Of course, this is not the functioning of an ideal business model; ideally, new customers are added without impacting the existing customers. However, too many businesses today focus on bringing in new customers through deals and discounts, while ignoring their long-time, loyal customers.
Research shows that acquiring new customers can be 6 -7 times more expensive than retaining old customers. Why? Because around 80% of your company’s profit comes from 20% of your customers– usually the oldest and most loyal customers. Because of this loyalty profitability, Bain and Co reports that “a 5% increase in customer retention can increase a company’s profitability by between 25% to 95%”.
These statistics illustrate the importance of customer loyalty and retaining customers, both of which seem like a big task, but are actually pretty simple.
There are many ways to implement customer loyalty programs, to encourage customers to climb the loyalty ladder. You can offer rewards based on the amount of money spent, better deals to older customers, or special products.
However, when it boils down to the core, customers just want to be heard. They want their needs and demands to be met, with efficiency and a genuine sense of helpfulness. This is why good customer service is the best loyalty program you can implement in your business, and surprisingly, it’s a program many companies are yet to master. According to Harris Interactive, customers say service agents fail to answer their questions 50% of the time.
Your customers want to be able to contact you with ease, from wherever they are, and receive real-time results. This is why multi-channel communication is so important to the businesses of today. Your company should be offering many ways for customers to contact you, be it through phone, email or web chat. These communication channels need to lead your customers to real people who have been trained to provide the best customer service. A company that listens to its customers and meets their needs is already ahead in the race. A company that doesn’t provide an excellent level of service isn’t in the race at all.