Welcome back to the Miss Details Deep Dive blog series on Customer Acquisition Cost.
If you haven’t been keeping up with our first-ever Deep Dive series, you might want to go back and read the first four installments; we’ve covered quite a bit of ground. By now, you should have a good grasp on what goes into customer acquisition cost (CAC), from the obvious factors, like marketing, to those you might not have considered, like your branding and company values.
Once you’ve acquired your customers, there’s another incredibly important task that pops up: customer retention.
Quick Links for the Full Deep Dive Series on Customer Acquisition Cost
Part 1: Introduction | Part 2: Exploring Customer Acquisition | Part 3: How Industry Affects Your Costs | Part 4: Why Branding Makes a Difference | 📍Part 5: Customer Retention + Lowering Your Cost | Part 6: Conclusion
Retain Customers, Save Money
It’s great to make friends. Most of us love meeting new people and making those connections. Friendships, like business relationships, serve various purposes: support, sharing life experiences, mutual growth, and networking, among others.
But it’s even more important to maintain the friends and relationships we have. And it’s easier, too. Think about how much work you need to do to get a friendship off the ground. You can’t just have one coffee and suddenly have a new best friend for life; a true connection takes months or years of shared experiences, bonding moments, and resonating values. But once you have that friendship, it’s easier to maintain it, with the occasional phone call, meet-up, or check-in that keeps the bond going.
The business world is the same way—growing your customer base is terrific, but retaining and nourishing those people who’ve already spent money on your service or product and continue to support your brand is even more critical.
Customer retention is more than just smart, it’s crucial. The numbers make it clear—it’s the best way to increase your profits and grow your business. After all…
- Increasing customer retention rates by 5% increase profits by anywhere from 25-95%
- Retaining an existing customer is five times cheaper than acquiring a new one
- New customers only purchase on 5-20% of sales, while returning customers will purchase 60-70% of the time
And we know businesses don’t take advantage of customer retention enough: companies lose more than $136 billion each year due to ‘avoidable consumer switching.’ Unsatisfactory customer service alone costs companies $62 billion.
Here are five strategies to help you retain customers and increase your profit margins.
Don’t Ignore Your Customers
Too often, businesses take their current customer base for granted, even if they don’t mean to. Some are hesitant to reach out too often or push their products or services with any frequency, afraid of being too aggressive with sales. But not reaching out enough can result in failing to keep their brand in the forefront of their audience’s minds.
If you have a loyal following and a customer base who wants to see you succeed, they’ll want to hear from you! They should be excited about your successes, your growth, and your new initiatives. And while you don’t want to overload them, they’ll also be happy to hear about new products and offers, and be reminded why they became your customer in the first place.
Expand Your Product Line
If your primary product or service is something that most customers only need once, or don’t need to purchase again for many years, then you risk losing clients who find a different brand that ropes them in with a more consistent benefit. Adding to your offerings not only gives your customers different ways to engage with your brand, it allows you to diversify your content offerings. Having related products or services means your brand can attract different customers who are drawn in by the various commodities, and then cross-sell once they’re in your marketing funnel.
Of course, you have to make sure to pick carefully and ensure that the products you’re adding make sense in the context of your current products, your company values, and your mission and vision. Remember our last piece, when we talked about how your brand needs authenticity and consistency? Your customers will be able to tell when you’re adding to your line for monetary gain, versus when it’s an authentic expansion of your brand.
Customer Loyalty Programs
What are you doing to make your client feel valued and delighted above and beyond the actual thing they are paying you for? When people feel joyful or surprised, they are more willing to share their experience on social media or with friends and family. And reaching out with a personal touch helps customers feel that connection to your brand and encourages them to respond in kind.It’s true that too many “add-ons” can eat away from your time, and so you need to be mindful of what you’re giving away. It helps to give away something that will supplement your primary objective, such as a free journal for those who’ve purchased a coaching course, or a checkbook for those who’ve hired a financial advisor. Help your customers see the additional value that your brand brings to the world.
Referral Programs
You know what’s a win-win? Turning your customers into your salespeople. Giving your existing clients a discount on your services or even a cash reward or special gift for referring a friend or colleague is a motivator to get out there and talk about your company. You’re relying on the people who are best equipped to promote your company: the people who have used your product or service and benefitted, whether that was financially, personally, or emotionally.
For some businesses, this might mean starting an official referral or affiliate program, looping in other businesses to serve as your independent partners. Getting affiliates who are just as excited and motivated about your company and its products means finding value-aligned partners who know and trust your products or services and therefore feel inspired to guide others towards your funnel. If done right, your referral programs will increase your sales with minimal extra effort beyond setting up the program and watching it work.
Sales, Discounts + Incentives
It’s science: we can’t resist a good deal. There are customers in your funnel who enjoy your content and would be happy to purchase your product or service if they thought they were saving money. Offering your product or course at even a small discount can help people feel like they’re making a smart financial decision, and a small profit margin loss is better than not having any sale at all.
Don’t forget to remind your customers of your business’s impact on the local community. Even customers who haven’t spent money with your company might be motivated to renew their financial relationship with you if they see you giving back. For example, you could post the following on your social media accounts:
- Pictures of happy animals at the local animal shelter your brand supports
- Stories about local organizations that have benefitted from your company’s outreach
- Statistics of total amounts of money and/or supplies donated and the impact it’s had
Even if they don’t act on those positive feelings at the moment, your customers will associate them with your brand, and they’ll know that money spent with your company is money spent with an organization that fits their values.
How Can You Keep Your Customers Happy?
If you haven’t realized by now, once you’ve built up a customer base, keeping that base happy needs to be your first priority over continued growth. Only once you’re sure your current customers are satisfied, returning, recommending your products or services to others, and engaging with your content, can you worry about how to get more people into your marketing funnel.
Now you need to think about what you’re doing to encourage your customers to stick around. What can your business offer? Who can your brand connect with? What products or services could you add?
If you’re curious about where your brand could be doing more to help retain its customers, you might want to start with our Brand Checkup. This invaluable document will help you think about your brand from top to bottom, including your different assets and how they’re all working for you. Gaining a more comprehensive understanding of your brand positioning can help you focus your efforts moving forward and touch on the points that keep your customers engaged and spending more time and money on your company.
Don’t want to miss out on our articles and insights?
Sign up for the Miss Details newsletter today.
Thanks for subscribing!
We know how precious your inbox space is and promise to do our best to offer you value.
Please check your email soon.
More From This Deep Dive Series on Customer Acquisition Cost
About Miss Details
Founded by Tanya Gagnon in 2004, Miss Details is a full-service branding and design firm which helps entrepreneurs and companies launch, adjust and reinvent key aspects of their branding and business marketing strategy. With a background in all aspects of interior and experiential design and a passion for data-backed design, Tanya leads the Miss Details team to guide her clients through everything from a refreshed website to a full rebranding, helping them put the pieces together to create a consistent, authentic, unique brand image.