Being at the beginning of the year, a number of businesses across the world will be formulating their strategy and attempting to navigate the challenges that are set out before them. In the UK, specifically, there is a particular issue that will have to be accounted for.
The cost-of-living crisis is beginning to grip households across the country, and the winter will see most people holding back on what they spend and, instead, only purchasing what they feel are the essentials. This means that – if your business is not an essential – either your b2c or b2b customer retention will potentially be harder than it has ever been before.
Naturally, there will be some fallout, and your business should be prepared for this. With that being said, every business will have customers who would like to remain a customer but need that extra incentive in order to do so. This is why your customer retention plan needs to be at the forefront of your strategy going into 2023.
Customer Retention And Its Benefits
The reason we’re referring to customer retention specifically is that, typically, retaining customers is far more beneficial than acquiring new ones. According to a recent study, 65% of business revenue will come from repeat customers, with a focus on customer retention, increasing that revenue by anything between 25% to 95%. Not to mention, acquiring new customers is far more costly and time-consuming – sometimes even five times more expensive than retaining an existing customer.
The benefits of keeping a customer loyal can be the difference between your business keeping afloat in 2023 or sinking along with the crisis that the UK finds itself in, especially with many retailers already noting a spending fall in 2022. Not only this, it is important to be optimistic about margins, and a good customer retention scheme can help you excel this year rather than simply survive. But how do you go about keeping customers efficiently?
Customer Retention Strategies
One of the best ways to maintain a strong customer base is through an efficient loyalty program. A loyalty program is a way to actively reward customers for their repeated custom, whether through discounts, gifts or special offers depending on how regular their custom is. From this, the customer then gains a loyalty membership that essentially incentivizes them to stay loyal to your company instead of cutting back or looking elsewhere.
It is important to note, however, that a loyalty program is a structured marketing strategy, and it must be achieved through an understanding of what your customers are looking for and will be motivated by. If this is done, then these customers may buy between 5% to 20% more frequently, which can increase revenue by more than 10%. It will also deter loss, as studies have shown a business with a 60% retention rate will be losing four times more than a business with an 80% retention rate.
At the beginning of 2023, then, attaining a strong loyalty program must be the first thing your company prioritises before moving forward.
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