Whether we are talking about retail or hospitality, customer retention should be the priority of any business.
Those who give priority to retaining existing customers will see their costs decrease, while revenue increases. Research shows that acquiring new customers costs five times more than keeping existing customers. In fact, you have a much higher chance of success selling to an existing customer (60-70%) compared to a new customer (20%).
Expanding your customer base has some benefits, but retaining customers increases revenue per head while cutting costs at the same time. In fact, increasing customer retention by 5% increases revenue by 25-95%. The best example of a company retaining existing customers is Netflix, which generates billions of dollars in revenue by retaining their customers.
Customer retention is more feasible for smaller stores. It’s not possible for smaller businesses to compete with the branding power and larger resource base of larger firms. Fortunately, they do not have to. By reaching out to a smaller set of customers and giving them a reason to return to their store, businesses can ensure repeat purchases that drive up revenue and lower costs.
Customers with a pleasant experience can be easily lured back, driven by positive impressions of the last time they visited your store. Furthermore, when you retain existing customers, they are much more likely to recommend you to people they know through word-of-mouth, bringing a steady flow of new customers, without having to make any significant investments in marketing. Word-of-mouth is incredibly popular – studies indicate that 92% of consumers trust recommendations from their friends.
What is particularly encouraging about a “retaining customers strategy” is the resources needed to invest in it. You don’t need a splashy marketing campaign, all you need are channels to communicate with customers. The most effective channels for retaining old customers are email and SMS because they are the most popular forms of communication.
SMS marketing is one of the best ways to improve customer retention. Studies reveal that over 95-98% of text messages are read, leading to a 45% response rate. Texting is also one of the preferred methods of communication among millennials (along with social media), making SMS a useful marketing tactic for anyone looking to draw in millennial customers. SMS receives high engagement because communication happens quickly, and it does not disrupt people’s routines – for the most part.
SMS marketing is also very flexible. It can be used to achieve several marketing goals like customer support, cross-selling, or keeping in touch with customers. SMS marketing is also relatively simple to accomplish. If you have invested in an EPOS system, you can conduct an SMS campaign within that system. You can reach out to all your customers informing them about the latest products or sending a timed personalised message. Having a consistent plan to engage your customers via SMS is incredibly helpful.
Mobile Payments are another great way of retaining customers which can be integrated into an EPOS system. Find out why you should enable this option here.
A well-timed personal email that speaks to their needs is one of the best ways to retain a customer. Sending an email is all well and good, but if it’s not relevant to your customer’s needs, the email will not be engaging. Emails with personalised product recommendations will be more engaging and great for cross-selling. Research reveals that e-commerce websites make over 40% of their revenue from 8% of their customers. So it makes sense to invest in personalised product recommendations via email.
Some EPOS systems feature a system to conduct email campaigns – you can even use the data on the system to find out which customers bought from you and use that information to compile personalised emails.
Emails can even be used to engage customers who have lost interest in the brand by using EPOS data to find customers who have not opened your previous emails. You can then create emails specifically for those who have not engaged with your brand to reignite their interest. You can also include a promo or discount code in the emails to entice customers.
Customer retention is something every small business should be aiming for because it increases revenue while lowering costs. With an emphasis on retaining customers, businesses can invest in reasonable strategies like SMS and email marketing that are particularly manageable if you have already invested in an EPOS system.
Want to learn more about engaging customers? Visit the eposEX blog for more details.