According to statistics, about 65% of a company’s revenue is generated from existing customers. Another study claims that acquiring a new customer is 5 to 25 times more expensive than retaining an existing one. Moreover, business owners say that 11-20% of their clients are one-time customers.
These figures prove that customers are the hearts of any business. If you want to survive the fierce battle between companies in the 21-century, you should pay proper attention to your buyers and maintain healthy relationships with them. Long gone are the days when customers didn’t have a large variety of choices and had to tolerate poor service or product quality. Nowadays, consumers are more demanding. They have specific needs and requirements and won’t stay with a brand that cannot meet them. Having this in mind, business owners are looking for ways to improve their services and introduce new methods of engaging buyers, building relationships with them, and increasing customer satisfaction score. In short, they seek ways for customer retention.
Customer retention is the set of practices taken by a company aimed at engaging existing clients to continue buying their products and services. The final goal of any customer retention strategy is acquiring more loyal customers and decreasing customer churn. At the heart of any good retention strategy, there is a CRM system.
CRM systems are mainly used for marketing, sales, and support purposes, and not many people know that they can also be used for improving customer retention. Let’s look into several ways of how CRM helps in customer retention.
1. Personalize Your Communication with Customers Using CRM Data
First, CRM improves customer retention by personalizing your interaction with buyers. Unfortunately, most companies treat their customers as letters and numbers in their lists or sources of profit. And it’s the biggest mistake they make.
It’s important to realize that customers are individuals and should be treated like ones. You cannot keep calling them “Dear Valued Customer” and expect a high engagement rate. Instead, try inserting human elements and personalizing every aspect of interaction with your clients. For example, you could call them by their names in your marketing emails, tailor your marketing campaigns to their needs, show them ads of products they might be interested in instead of random ones, provide timely support, etc.
And what’s the role of CRM systems in all this? CRM software is a centralized system where you keep all your customer data and interaction history, including but not limited to their names, contact details, purchased products, support cases, etc. This information can be used to make your communication personal, show your customers how valuable they are, and make them feel special. As a result, your customers will always come back to you.
2. Provide Superb Customer Service
Providing top-notch customer service is one of the most effective ways to retain customers. According to statistics, three out of every ten loyal clients are ready to walk away from their favorite brands after just one poor customer experience.
To prevent customer churn, you need to improve your service quality. In this regard, the role of CRM in customer retention is priceless since the system can help you cut down the customer response and problem resolution time, automate your support team’s work, use email templates, etc. If the customer is happy and satisfied with your service quality, he’ll stay with your company, renew his membership, and buy new products and services.
Read more on How CRM Can Improve Customer Service And Support
3. Identify and Pay Particular Attention to Loyal Customers
Have you ever heard about the Pareto Principle, known as the 80/20 Rule? According to this well-known customer success law suggested by Italian economist and sociologist Vilfredo Pareto, repeat buyers that account for 20% of all customers generate 80% of a company’s revenue. It means that you should pay extra attention and care to your loyal customers.
As mentioned earlier, CRM systems store valuable information about customers, including their purchase history, which can be used to identify loyal customers. Once you know who they are, create loyalty programs, give them rewards, and set up other incentives to encourage them to stay with you and use your products and services.
To sum up, companies shouldn’t focus only on acquiring new customers but should make more effort to retain existing ones because it’s cheaper and more profitable. The role of CRM in customer retention is significant. The system helps personalize the interaction with customers, provide top-notch service, and create loyalty programs that cut down customer churn and boost customer retention.