It is very important for companies to earn profit to its maximum to ensure that no losses will occur. But how do you ensure maximum profit? To achieve this goal, we must focus on customer retention. Customer retention refer to keeping long time customers and proceed to do business over a period of time. We should know how customer retention can help with profit maximization. Customer retention as well as the continuous growth in the existing customers revenue share is very vital so that marketing ROI can be optimized and a stable revenue stream can be built.
Acquisition Costs
The costs spent to acquire new customers can be very expensive. Marketing and sales are two of the activities that are spent on to acquire new customers. Hence, retaining customers will help reduce the cost of acquisition of new customers.
Brand Reputation
Long-time customers will eventually spread out good words regarding our products/services. These positive feedback can act as a attraction point to acquire new customers.
Higher Profitability
Loyal customers are most likely to keep purchasing from the business rather than new customers. Not only that, since our loyal customers are given good service, they are most likely to spread out positive feedback.
Customer’s Lifetime Value
Customer’s lifetime value means the generated amount of revenue by the loyal customer to the business during their relationship. With customer retention, the company is able to achieve a higher customer lifetime value. This is due to the fact that loyal customers will spend more over time.
All in all, customer retention play a very important role in profit maximization. It works wonders for our company only if we are able to master on how to achieve customer retention. Once we have mastered the ways to achieve and sustain customer retention, we are able to enjoy the benefits that come along.