Retention Enhances Acquisition Value
December 28, 2021

Back To Article

Why Retention is so important growth

Every customer will churn eventually. Hence, new customers are necessary for business growth and continuity. Sustainable development is about both customer acquisition and customer retention. Building a sustainable strategy for retaining the customers will generate higher dividends – higher Lifetime Value (LTV).

Customer retention strategies aim to hold on to as many customers for as long as possible. This boosts revenue and loyalty, referral, advocacy, and employee satisfaction. Businesses will reduce churn risks by planning a better retention strategy. Keeping the right customers longer increases the LTV and enhances the business value. Hence, companies can focus on other strategic activities, including customer acquisition. In the HBR publication “The Value of Keeping the Right Customers,” Amy Gallo explains that businesses remain valuable by retaining the right customers.

Today, marketers share equal attention to customer retention and customer acquisition initiatives. With effective customer retention strategies, marketers can target to achieve multiple objectives. Some benefits of retention strategies are:

  • buy same products and services
  • buy various products and services
  • costs less to serve due to familiarity and awareness
  • costs less to retain than to acquire a new customer
  • advocate the brand and bring awareness to the market
  • function as referral machine
  • provide market feedback and intelligence easily
  • keep competitors away
  • experiment and trial new products and services
  • stay longer and get higher LTV and ROI

Overall, customer retention boosts an organization’s overall performance significantly, including strengthening acquisition initiatives. It is important to note that focusing on long-term customer value makes retention-related decisions, investments, and strategies easier.

Retention takes center stage

Managing Customer Value is one of the most critical organizational priorities. While it takes significant effort and time to build customer value, it can be destroyed quickly due to a lack of respect for customer needs and expectations. Even short-term organizational gains and business objectives could hinder long-term customer value creation. It is essential that the organizations build a customer-centric culture and constantly remind the long-term value of customers and their impact at all levels of the organization. This ensures that organization can preserve customer value over an extended period.

The following four strategies will help achieve consistent and sustained customer value year after year, among many other initiatives.

  • Design, develop and deploy robust customer-value management processes and tools.
  • Embrace, enhance and enforce design thinking with loyalty and retention management processes.
  • Explore and innovate customer value focusing on needs, aspirations, and ambitions
  • Establish a leadership-driven loyalty and retention culture across the organization

Customer retention is a marketing priority

Marketing departments focus on customer acquisition. This is not a surprise since the core function of marketing is to support sales and help them do the funnel-to-revenue conversion. As marketers’ time and attention focus on acquisition, retention remains low on priority and access to a limited budget. This indirectly impacts marketing’s ability to invest and nurture existing customers and protect them from switching to the competition. This impacts organizations’ retention success and future revenue sustainability.

A good customer acquisition strategy should be augmented by an effective customer retention strategy to bolster long-term growth. Thus, marketing can have a concrete stake in the long-term development and deployment of an organization’s retention strategy.

Customer retention is not a single event at a specific time, such as contract renewal or the next purchase. It is an ongoing process that starts at the first purchase or by becoming a first-time customer. It encompasses the customer’s journey and experience between the first and subsequent purchase engagements. While retention is directly measured by renewals or repurchases, customer retention is also highly influenced by customer interaction over a period.

Customer retention strategies differ across organizations. However, some core concepts applied during the planning and development stages remain the same.

  • Establish a structured customer interactions framework. By talking to customers, organizations capture essential insights about the customer experience, feedbacks, and competition while building stronger relationships.
  • Simplify processes to make them as frictionless as possible. The easier it is for customers to reach, communicate, and give feedback to the organization, the longer the relationship will be.
  • Serve with a cross-functional customer advocacy team to drive higher customer satisfaction, analyze customer feedback, identify opportunities for improvement, and optimize processes.
  • Nurturing existing customers to learn and improve their ongoing experience and continue measuring and refining processes.

A robust retention strategy will incorporate and integrate the above concepts into a 360° operational framework. Organizations that focus on building and maintaining comprehensive retention strategies into their business operations will be more likely to succeed and grow.

Retention is a necessity

In today’s competitive environment, customer retention is as essential as acquisitions, and in some situations, it could be even more significant. It costs significantly high to acquire a new customer than to retain an existing one. Hence, every customer we have today is valuable, and organizations should ensure they stay longer and bring more direct or indirect value to the already established relationships. Customer Loyalty programs offer the platform and tools to help achieve this.

Customer retention remains an essential priority for top management. To be successful, retention strategies need to drive across the organization. To make the customer experience compelling and valuable, the customer journey at each interaction point must be seamless. This will help achieve long-term business goals. Naturally, organizations with integrated retention strategies are more stable, forward-looking, and deliver long-term business sustainability and growth.

Address

Address

3 Irving Road #11-01,
Tai Seng Centre, Singapore 369522
Get In Touch

Get In Touch

Tel: +65 6972 6400
Email: Info@prmms.com
Click here to follow us on LinkedIn
Office Hours

Office Hours

Mondays – Fridays 9.00 am – 6.00 pm
Closed on Saturdays, Sundays and Public Holidays
© 2022 PRM Marketing Services Pte Ltd. All Rights Reserved. l Data Protection and Privacy Notice
© 2022 PRM Marketing Services Pte Ltd. All Rights Reserved.

Data Protection and Privacy Notice