Social media platforms can help businesses attract new customers, connect with current customers, build brand awareness, and push new products. However, many brands don’t understand social media’s vital role in customer retention.
A well-thought-out social media marketing strategy helps increase customer retention by building trusting, loyal relationships with consumers. Loyal customers provide invaluable repeat business, help create positive brand perception, and tend to spend more money per visit.
We’ll share expert advice on using social media for customer retention and explain the importance of a customer retention strategy.
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Importance of a customer retention strategy
A customer retention strategy is essential to ensure your business’s long-term growth and success. The benefits of an effective customer retention strategy include the following:
- A customer retention strategy reduces risk. Retaining customers insulates your business from competition and economic downturns. A happy customer base means you can rely on a steady revenue stream. If you find yourself squeezed by higher supplier prices or your competition lowers their prices, you’ll be less affected than if your customers had a weaker connection with you.
- A customer retention strategy fosters organic growth. Loyal customers will repeatedly patronize your business while you continue attracting new clients. In addition, happy customers are much more likely to write positive reviews and testimonials, praise you on social media, participate in case studies, and refer others to you. The extra business you get from these brand ambassadors costs you little or nothing.
- A customer retention strategy increases profitability. According to Invesp data, gaining new customers costs five times more than keeping a current customer, and existing customers spend 67 percent more than new customers. Additionally, the probability of selling to a new prospect is between 5 percent and 20 percent, but rises to 60 percent to 70 percent for an existing customer. Satisfied existing customers trust you and feel comfortable doing business with you. However, your business is an unknown quantity for a new customer who may worry about product quality, usefulness, pricing or customer service. The more existing satisfied customers you have, the more money you’ll make.
- A customer retention strategy increases CLV. Customer lifetime value (CLV) is a crucial KPI to track. CLV is the sum of the money an average customer spends with you. When a customer only does business with you for a short time, there’s less opportunity for them to spend more. Retaining that customer increases CLV and makes each customer more valuable to the company.
Jennifer Dublino is a prolific researcher, writer, and editor, specializing in topical, engaging, and informative content. She has written numerous e-books, slideshows, websites, landing pages, sales pages, email campaigns, blog posts, press releases and thought leadership articles. Topics include consumer financial services, home buying and finance, general business topics, health and wellness, neuroscience and neuromarketing, and B2B industrial products.