4 Reasons Why You Shouldn’t Ignore the Importance of Customer Retention

Why bother keeping an eye on your current customers if there’s a whole world of potential new customers ripe for the picking, right?

Unfortunately for everyone, that seems to be the mentality of quite a few businesses, and it couldn’t be more wrong. While there may be a short-term gain in acquiring new customers, a model that primarily focuses on converting new versus keeping old customers will lose in the long run.

Understanding the importance of customer retention is the first step in building customer brand loyalty, which is to say, establishing a group of people who regularly choose your brand over competitors regardless of price and convenience.

Having this loyal base not only stands to improve your bottom line — after all, it costs 7x more to acquire new customers than it does to retain existing ones. It also allows you to fearlessly experiment with new offerings, get valuable feedback and benefit from a number of other advantages.

Keep reading to learn the top 4 reasons why you shouldn’t ignore the importance of customer retention.

1. Retention Efforts Today Impact Revenue Tomorrow

Adobe reported that online retailers spend nearly 80% of their digital marketing budgets acquiring shoppers. In the U.S., though, 40% of revenue comes from only 8% of all visitors. And who are the 8%? Returning or repeat purchasers! In fact, the revenue of one repeat customer is equal to 5 new shoppers in the U.S. and 7 new shoppers in Europe.

In the U.S., 40% of online shopping revenue comes from only 8% of the most loyal repeat customers.

click to tweet

Click to Tweet

We can also consider the flip-side: 67% of consumers have become “serial switchers” who are more than willing to switch brands because of poor customer experience. This lack of loyalty, which stems from bad experiences and weak retention efforts, is costing U.S. businesses up to $75 billion a year.

Simply put, customer retention is a more valuable pursuit than acquisition — it’s making the most of what you have and making what you have work for you.

It doesn’t have to be complicated. Getting your customers to stay loyal to you is about continually adding value to their lives and reminding them of it. It’s about valuing them as unique individuals through personalized communication and developing a solid relationship.

Watch the video above to see how Vodafone sent a personalized thank-you to their rewards members. Sprinkled throughout are reminders of each customer’s experience. Plus there’s a special offer. And it’s all data-driven, so it’s unique to that individual.

Fun fact: These kinds of Personalized Videos have helped our clients in the telecommunications industry reduce churn by up to 37%!

2. Loyal Customers Reach More Customers

People are strongly influenced by referrals from friends and family. To put that in numbers:

  • 81% of consumers say their purchase decisions are influenced by feedback from acquaintances.
  • 30% say they’re more likely to respond to brand offers when they’ve been shared directly by a personal connection.

It’s worth noting that millennials specifically are very vocal about their brand opinions, whether positive or negative:

  • 70% of millennials feel a responsibility to share feedback with companies, whether the experience was good or bad.
  • 50% will also share their brand preferences on social media.

Word of mouth brand endorsements carry a lot of weight among consumers, so let your customers be your own grassroots marketers. In general, people are 4x more likely to buy when referred by a friend.

Free White Paper

Personalize your loyalty program to boost customer satisfaction and sales

Customers’ honest opinions about your service, products and brand image carry more sway with fellow consumers than what you have to say about yourself. Focusing on optimizing the experience of current customers will guarantee the reviews they share attract, instead of repel, new business. This can have a big impact on revenue over the long term — the customer lifetime value of new referred customers is 16% to 25% higher than those who find you on their own.

For tips about increasing customer satisfaction, check out our blog: 7 Ways to Make a Good Retention Rate Even Better.

Strategy Highlight: Ready-to-Share Content

With your most loyal customers ready to share their experiences online, help them skip a step by creating shareable content that’s ready for them to post. This gives you some control in how your brand will be presented to others while encouraging customers to be brand ambassadors.

Remember that this content should be personalized for your customers. It’s social media, after all. People like to share content as it relates to themselves, whether it’s their most-played songs or video game rankings.

Here’s an example of a Personalized Video from EVE Online that customers loved and shared on social media.

Imagine you’re an EVE Online player and the video above is personalized with your avatar, photo, amazing stats and experiences. Wouldn’t you want to share it with the world?

As your customers share the content you create, you get exposure to their networks and, ideally, more referrals! To make referrals easier, you can even create landing pages for potential new customers as EVE Online did for their campaign.

Personalized Video from EVE Online

Quick tip: Make sure you know your numbers. Figure out just how well your current retention efforts are doing by reading our guide on how to calculate retention rate.

3. Loyal Customers Are More Profitable

Customers who aren’t engaged with a brand tend to make purchase decisions based on price and convenience.

This means that when costs rise with one brand — a sometimes necessary business decision — disengaged customers will churn and seek a better deal elsewhere. Loyal customers, on the other hand, are much more likely to stay.

More than that, loyalty generates quantifiable value for businesses. Paid loyalty programs, like Amazon Prime, were found to have customers that were:

  • 62% more likely to spend more on the brand
  • 43% more likely to buy weekly since joining
  • 59% more likely to choose the brand over competitors

Netflix, which enjoys a large segment of dedicated subscribers, leaned into these findings when they laid out plans for a price increase a few years ago. Business.com explains:

The company thinks that because these people have been with the service for this long there’s no need to worry about them leaving in revenge.

