Every retailer should know that customers are the lifeblood of their business, which is why customer relationship software has become an integral tool for understanding more about customer bases and implementing actions to sustain shoppers for the long-term.
To put the value of longstanding customers into perspective, this time of year sees an average spending increase of 25% by repeat customers, as opposed to first-time shoppers, which is just 17% – that’s according to a study by Adobe.
But do retailers truly understand how important a good customer relationship is to their business, not just over the Christmas period, but all year round?
Understanding the real cost of losing your customers
Whilst the immediate outcome of losing a customer is pretty straightforward, it’s in recognising the value of being able to keep those customers for the long-term, particularly the hidden benefits they bring to your business, that the real cost becomes apparent.
Marketing spend is far less for repeat customers
It costs more to sell to a new customer than it does to somebody you’ve already sold to before, that’s something any marketer will tell you.
Since you need to gain new customers’ trust before they think about paying for your products and services, you make less of a return after extensive marketing efforts. This is something you don’t have to worry about so much with existing customers already familiar with your brand.
In fact, conversion rates for existing customers can be anywhere between 60% and 70%, as opposed to 1% and 3% for new customers (source, Marketing Metrics). Yes, some degree of marketing is still required but the cost won’t be as high – 5 to 10 times less than if you were reaching out to a new customer.
Longstanding customers generate more referrals
Online retailers rely on customer referrals, it’s what helps drive motivated traffic and is commonly known as “social proof”. Testimonials, reviews, shared promotions; they all help to encourage people who have never bought from you to buy, based on the fact that other people (who are generally more trusted than anonymous retailers and websites) have received a positive experience when shopping with you before.
In short, it’s glowing advertisement, and what’s more, it’s practically free.
Longstanding customers are statistically more prolific at generating customer referrals than first-time buyers, and tend to refer even more people when they’ve made a higher volume of purchases from you over a longer time.
Loyal customers spend more
It’s no secret that longstanding customers are valuable to your business when they’re buying from you on a regular basis, it’s what most retailers would call “repeat custom”. But just how much additional revenue a repeat customer generates is probably underestimated by many retailers.
The total spend-per-order for a customer who is considered to be in the top tier of your loyal customer base is significantly greater than those who are in the lower tiers. According to RJMetrics, loyal top 10 customers spend 3 times more per order than the lower 90%, whilst the top 1% spend 5 times more per order. This means that customer retention not only produces long-term sales, but a higher volume of sales also.
Why you’re losing customers – 3 ways CRM software can help with retention
Now you understand the hidden benefits of customer retention, it’s important to identify areas of your business where better customer relationship management is required, and how CRM software can help you.
1. Improve poor customer service
Okay, all the reasons on this list come down to the quality of customer service, but this is in reference to failing at things you promise to deliver.
When you promise a certain level of service, you have a responsibility as a retailer to see it through to the highest standard, otherwise you risk losing that customer forever. This might be regarding the completion an order, submitting a refund, or answering a query; whatever the case, there is no room for mistakes and complacency.
And communication is key here – if for some reason you can’t deliver on a promise, you must be able to keep your customers informed at every step of the way, and offer them a resolution that they are happy with. Problems are always going to crop up, but it is how you deal with those problems that sets you apart.
Because CRM software is focused on storing and sharing customer data across your business, it increases visibility and reduces duplicated effort, enabling staff to carry out customer-focused tasks quickly and without error. Plus workflows and automation allow you to keep customers informed every step of the way.
Poor customer service is generally a result of not being able to correct misinformation properly and quickly enough – two things which customer relationship software can prevent. Customer-facing staff can trust that the information they are seeing is up-to-date and correct, and this allows them to serve your customers better.
2. Learn from negative feedback
Do you keep a record of all your customer feedback? If so, you need that information to be categorised, referenced, and accessible to everybody who needs to see it. Otherwise you have no way of correcting your previous mistakes and enforcing said corrections effectively when dealing with customers, new or existing, in the future.
Customer relationship software should allow you to track both resolved and unresolved cases/feedback, and record the reasons behind any negative experiences. By looking at individual cases and running reports that group them together, you will be able to learn from any mistakes and avoid losing customers going forward.
3. Giving them a reason to return
Finally, you need to give customers a little something extra for them to keep coming back. If you don’t show that you appreciate and value their loyalty, they will turn to competitors who will. This is where you need to look at your customer data on a granular level and personalise special offerings, discounts and other types of promotions.
The most important thing to demonstrate here is that you understand each of your customers’ specific needs, what they want, and why they shop specifically from you, working to the data you have obtained throughout the years to deliver something that shows the relationship goes both ways.
Customer relationship software – particularly when it is integrated with your other business systems, such as your order management, billing & finance and your eCommerce – provides a full and detailed view of your customers, their order history, how much they paid, what products they are interested in, their delivery dates, and more. And it is this level of data that is key to personalisation.
You may find our related article of interest: The key to CRM software selection success
NoBlue provides NetSuite which is a single solution to support all of your company’s back office processes, including CRM, ERP and eCommerce. Alternatively you can opt for NetSuite CRM which can be integrated with your existing business management software. If you’d like any further information, please get in touch with us!
Leave your own tips and customer retention experiences in the comments box below.
Image courtesy of cuteimage at FreeDigitalPhotos.net