Today a large number of businesses are deceived in to thinking that having a great product or service automatically translates to being a profitable business. This simply isn’t the case. You need a solid customer retention strategy to maintain your profitability throughout the highs and lows of your business events and sales cycles.
If your business employs solid customer retention strategies, you'll see higher customer satisfaction levels, which can translate into revenue growth for your business as happy customers become repeat customers.
With this in mind, here are four ways prioritising customer retention can boost your revenue and fuel your business success.
Related content: The customer retention playbook [free guide]
1. Replacing lost customers is costly
If you’re losing customers you’re losing money. The cost of replacing your lost customers with new ones is alarmingly high (taking into account acquisition costs in advertising, managing sales and time spent for conversion). Studies have found it costs five to seven times more to acquire a new customer than to retain one.1
Keeping your existing customers loyal is more cost efficient than constantly trying to acquire new customers. The stats say it all: a 5 per cent lift in customer retention can actually result in an increase in profit by as much as an astounding 95 per cent.2 So, another way of looking at this would be: if you ignore customer retention, you could lose out on a 95 per cent profit increase. Now, why would you want to do that?
2. Existing customers are more likely to buy from you again—and buy more
As a business, you are 60 to 70 per cent more likely to succeed in selling to an existing customer. Meanwhile, chances of selling to a new prospect is between 5 to 20 per cent.3
Moreover, your existing customers order more; their order values are 67 per cent higher, on average, than new customers.4 With stats like that, it's no surprise that retaining customers is so good for a business' bottom line and, in turn, it's overall value.
Moral of the story: take good care of your existing customers.
3. Retention goes hand-in-hand with customer centricty
With modern business' push for customer centricity and to become customer obsessed, prioritising customer retention, alongside customer experience and customer loyalty, is a vital part of this business strategy. Moreover, the results from this strategy speaks volumes. Research from Forrester has found that organisations that are customer-obsessed report 41% faster revenue growth, 49% faster profit growth, and 51% better customer retention than non-customer-obsessed organisations.
4. Retention builds word of mouth—and your brand
The longer a customer is with your business, the more rapport your business and brand builds with that customer. This not only grows that customer's trust and loyalty towards your brand, but also increases the likelihood of word of mouth referrals. Word of mouth is widely considered the most powerful form of marketing5 , and in , a 2024 study found word of mouth was the leading source of brand discovery in the US.
Want to retain and acquire more customers to boost revenue? Check out our customer retention guide below:
1. Kumar, S. "Customer Retention Versus Customer Acquisition", Forbes, www.forbes.com, 2022.
2. Reichheld, F. "Prescription for Cutting Costs", Bain & Co.
3. Hull, P. "Don't get lazy about your client relationships", Forbes. www.forbes.com, 2013.
4. Dublino, J. "Returning Customers Spend 67 Percent More Than New Customers – Keep Your Customers Coming Back With a Recurring Revenue Sales Model", Business.com, www.business.com, 2024.
5. Whitler, K. A. "Why Word Of Mouth Marketing Is The Most Important Social Media" Forbes.com. www.forbes.com. 2014.
