E-Tip #332- 6 Reasons Why Customer Retention Is Crucial To Your Business

Because of all the advances in telecommunications technology, your clients, past clients and prospects have access to your competition at the tips of their fingers. So, one bad experience with your business and a few tweets later, the results could be disastrous for future sales.

The key to retaining your clients is through strong customer service. Good customer service shows your clients and your future clients that you care, and opens the door to cross-selling additional products and services to them.

6 Reasons Why Customer Retention Is Crucial To Any Business:

Reason #1. Existing Customers Are More Profitable: Researchers have repeatedly conducted studies to determine the expense of gaining new clients versus the expense of retaining one. These studies have proven that it can be up to five times more expensive to win over a prospect than it is to keep an existing client. Furthermore, existing clients are far more likely to increase their business with you by taking advantage of additional products or services.

Reason #2. Satisfied, Loyal Customers Refer Other Business To You: Satisfied customers can contribute to your sales efforts through their recommendations. In essence, they become a referral source. Satisfied, loyal customers make particularly useful referral sources because they are able to provide a first-hand testimonial when recommending you to someone they know who could benefit from your business.

Reason #3. Service Is More Memorable Than Products Or Prices:Price doesn't have as much sway in the sales world as it once did. That isn't to say that price doesn't matter, or that customers aren't drawn to lower prices, just that they just rank customer service higher than price or product these days. Most people are willing to pay a little more for a product or service if it means having an amiable relationship with a business.

Click here to read an insightful USAToday article about social media and customer service experiences.

Reason #4. They Will Take Their Business Elsewhere: Customers, by and large, are non-confrontational. Most will not outright voice their complaints. Instead, they will simply take their business to your competition. Don't assume your customers are completely satisfied if they are not complaining -- remember, they vote with their pocketbook.

Reason #5. Satisfied Customers Are Loyal Customers: A customer's loyalty to your business directly relates to your customer service. The better you treat your customers -- that is, the stronger and more exceptional your customer service is -- the more satisfied they will be. And the more satisfied they are, the more loyal they become.

Reason #6. Existing Customers Provide Better Metrics: One of the most effective ways to improve your business is through your existing customer base -- by taking advantage of customer satisfaction surveys. We recommend doing both an e-mail survey and a snail mail survey once a year, 6 months apart.

Executive Summary: When it comes to retaining your existing clients, customer satisfaction is king. It is a vital component in your efforts to retain your existing client base and, more importantly, cross-sell them additional products and services. There are numerous reasons to place just as much emphasis on retaining clients as you do prospecting -- not the least of which is the potential revenue it could generate for your business.

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