Focus On Customer Retention For Maximum Sales Growth
Two ways to increase sales growth are through customer acquisition and customer retention. At first glance it seems like it would be most beneficial to go and find new customers, because new customers means increased sales. However, focusing on customer retention leads to maximum sales growth.
According to Marketing Metrics, the success rate of selling to an existing customer is 60-70%, while the success rate of selling to a new customer is only 5-20%! Additionally, according to Harvard Business Review, increasing customer retention rates by 5% increases profits by 25% to 95%. This data demonstrates why it is important to focus on customer retention for maximum sales growth.
Leads to word-of-mouth referrals
Customer retention is a reflection of how well you satisfy your current customers and this has a noticeable impact on sales growth. When current customers are satisfied with the product or service they receive and feel they are getting quality customer service, they are more likely to refer the product to a friend or family member. This word-of-mouth marketing will help increase sales and help ensure maximum sales growth.
Leads to improved products and services
Customer retention also helps you refine your offerings and continually improve your product or service. When you are constantly focused on acquiring new customers, you can sometimes lose the customers you already have. The customers who already know and like your product and service and are likely willing to help you refine and improve your offerings.
Instead of investing energy in seeking out new customers, focus on developing relationships with your current customers. These relationships give you the opportunity to solicit feedback and make improvements to your offerings. As your product gets better and better, these improvements will in turn help maximize sales growth.
Leads to targeted marketing opportunities
Seeking out new customers often requires broad advertising with the hope of your intended customer making a purchase. On the other hand, building relationships with your existing customers allows you to market specifically to their wants and needs. A more targeted marketing approach will yield higher sales.
Leads to reward opportunities
Customers like to be rewarded. Customers are often willing to spend just a bit more to unlock or access various rewards. Focusing on customer retention, and specifically a VIP rewards program, gives you opportunities to maximize sales growth. These rewards programs can encourage customers to be loyal, share your product or service with others or purchase from you on a regular basis. All of these customer habits help maximize sales growth.