Why bother keeping an eye on your current customers if there’s a whole world of potential new customers ripe for the picking, right?
Unfortunately for everyone, that seems to be the mentality of quite a few businesses, and it couldn’t be more wrong. While there may be a short-term gain in acquiring new customers, a model that primarily focuses on converting new versus keeping old customers will lose in the long run.
Understanding the importance of customer retention is the first step in building customer brand loyalty, which is to say, establishing a group of people who regularly choose your brand over competitors regardless of price and convenience. A strong marketing strategy should never just be about attracting fresh faces — it needs to also keep customers engaged and satisfied for the long haul.
Having this loyal base not only stands to improve your bottom line — after all, it costs 5x-6x more to acquire new customers than it does to retain existing ones — it also allows you to fearlessly experiment with new offerings, get valuable customer feedback and benefit from a number of other advantages that fuel long-term success.
Keep reading to learn the top 4 reasons why you shouldn’t ignore the importance of customer retention strategies.
1. Retention Efforts Today Impact Revenue Tomorrow
Did you know that a whopping 65% of retail business comes from loyal customers, who spend 67% more on an average purchase than new customers do?
The numbers are similar when you look at ecommerce: While repeat customers make up only 15% of online shoppers, they account for one-third of all online shopping revenue, spending 3x more than one-time shoppers on average.
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We can also consider the flip side: 64% of consumers have become “serial switchers” who, no matter how much they enjoy the product, are more than willing to switch brands because of poor customer service. This lack of loyalty, which stems from bad experiences and weak retention efforts, is costing businesses throughout the world up to $3.7 trillion a year.
Simply put, customer retention is a more valuable pursuit than new customer acquisition. Not only do retention efforts help you maintain a steady stream of revenue, but it also means lower acquisition costs. It’s more cost-effective to focus on repeat business than to constantly chase new customers.
The key is to build strong relationships over an extended period of time rather than only rely on one-time transactions. It doesn’t have to be complicated. Getting your customers to stay loyal to you is about continually adding value to their lives and reminding them of it. It’s about valuing them as unique individuals through personalized experiences and developing a solid customer relationship.
Watch the video above to see how Vodafone sent a personalized thank-you to their reward members. Sprinkled throughout are reminders of each customer’s experience. Plus there’s a special offer. And it’s all driven by customer data, so it’s unique to that individual.
Fun Fact: These kinds of Personalized Videos have helped our clients in the telecommunications industry reduce customer churn by up to 37%!
2. Loyal Customers Reach More Customers
People are strongly influenced by referrals from friends and family. To put that in numbers:
- 81% of consumers say their purchase decisions are influenced by feedback from acquaintances.
- 30% say they’re most likely to respond to brand offers when they’ve been shared directly by a personal connection.
It’s worth noting that millennials specifically are very vocal about their brand opinions — and very influenced by the real experiences of a company’s customer base:
- 60% of millennials write reviews multiple times per month, motivated both by positive experiences and negative experiences
- 86% are less likely to buy a product if there are no reviews available for it.
- 71% of millennial shoppers are less likely to return a product if they read ratings and reviews before purchasing.
But millennials aren’t the only segment that cares. One survey found that brand reputation is the most important factor impacting relationships with brands across generations, including Gen Z, millennials, Gen X and boomers. In other words, no matter who your target audience is, your existing customers hold the power to shape how your brand is perceived.
Word-of-mouth brand endorsements carry a lot of weight among consumers, so let your customers be your own grassroots marketers. Their testimonials and honest opinions about your service, products and brand image carry more sway with fellow consumers than what you have to say about yourself.
A positive experience shared by a satisfied customer can often do more for your brand than even the most well-funded ad campaign. By focusing on optimizing the experience of current customers, you can guarantee that the reviews they share will attract, instead of repel, new business. This can have a big impact on revenue over the long term — the customer lifetime value of newly referred customers is 16% to 25% higher than those who find you on their own.
For tips about increasing customer satisfaction, check out 5 surprising ways video marketing can improve customer retention.
Strategy Highlight: Ready-to-Share Content
With your most loyal customers ready to share their experiences online, help them skip a step by creating shareable content that’s ready for them to post. This gives you some control over how your brand will be presented to others while encouraging customers to be brand ambassadors.
The easier you make it for your customers to share, the more likely they’ll do it — especially if there’s an incentive involved. Small rewards like discounts, free benefits or exclusive access can motivate people to spread the word even faster.
Remember that this content should be personalized for your customers. It’s social media, after all. People like to share content that relates to themselves, whether it’s their most-played songs, game achievements or a recap of their year with a brand.
Adding this personal touch not only increases the chances of them sharing but it also makes the content more interesting for their audience. Here’s an example of a Personalized Video from EVE Online that customers loved and shared on social media.
Imagine you’re an EVE Online player and the video above is personalized with your avatar, photo, amazing stats and experiences. Wouldn’t you want to share it with the world?
As your customers share the content you create, you get exposure to their networks and, ideally, more referrals! To make referrals easier, you can even create landing pages for potential new customers as EVE Online did for their campaign. In fact, their efforts led to a 66% uplift in visits to the EVE Online recruitment page, which was one of the campaign’s top goals.
Quick tip: Make sure you know your numbers. Figure out just how well your current retention efforts are doing by reading our guide on how to calculate your customer retention rate.
3. Loyal Customers Are More Profitable
Loyalty generates quantifiable value for businesses. Devoted customers, such as those enrolled in paid customer loyalty programs like Amazon Prime, spend more money and more often, as well as boost brand awareness.
