Customer retention versus customer acquisition
For brands, holding onto loyal brand lovers is usually a lot easier than acquiring new customers. It’s also an investment that enormously pays off. A study conducted by Bain & Co. reveals that increasing the customer retention rate by just 5 percent can raise profits by 25 to 95 percent. Focusing on existing customers is definitely worthwhile in that regard. However, the strategy needs to be well thought through. In our guide “Long-lasting customer bonds: what strategies ensure enduring loyalty?”, we have put together some tried-and-tested approaches for retaining customers over the long term.
Brand loyalty requires a first-class customer experience
An important prerequisite for retaining customers on a long-lasting basis is customer satisfaction. To ensure this at each and every touchpoint along the customer journey, customers as well as their individual needs and expectations should be put center stage – from the first point of contact with the company right through to the purchase and beyond.
Understanding the customer journey can be incredibly helpful in providing consistently good customer experiences. Existing customers will in turn vouch for the positive experiences by placing their trust in your brand and thus staying loyal to it. An exceptional customer experience also brings other advantages:
- Higher recommendation rate
- A competitive edge
- Stronger customer bonds
Tilman Au: “Existing customers are particularly beneficial in that their allegiance and loyalty are often expressed in the form of personal recommendations to others, so they essentially become brand ambassadors. That creates additional business and ultimately also a higher value contribution, since the subsequent customer acquisition costs are lower. It’s not without reason that all of this is considered holistically in terms of the customer lifetime value.”
Brand loyalty – marketers should have these KPIs on their radar
If you want to build brand loyalty and find out how satisfied your customers are, there are various KPIs (key performance indicators) available to help you measure this. These include
- the conversion rate,
- direct traffic, and
- the customer churn rate,
which are indicators of the quality of the customer experience. Higher conversion rates, for example, signify that customers are eager to pass through the sales funnel stages – a sign that you’re offering a motivating customer experience. A low customer churn rate also suggests excellent customer experiences and good service. However, if the values are going in the opposite direction and customers are increasingly turning their backs on your brand, it’s a sign that you need to take urgent action.
You’ll find 10 helpful tips on further optimizing the customer experience in our guide “Long-lasting customer bonds: what strategies ensure enduring loyalty?”.
Long-lasting customer bonds through personalization
Personalization has been gaining ground for some years now – and has enormous potential for customer retention.
Tilman Au: “Relevance and personalization make it possible to present targeted offerings and packages to customers and thus increase customer retention. They feel as if the sellers understand them. That leads to an improved conversion rate, and the shopping cart value also often goes up significantly. Personalization also improves the convenience and user experience and leads to quicker and more frequent purchases. Ultimately, that’s an important aspect for the increase in profits mentioned before.”
Leveraging brand loyalty as a success factor
A high level of brand loyalty greatly contributes to the success of companies and therefore should be a top priority for all brands. In our guide, we explain the approaches you can use to hold onto loyal brand lovers and how you can strengthen customer bonds over the long term!