This reveals the strategy Netflix has been adopting for some time. The idea was that if customers became used to the service they would be less likely to abandon that service if something adverse happened.

The same is true for customers loyal to any type of business. As you implement price and policy shifts, your most engaged customers are the ones who will trust you enough to stick around and ride out the changes.

Of course, winning loyalty doesn’t just happen. Like any relationship, it thrives with meaningful communication.

Think about it. These customers are the ones who are most interested in your actions and expect to be kept in the loop. Why wouldn’t you stay in touch 1:1 with every single one of them?

Data-driven video makes it possible. By communicating personally but still through a digital medium, you add a human touch that fosters loyalty and a stronger brand connection.

4. Loyal Customers Help Define the Brand

Finally, let’s not forget the most important part of loyalty. Who you are!

A lot of the fun in running a brand comes from innovating your product and service lineup. Glitzy marketing and branding campaigns aside, your product or service is why your loyal customers care about you in the first place. But it’s definitely not fun to introduce updates that no one engages with.

Because repeat customers enjoy doing business with you and have bought into your brand philosophy as well as your products, loyal customers will look for ways to grow and deepen your relationship.

These are the people who are more likely to peruse your brand’s other offerings and expand their purchases into other products or services. What’s more, they’re the ones who are actually excited for new products and will share their excitement with others, bringing us back to the whole word-of-mouth point.

With launching something new, connect with your excited and loyal customers by addressing them one-on-one. Add elements of personalization to your messaging in order to draw them in and signal that you see and appreciate them as an engaged customer.

Better yet, make it easy for them to share the news with others. The possibilities with this are endless. Design a fun promotional filter for them to use on social media. Send a referral offer that they can pass along to others. Or allow them to create and send their own brand videos, adding names of their friends with a simple form. You can try it yourself below with this thank-you campaign for essential workers during the pandemic.

The Bottom Line for Customer Retention

Don’t underestimate the importance of customer retention. Focusing on retention is the first step in building a community of people who care about your brand and your products.

Instead of throwing all your resources behind building a larger pool of customers, create an environment where people feel good about the purchases they make. They’ll then make larger, more frequent purchases, share their brand enthusiasm with their friends and remain loyal through changes. That’s why you shouldn’t ignore the importance of customer retention.

To learn more about leveraging video to boost retention, get in touch at the link below.

Schedule a Call

Explore More Content

Generic selectors
Exact matches only
Search in title
Search in content
Post Type Selectors
post

Subscribe to Our Newsletter

Email * Enter Email

Explore More Content

Related Articles

Personalized Interactive Video in Action

Personalized Interactive Video in Action

How many times have you come across an ad or brand message that was entirely skippable? Today’s content often feels like a one-way street, where brands blast messages “at” us rather than engaging in a genuine, two-way conversation. To stand out amid the digital noise, businesses must explore fresh ways to connect with their audience. Luckily, Personalized Interactive Video steps up to the plate. Think of it as the powerful blend of personalization and interactivity — a dynamic solution that brings the best of both worlds to your video marketing strategy. But what exactly is Personalized Video? What’s Interactive Video? And what’s the big deal with combining the two? We’ve got the answers. This blog is your go-to guide, answering your questions and sharing loads of ideas and tips for leveraging Personalized Interactive Video. Let’s get started. What Is Personalized Video? Ever felt like your name was just slapped onto

Read More
How To Level Up Your Sales Strategy With Personalized Video

How To Level Up Your Sales Strategy With Personalized Video

Hitting sales goals can often feel like an uphill battle. As consumers become increasingly discerning and the competition for their attention intensifies, many sales teams find themselves scrambling for innovative sales tactics to connect with their audience and boost conversions. Amidst these challenges, Personalized Video marketing has emerged as a game-changer. In a time where we’re constantly bombarded with ads and content, a personal touch can make a huge difference. In fact, most sales leaders believe personalizing the buying process to each prospect will become more and more important in the future. From forging genuine connections to evoking emotions that drive action, let’s take a look at how this Personalized Video can transform your sales and marketing strategy. The Sales Struggle Sales is a tough gig, no doubt about it. In their daily grind, your salesforce may take part in a constant outreach cycle involving cold calls and emails, LinkedIn

Read More
How Digital Marketing Is Changing in 2024: AI, Video and More

How Digital Marketing Is Changing in 2024: AI, Video and More

Every year, new possibilities and advancements arise that we expect to redefine the way businesses connect with their audiences. This year will be no different and, with trend cycles happening faster and faster, businesses can’t afford to be static. Your success depends on not just keeping pace but staying ahead of the competition. Ready to get caught up to speed? Let’s get into the must-know digital marketing trends of 2024. AI Helps Video Expand Its Reach First up? Video marketing expands its (already massive) reach. With platforms like TikTok and YouTube continuing to dominate, it’ll be hard to find a brand that hasn’t jumped on the video bandwagon and for good reason. Marketing is all about speaking to your audience and, for the modern consumer, video is the preferred language. The real game-changer this year is the elimination of barriers to entry and you can thank AI for that. With

Read More

Request a Call

Leave your details below, and our team will contact you ASAP to show you what Personalized Video can do for you.