It costs businesses five times more to win a new customer as it does to keep existing ones – according to a study by mystery shopping and retail intelligence analysts, Retail Active.
And repeat customers typically spend a third more than new ones.
Retail Active’s managing director, Julian Chamberlain, says: “It proves beyond doubt the value of holding on to your existing customers – especially in challenging trading conditions.
“To do that – you have got to keep them happy and offer them better customer service than your rivals.
“Maintaining high levels of customer service has never been more important.
“Repeat customers are the heart of every business and are far more profitable than new ones. They have a better understanding of the brand’s value, plus they are easier to find and communicate with.”
Retail Active is Britain’s leading mystery shopping company, sending out thousands of undercover agents each year to monitor customer service standards in a wide variety of nationally-known companies.
Although it can be vital for businesses to attract new customers, it is usually much more beneficial to turn the ones you have into loyal lifetime customers.
It is offering a five point guide to businesses on how to keep their existing customers happy.
Julian Chamberlain said: “Seeing as one new customer costs as much as five existing ones – we though the five point plan was very appropriate.
The Retail Active Guide is:-
- Always seek to identify and solve complaints quickly. Customers will have much more trust and increased loyalty if you do this.
- Keeping customers loyal is critical, so providing a good product or service is core to success.
- Front Line is Bottom Line! Keep your customer facing teams highly motivated and focussed.
- It's worth remembering that every dissatisfied customer will tell up to 10 others of any poor experience.
- Always look for ways to exceed your customer’s expectations. Often ways to exceed expectations cost a minimal amount and can give huge financial returns
- Always consider the Lifetime Value (LTV) of a customer. To do this take the average transaction size and multiply this by the number of purchases the customer makes from you each year. Only then can you fully appreciate just how important existing customers are: As a rule of thumb you should seek to retain every customer for at least five years.
