Just as you keep tight tabs on annual sales and profit figures, you need to diagnose your company's success at retaining customers over the same twelve months.
Otherwise, you can't accurately forecast your future growth. In the following examples, you can see how a mere 5% difference in the customer retention rate at two rival companies affects their bottom lines over 14 years. Each company has a base of 100 customers and an average annual sales volume of $5,000 per customer, so first-year sales total $500,000.
Company A: Retains 90% of its customers each year and new accounts grow 10%. The company raises its prices 3% a year. After 14 years, sales have climbed 47%, but the customer base dropped to 95 from 100.
Company B: Retains 95% of its customers each year. After 14 years, its customer base has swollen to 180 from 100, and sales have soared nearly 300%.
You must survey current and lost customers to determine their needs and problems. That way, you'll be able to tell whether you're losing business because of lower prices at the competition or because you're taking customers for granted.
Learn to spot — and improve — elements that add value to your products and services. Above all, increase employees' awareness of how well they satisfy customers. Ask staff members in your customer service and sales departments to fill out the following questionnaire to get them thinking about how they can improve.
Your responses are important to help meet internal and external customer needs. Please answer the questions honestly and not the way you think they should be answered. Explain any NO answers. For YES answers, provide examples of how you accomplished the task.
We would be pleased to meet with you to find solutions to your concerns about the department.
Thank you, The Management.
The key to customer retention is satisfaction. The deeper your relationships with customers, the more likely they are to come back for more and spread the word among their friends, family and colleagues.
When you focus on maintaining a high customer retention rate, you minimize operating costs. Studies show that the cost of keeping customers is only 20% of the cost of acquiring new ones.
Get in touch today and find out how we can help you meet your objectives.