Getting and keeping customers has always been of primary concern to businesses. But in today’s oversaturated, competitive markets, it’s proving more challenging than ever.

Personalized email campaigns and loyalty rewards programs are valid retention strategies. However, many brands neglect their existing customers in favor of acquiring new leads, and they spend up to seven times more in the process.

With up to 65% of a company’s business coming from existing customers, businesses ignore customer loyalty and retention strategies at their peril.

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Cost of Acquisition vs. Retention

When it comes to the customer funnel, many businesses focus on lead acquisition and neglect current customers who have already made a purchase. Almost half of companies focus more on getting new customers than retaining existing ones.

However, existing customers represent a pool of pre-qualified, highly invested leads who have already shown they’re interested in a brand — enough to purchase one of its products. Neglecting these existing customers as a potential source of repeat income is a missed opportunity for a few reasons:

  • New prospects convert at a rate of only 5-20% while repeat customers rebuy at a rate of 60-70%.
  • It costs companies 5-25x more to acquire new customers than it does to retain old ones.
  • Money spent to acquire new customers is wasted if there are no strategies in place to retain them.

Fresh leads know nothing about a brand and aren’t yet convinced of its quality or usefulness. With current customers, these barriers to conversion have already been overcome. Focusing on retention just makes sense — existing customers already know and trust a brand and are primed to make a purchase.

 

Why Having a Retention Strategy in Place Is Vital

Retention programs give existing customers a reason to stay loyal to a company. Brands show customers that they are valued, and customers return the favor by staying engaged.80 percent of revenue comes from 20 percent of current customers

While brands must commit to growing their customer base and can’t live solely on existing customers, retaining them plays a vital role. More than 80% of a company’s future revenue comes from just 20% of its current customers. Even a 5% increase in retention can raise profits by 25-95%.

Brands that keep their customers from canceling their subscriptions, deleting their accounts, or switching to a competitor drive growth and increase profits.

 

How Loyalty Fits into Retention

Customers always wonder what’s in it for them. In the drive to increase referrals, social mentions, and repeat purchases, rewarding existing customers is critical. At least 75% of consumers say they favor companies that offer rewards.

By using a loyalty program, brands can tie their marketing efforts back into their retention strategy. Good customer loyalty programs are personalized, get customers excited, make rewards attainable, offer variety, and are simple and easy to understand.

Many programs use points, subscription memberships, exclusive discounts, special offers, birthday bonuses, referral incentives, and more to make existing customers feel valued. The goal is to incentivize action by using your existing data to engage current customers and create programs that move with them through the customer journey.

 

Finding the Right Customer Loyalty Program

Implementing the right loyalty program is important. Inte Q can help you create a loyalty program that fits your brand, your customers, and your business goals. Inte Q’s loyalty program design process provides the strategic recommendation needed to shape your program based on:

  • Transactions
  • Engagement
  • Experiential Benefits
  • Points
  • Membership and Subscription

Retain customers and increase profits using our data-driven customer engagement platform and stop missing out on the large pool of highly qualified leads right under your nose—your existing customers.

 

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