The probability of selling to an existing customer is 60% to 70%, whereas with new prospects it's as low as 5% to 20%. If you're trying to hit sales targets, you're likely to get there a lot quicker reaching out to existing customers.
Retaining repeat customers requires less effort than acquiring new ones. They have proven their interest in your brand or service, and keeping them on the hook is in your best interest. The Pareto Principle states that 80% of consequences come from 20% of your output. In essence, by studying the top 20% of your customers, you can develop a strategy to attract similar customers and increase your future profits.
Loyalty programs are a great way to keep these customers engaged and provide them with regular offers and opportunities. Regular offers and incentives can be anything from repeat discounts to exclusive memberships, like Amazon Prime. You can also collect valuable data from these guys to inform your strategy.
Saves you money
4. Loyal customers spend, on average, 67% more than new customers.
5. It can cost up to 16 times more to build a long-term relationship with a new customer, compared to nurturing a relationship with an existing one.
6. A 5% boost in customer retention can increase profit with 25% to 95%.
7. 82% of brands have found customer retention to be cheaper than customer acquisition.
Obviously, the big one is how much more it can cost to bring in a new customer than it does to keep an old one. Investing in repeat customers is a great way to future-proof your service.
There's also the argument of opportunity cost, where you spend time and resources on trying to get a new customer when you could be investing your time into your already valued customers. Turning them into loyal customers rather than spending more on acquisition can be the difference between growth and stagnation.
Top of the funnel marketing efforts
8. 92% of consumers trust suggestions from friends and family over more traditional forms of advertising.
9. 74% of consumers also recognise word of mouth referrals as a key metric when they make purchasing decisions.
This one, can fly a little under the radar sometimes. If you're retaining your customers, chances are they're happy with the service you're providing, and a happy customer is more likely to share their happiness with their friends and family. Word of mouth marketing is an incredibly powerful tool, as it turns your evangelists into part of your marketing efforts. If you have satisfied customers singing your praises, their opinion will hold much more sway among their friends and family than generic advertising.
Best ways to keep customers
10. 89% of companies say that excellent customer service plays a huge role in customer retention.
11. 33% cite a lack of personalization as a reason for choosing a different brand.
12. 79% of consumers say that they are only likely to engage with a personalized offer reflecting their previous interactions with the brand.
13. Scribeless customers have seen retention boosts of up to 35% when adding personalized handwritten notes into their orders.
It's one thing knowing the value of retaining your customers, but knowing exactly how to get them to stay is a whole other battle. Excellent customer service and personalization opportunities are two of the biggest wins a brand can achieve to keep their customers satisfied, inspiring loyalty.
For more information and ideas on how to make your unboxing experience more special, check out our playbook here!
What the big guys are doing
14. Some of Amazon's most amazing stats include that their top customers buy around 47 items per year.
15. And, their customer retention year after year is a staggering 90%.
16. Apple's is even higher, rising from 90.5% to 92% in 2020.
17. 72% of smartphone owners feel that it is important to be able to access their digital libraries across multiple platforms, with the figure jumping to 80% for users who also own tablets and computers.
Amazon are titans of the eCommerce game, and their retention stats show that they get it. Some of their strategies include creating a sense of urgency and FOMO - fear of missing out - with huge offers in a small timeframe, e.g. Prime Day.
For Apple, the key to their success can be linked to their customers being heavily invested in the Apple ecosystem. Steve Jobs allegedly even used this phrase himself in an email to Apple employees back in 2010, stating that he wanted to 'further lock customers' into Apple's 'ecosystem'. iPhones, Macbooks, iPads, Airpods - the easy compatibility and interplay between these devices creates a seamless experience for customers - one they won't be looking to deviate from anytime soon.
Of course, Amazon and Apple retention strategies can't necessarily be easily applied to any and every business, but certainly the principles can be applied: creating urgency, tailoring the customer experience and a harmonious product ecosystem can all be crucial ways to inspire loyalty in your customers.
Hopefully, some of these stats have shown you just how important customer retention is, and how much money and time you can save by making it the focus of your marketing efforts. And there are plenty more stats out there - check out the blogs linked at the bottom of the article for even more surprising stats.
With Black Friday approaching fast, now is the time to start nailing your strategy, and find out what your current customers love, to try and make sure you retain as many new customers as possible.
If you're looking for more ideas on how to maximize your Black Friday retention, check out this article here, and if you're interested in adding handwritten notes to your retention strategy, check out Scribeless to start delighting your customers.
Some of our stats were sourced from the following blogs, where you can find even more interesting stats: