We have all heard it before; it is cheaper to keep existing customers than to recruit new ones. But have we ever thought about the data behind it and why it matters so much? According to Outbound Engine, by increasing your current customer retention by 5%, your profits can jump from 25-95%! While the range varies, the statistics sound good and I sure wouldn’t argue with a 25% profit increase. So now that we have the knowledge to focus more on retaining our clients, let’s look at how we keep them while simultaneously increasing our sales.
An article published by Forbes suggested that businesses identify their VIP customers. Many employers offer an emailed receipt, a rewards program, ask for a phone number, etc. when checking out. You can use this information to see how much individual customers are spending, and then set your VIP parameters. For example, the customers who spend at least $200 DPT (Dollar per Transaction) will get a special SMS/MMS coupon to come back and shop. Or maybe you are a UPT (Units per Transaction) focused business; you could say the UPT must be at least 4 to receive an email about a special coupon. Some businesses offer free shipping on orders over $100; this is an example of VIP targeted marketing.
Whether you use SMS/ MMS text messaging marketing, e-blasts, printed mailers, or even geo-fencing in order to grab the attention of current clients around you, you can increase your UPT & DPT, boost your client retention and overall increase your profits. You are keeping your current clients and offering them perks, resulting in a long-term relationship with your customers. Forbes reported a survey and 48% of customers reported that they will be a repeat shopper if the business offers expertise, knowledge and credibility. Thus, VIP perks are not necessarily monetary driven. This is great news for smaller businesses who may not be able to offer deep discounts compared to chain retailers. Regardless of your business size, whether you are a local Mom & Pop shop, a chain store, or an individual franchise, keeping your current customers happy and showing appreciation for their purchases can result in higher profits, brand loyalty, and depending on your retention, profits jumping up to 95%.