Why Customer Retention is Important to a Business

September 2, 2019
Why Customer Retention is Important to a Business

The ability to make your customers satisfied and pleased with your services can not be overestimated. After all, a business depends on its customers, doing a good job can only make your customers more loyal to your brand. This is the essence of why customers decide to stick to a service or leave to find a new one.

It doesn’t matter what kind of business you run. Whether an online shop, a educational service or a coffee shop. Every business needs to retain a faithful group of customers that will be known as regulars in a place. This tells the public that your services are good enough to meet their requirements. The importance of customer retention will be obvious for some and obscure for others. Regardless below you will find why customer retention is important to a business.

Before we get down to specifics let’s review the fundamental term here, customer retention.

What is customer retention?

Customer retention is a definition used in marketing. It refers to the engaging of existing customers to continue buying products or getting services from you or your brand. It should, by no means, be confused with customer acquisition. It refers to your already existing base line of customers.

Using different tactics for customer retention you can form long lasting relationships with your customers. Making them a steady source of income for your business. This does have a few advantages other than money. Usually loyal customer will recommend your services to others and generate a sort of free publicity.

Once someone buys a product or a service from you, they become a customer. What you should do is try to get to know how satisfied that person is with your business. If they’re satisfied then likely they will come back and over time you’ll start reaping the benefits of a loyal customer. If in the other hand they’re not that satisfied then you should implement some changes in favor of what the majority of your customers would like.

Why customer retention is important to a business?

Here we are presenting in detail a few reasons why customer retention is important to a business. There are lots of other advantages from having loyal customers that are engaged with your brand. However here we are presenting the most important ones.

You can save money on marketing.

If you’ve ever heard that it’s easier to keep a customer than to gain a new one, this is true here. Acquiring new customers requires investment on marketing campaigns and advertising, while you still have to invest in your product. Keeping an already existing customer only requires investing in the product or service you provide. It’s simply less expensive and takes less effort to retain a customer.

In addition to this people like to feel familiar with the brands they use. This is all the better for you since your customers are likely to keep using your services so long as they’re satisfied. This also means that you need to spend less on customer support.

Repeated purchases from loyal customers means a steady income.

Loyal customers will keep coming to your business and you can rely on them to earn a steady income every month. As if this wasn’t good enough, people that are considered loyal customers of a business are 3 to 10 times more likely to spend money on your business than a anyone else. Also, since they trust your brand, they’re about 50% more likely to buy new products.

When you have a god customer retention rate, your customers will start believing that your brand is way better than your competition. This will give you an edge against your competition and can generate a good source of constant income.

Free natural advertising.

People that like and trust in your service are more likely to recommend your business to friends and family members. Having word-of-mouth advertising is one of the best sources of customers for your business. It’s free and you get customers based on other people recommendation and taste. If you’re providing a good service then this new customers in turn can become in loyal customers and generate even more income.

In the United States, 49% of consumers report that their friends and family members are their top source of brand awareness. In addition to this, people that come recommended from a friend are about 4 times more likely to purchase your services. This kind of advertising works wonders for a business and it can be 5 times more effective than any other kind of publicity.

This also plays to the point that keeping a customer is less expensive than finding new ones. People that are referenced to your business by friends or family members are likely to keep coming back to your business. This is also based in a social bias that we as a society often take advantage of.

Retained customers can, and often will, provide valuable feedback.

Regular customers that are engaged with your business and brand will be able to quickly and accurately pin point good and bad changes in the business or its products. These customers are the main source of good feedback that can help your business be even better. You can use them for AB testing or simply take their opinions on new changes.

They can also provide insight into what the public expects from your business. Nearly all businesses depend on feedback from the public to stay afloat. Taking your feedback from people that actually know your business is beneficial to your brand in the short and long term.

Previous customers are more likely to pay premium prices.

Customer retention can also be a good measure of the trust your public has on your business. People that trust your brand more than in others will relate this to a better quality product. As we all know good quality is associated with higher prices.

Often times your business will have to put products on display that are a little more expensive than that of your competition. Your loyal customers will have little issue in proffering your products since they trust your business and its good quality. This is a good source of income in products that otherwise might me stuck on the shelves for a long time. Customer retention is very important in this aspect.


Loyal customers are customers that you can always count on and rely to partially sustain your business. As you have seen there are many advantages of keeping customers coming back to your business. Companies and brands that fail to maintain even a minimum of customer retention are the ones that fail in the long run. Luckily for your business now you know why customer retention is important to a business.

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