Here’s a question every small business owner should be asking on a regular basis:
How sticky are my customers?
In other words, how well are your customers sticking with you? And do you know why they “stick”—or leave?
Luckily, there are tools to help frame the question for your own business. One is the popular customer service blog, Customers That Stick, whose owner, Adam Toporek, posted the following infographic, When Customers Stick: Customer Retention by the Numbers. It helps visualize where customers may be in the retention process—and some of the reasons behind it.
The infographic demonstrates how, using statistics, Toporek breaks down customer retention into three important aspects:
Toporek says that truly understanding customer retention means understanding what motivates customer loyalty and customers’ decisions to leave a particular business. Then organizations need to buy in to those, as well as to the economic case behind retention. For small business owners, this means personally embracing these concepts and facts and committing to incorporating retention principles into the core values of your business. And not only that, but also making sure your employees embrace—and practice—retention principles. Using tools like this infographic can help that process, too.
In his post, Toporek explains that he used mostly primary sources for the statistics and some secondary sources, in order to be very specific. And for anyone looking for ways to hold on to customers—that includes everyone running a business, from the smallest to the largest—those statistics are striking. Some of these things we know intuitively or from experience, but seeing the data visualized really drives home the points!
For example, we know that today’s customers are demanding (as they should be) and expect to have good experiences with businesses and to be appreciated for their business. They’re clearly not sticking around when that doesn’t happen: A whopping 82 percent of U.S. consumers will stop doing business after a poor experience and may even back out of a transaction if they feel they’re being treated badly. And a “poor experience” can be everything from rude or clueless staff to lack of problem resolution.
But—customers will stay with you when they get friendly, knowledgeable service and can easily find what they need. It’s interesting that good brand reputations can also cause them to stay. Another interesting stat: Even after they’ve had a negative experience, there are ways to get them to “stick.” In fact, ninety-two percent said they would return if they received an apology or correction from someone in authority; a discount; or proof that customer service had been improved. The statistics also indicate that you can convert negative comments to positive comments and/or happy customers simply by responding. An overwhelming majority of consumers say they’re even willing to pay more for superior customer service from businesses!
Something else we know intuitively: Acquiring new customers is more expensive than retaining current ones. Toporek’s stats confirm (and quantify) this with findings from three different studies that say this difference can be anywhere from 5x to 10x. And it’s16x more expensive to bring new customers to the level of profitability of ones you lost! If you’re still not convinced, additional stats show how increasing your retention rates equates to more profit and/or lower expenses—and how repeat customers increase their spends and continue to grow in value to your business.
It’s easy for businesses to fall into the habit of emphasizing new customer acquisition at the expense of retaining current ones. So solid customer service practices that lead directly to retention begin with you, the business owner, but obviously involve everyone in the business. Sharing this infographic with your employees can help them see how their actions influence customers’ decisions to keep coming back—and ultimately, the profitability of the business.