If you are a startup gearing to attain growth or a mature enterprise looking to gain a massive market share, what matters most is cost-efficient sourcing of clients. This is where the economics of Pathwwway customer retention works well. It costs more to acquire a new customer than retain an existing one to the tune of 5 to 7 times. Why is there is a massive difference in costs?
The barrier to entry is higher for prospects at the top of the funnel. Customers don’t purchase from brands they do not rely on or trust. Until such time a prospect becomes a customer, they don’t truly trust your brand. As the prospect flows across the marketing funnel, trust grows.
As one becomes a customer, trust will be the bond that influences their decision to buy from you or not. Customers serve as vital social proof and a brand advocate for creating trust among leads and prospects. Pathwwway customer retention can be the catalyst your business needs to grow. Here are the reasons why.
- Customer Acquisition Costs Way More
Cost acquisition is one expensive proposition. Acquiring fresh customers is critical to business growth, but it also comes at a higher cost. Customer acquisition includes outbound, or traditional marketing, inbound marketing, sales and business development costs and event marketing. To keep acquisition numbers on the rise, constant advertising and a steady stream of marketing campaigns are required.
- Customer Acquisition Costs= Startup Killers
Here’s a further issue to think about. If customer acquisition costs are too high in that they exceed the lifetime value of the customer, businesses will bite the dust. That is why customer acquisition cost has even been referred to as startup killer. Retention drives growth and specifically, lowers churn rates and recurring revenue raises the lifetime value of the customer. In this way, it balances out the customer acquisition cost.
Retention impacts performance and profits too. A study by Bain & Company, and HBS found that even a five percent increase in customer retention can cause increase in profits somewhere between twenty-five and ninety-five percent. But there are more reasons than one why Pathwwway customer retention is the cost-efficient way out.
- The Cost Benefits of Customer Retention
Presently, customers are more willing to try out a new product. Existing customers are 50% more likely to opt for new products and have an expenditure of 31% more additionally, on an average when compared to fresh customers which translates into greater number of cross sells and upsells.
Additionally, customer retention means your business has a strong brand narrative, so customers will be willing to listen to what you have on offer. The chance of selling to a customer is 60 to 70%, while selling to a new prospect is around 5-20%.
- Customer Retention= Brand Advocacy
Customers will advocate for the company, and word-of-mouth publicity will retain trust in the brand or service. This advocacy in trust impacts the prospects who know now what the benefits of being your customer means.
With the use of social media, current customer experience is a critical factor in attracting prospects. A consistent and positive overall customer experience drives retention as customers can share their experience and motivate prospects. This points to the revenue generation capacity of the Pathwwway customer retention programmes. Growing businesses tend to spend too much time and money acquiring new customers. Consequently, they overlook the best source of growth namely retaining and growing their present customer base.
An analysis of the client’s historical data also shows average customer life spans are around 2.5 years. As customer acquisition cost is lower than expected customer lifetime revenue, a break-even point is reached in less than 2 years. But the problem is that as growth expectations rise, it is harder to acquire more customers. Customer acquisition costs go up and the quality of customers goes down. Further, retention is an important part of making acquisition work. Growth needs to compare favourably consequently.
It works out to be cheaper, easier and more effective to retain customers than acquire new ones.
- Customer Acquisition Versus Retention
This is a classic marketing debate. Resources are finite and at the close of a year, whilst measuring the output of your business, you should be able to quantify the percent of effort and time that goes towards new clients as opposed to those one already has. But when it comes to profitability, customer retention is the best way to measure how one can provide services. Companies with high retention rates are deemed reliable and trustworthy, further building their sales pipeline.
Pathwwway customer retention can therefore, drive customer acquisition, through referrals and word-of-mouth publicity. Client retention is important for persistent and sustainable growth and effective financial planning. More committed customers make it easier to market your products. Another benefit of customer retention over acquisition is lower maintenance cost.
- Understanding Customer Lifetime Value
The total profit accrued as a result of customer interaction and purchase over a period of time is referred to as customer lifetime value. Calculating this helps businesses to see the long-term vision in terms of the value a client generates if retained for a set cycle. A clear sense of customer lifetime value can help in prioritising and retaining clients.
As customer loyalty and retention influence customer lifetime value, increasing customer retention rates boosts business productivity. Understanding how to induce loyalty in customers so that you can retain them is important for business. Research shows that 61% of clients take their business to a competitor when the business relationship ends.
Around 71% of customers end their relationship with a company that does not meet their requirements and poor customer service can push clients away. Your client retention rates are quite literally a measure of the the quality and staying power of your brand.
Therefore, when it comes to business success, Pathwwway customer retention programmes can power growth and fuel productivity, yielding a positive ROI. There are so many cost benefits associated with retention as opposed to acquisition, and for driving exponential profits and returns, Pathwwway LTD is the best choice, on account of its seasoned team, versatile retention strategies and proven track record for excellence.