Why some small business can last longer? #Customer Retention Rate
Why some small business can last longer?
We all know that it’s not easy to start a business. There are countless failed businesses, however, we also witnessed the success of many small and medium-sized enterprises (SME) nowadays. How their business survives?
Many enterprises may be eager to expand by acquiring new customers but overlooked one of the quantitative factors which is Customer Retention Rate. Customer retention rate plays vital roles in supporting the small businesses. The higher the customer retention rate, the growth of your business is more sustainable.
What is Customer Retention Rate?
Customer Retention Rate is the percentage of existing customers who remain customers within a given period.
How much is the Customer Retention Rate of your business?
You can define the period of time, by quarterly or yearly. The result is percentage.
For example: You have total of 150 customers on 1st January 2022, and 160 customers on 31th December 2022, 15 more customers were added during this period.
Then customer retention rate would be: [(160-15)/150] x 100 = 96.67%
So what’s your Customer Retention Rate?
Why your business should focus on maintain high customer retention rate?
1. Loyal customers promote new profit and repeat profit
The higher the customer retention rate, it means there’s higher number in loyal customers towards your business. Therefore, you have many existing customers to support your business and as one of your marketing channels where they can refer friends or family in result of bring in more new customers to you. Other than that, it proves that they are satisfied with your product/service(s) so they could remain customers for such a long period of time. Due to the trust between your company and customers had been build, they are willing to spend premium price and buy repeatedly compared to a new customer.
2. Boost customer loyalty and bond a strong connection
Research shows the consumers prefer a responsiveness customer service, have an effective communication and easier to access when they are in need for something. They tend to be more inclined to those who serves quality customer support to them. Treat the customers like how you treat the ones you care, and you’ll gain more than what you expected.
The better the customer experience, the more they can't get away from you.
3. Increase business revenue and build long-term sales
A study reflected that increasing Customer Retention Rate by 5% can increase business revenue by 25-95%, where it lies on new profits from referrals and repeat profits by existing customers. Moreover, the success rate of selling to existing customers is higher than to a new customer due to the existing customers trust on your product/service(s).
4. Opportunity to digitalise the customer relationship management
It’s essential to have a full-packaged digital marketing tools which enable to stay connected to customers anywhere anytime by allowing the easy tracking of all communications, automate marketing process, and customer purchase rate statistics.
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All enterprises should learn to be familiar in managing the relationship between the company and customers. The customers who keeps coming back to you indicates that your business has demand on the market and they judge you had an edge over the other competitors, thus forming a strong connection between each company and their customers makes it the rise of SMEs.
20 Oct 2022