(Image courtesy of Unsplash)
Those involved in the customer experience profession will no doubt be familiar with the statistics that demonstrate the benefits of customer retention:
– It costs 6 times more to attract a new customer than it does to keep an old one.
(Source: “Understanding Customers” by Ruby Newell-Legner)
– The probability of selling:
* To an existing customer is 60-70%
* To a new customer is 5-20%
(Source: Marketing Metrics)
– Customer loyalty can be worth 10 times as much as a single purchase.
(Source: White House Office of Consumer Affairs)
– A 5% increase in customer retention increases profits up to 125%.
(Source: Bain & Co.)
– Increasing customer retention by even 5% can increase your profits between 25-95%.
(Source: Harvard Business School)
– A 2% increase in customer retention has the same effect as decreasing costs by 10%.
(Source: Leading on the edge of chaos, Emmet Murphy and Mark Murphy)
So the evidence is well and truly there: it is more profitable for companies to hold on to their customers than it is to go out and find new ones.
So why do companies generally pay their top salespeople more than, say, a post-sale customer service employee whose knowledge, attitude, professionalism, courtesy, service and ability to connect with people has, over the years, saved hundreds of accounts from walking out the door?
If your company rewards and recognises salespeople but is not attracting and retaining good customer service people, chances are you are winning new business but at the same time losing existing accounts out the back door. Its akin to trying to fill a bath with the plug out.
Conversely, if your company recognises the economics of loyalty and through your Voice of the Customer program has identified an individual in your post sales customer service team who has prevented the loss of customers, did you reward them? How did you do it? Was it on par with how you reward your salespeople for bringing in new business?
If your company’s growth strategy centres on improving customer loyalty, it’s time to start recognising and rewarding the positive efforts of those who interact with your existing client base every day.
This post first appeared on the ICMI blog in February, 2022. I started my career in my early 20’s working
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