- 82% of paid loyalty program members buy from the brand more frequently.
- 78% of paid loyalty program members spend more on the brand.
- 61% of paid loyalty program members talk about the brand more often and 51% engage with the brand beyond purchasing.
More than that, customers who aren’t engaged with a brand tend to make purchase decisions based on price and convenience. This means that when costs rise with one brand — a sometimes necessary business decision — disengaged customers will leave and seek a better deal elsewhere. This contributes to a higher customer churn rate, seriously impacting revenue.
Loyal customers, on the other hand, are much more likely to stay. When someone is dedicated to a brand, it makes them resilient to changes that might otherwise drive them away.
Netflix, which enjoys a large segment of dedicated subscribers, leaned into this when they laid out plans for a price increase a few years ago. They believed that because people were used to the service for so long, there was less need to worry about them leaving as a backlash due to the price hike.
The same is true for customers loyal to any type of business. As you implement price and policy shifts, your most engaged customers are the ones who will trust you enough to stick around and ride out the changes.
Of course, winning loyalty doesn’t just happen. Like any relationship, it thrives with meaningful communication. Regular interactions — whether through thank-yous, updates or offers — help maintain that trust and familiarity.
Think about it. These customers are the ones who are most interested in your actions and expect to be kept in the loop. Why wouldn’t you stay in touch 1:1 with every single one of them?
For instance, rather than sending a generic email update about how the Swissôtel Circle loyalty program would become a new membership under Le Club AccorHotels, the program sent a personalized message to each of its members, clearly explaining the change and outlining the value it would continue to provide for its most loyal customers.
Powered by our Next Generation Video Platform, this Personalized Video is a prime example of how brands can go above and beyond for their clients. By communicating personally but still through a digital medium, you add a human touch that improves customer loyalty and a stronger brand connection.
Strategy Highlight: Champion Customer Success
Loyal customers don’t just happen randomly — they’re made. And that starts way before they ever consider sticking around for the long term. If you want people to keep coming back and making repeat purchases, you’ve got to nail that first experience with your brand.
In short, you’ve got to set them up for success. Don’t just solve problems. Make sure they don’t come up in the first place. For instance, a personalized bill explainer, like the one by Spectrum below, proactively clears up any potential confusion about a new customer’s first bill.
Or how about a dynamic customer onboarding video that walks customers through the ins and outs of your product? When customers feel supported and see the value of your brand early on, they’re more likely to come back for more. Plus, your customer support team won’t get bogged down with preventable questions, allowing them more bandwidth to deal with complex issues.
This personalized onboarding video by American Express is also interactive, giving viewers control over which topics they want to learn more about.
Bottom line? If you want to boost retention, give them a positive experience from day one. Nail that first touchpoint in the customer journey and you’ll be setting yourself up for long-term success right alongside them.
Pro tip: Intimidated by video? Our AI video creator, Lucas, takes the stress out of video production by handling everything from the script to the animation to the CTAs.
4. Loyal Customers Help Define the Brand
Finally, let’s not forget the most important part of loyalty. Who you are!
A lot of the fun in running a brand comes from innovating your product and service lineup. Glitzy marketing and branding campaigns aside, your product or service is why your loyal customers care about you in the first place. But it’s definitely not fun to introduce updates that no one engages with.
Because repeat customers enjoy doing business with you and have bought into your brand philosophy as well as your products, loyal customers will look for ways to grow and deepen your relationship.
These are the people who are more likely to peruse your brand’s other offerings and expand their purchases into other products or services. What’s more, they’re the ones who are actually excited about new products and will share their excitement with others, bringing us back to the whole word-of-mouth point.
With launching something new, connect with your excited and loyal customers by addressing them one-on-one. Add elements of personalization to your messaging in order to draw them in and signal that you see and appreciate them as an engaged customer.
Better yet, make it easy for them to share the news with others. The possibilities with this are endless. Design a fun promotional filter for them to use on social media. Send a referral offer that they can pass along to others. Or allow them to create and send their own brand videos, adding names of their friends with a simple form.
You can try it yourself by clicking the lightning bolt in the video below, part of a thank-you campaign for essential workers during the pandemic.
Don’t forget, too, that your loyal customers can help shape your brand by sharing their opinions. Research into customer needs and customer expectations is essential for continued growth and, unlike the average customer, dedicated fans are the ones who care enough to offer feedback that can guide further improvements and innovations.
Ultimately, when you actively listen and adapt to what your loyal base is saying, you build a reputation for being a brand that cares about and delivers a better experience each time.
The Bottom Line for Customer Retention
Don’t underestimate the importance of customer retention. Focusing on retention is the first step in building a community of people who care about your brand and your products.
Instead of throwing all your resources behind building a larger pool of customers, create an environment where people feel good about the purchases they make. Make your current customers feel valued. They’ll then make larger, more frequent purchases and remain loyal through changes.
Next Generation Video can help. Data-driven video that’s personalized and interactive speaks directly to your customers — whether in the form of a tailored thank-you message, a dynamic offer or an engaging explainer video that answers their questions before they even ask.
Better yet, our Next Generation Video Platform makes creating these dynamic videos scalable and seamless. You can wow millions of customers with videos made just for them, boosting customer engagement, deepening relationships and improving retention.
Want to see it in action? Reach out for a free demo and let us show you how Next Gen Video can help you keep customers coming back.
