Have you ever experienced the frustration of being ineligible for a discount or special offer with a company because you’re not a new customer? Or threatened to take your business elsewhere, only to find the company you’re with makes no effort to keep you?
Sometimes, it can feel like your satisfaction as an existing customer ranks below the lure of expanding their customer base.
With research showing that keeping your existing customers happy boosts your bottom line both in the short and in the long-term, and can actually help your business to grow, why aren’t businesses paying it their dues?
Well, it seems they might think they are… According to a study by Harvard Business School, while just 8% of customers believe they get a superior service in return for their loyalty, some 80% of companies claim to deliver superior customer service.
Something has gone badly wrong there, hasn’t it!?
The importance of customer satisfaction
So, just why is it so important to keep your existing customers happy?
- Existing customers are easier to sell to
Your existing customers know you; they know you can deliver what they need. Unless you give them a reason to look elsewhere, they will keep coming back for more. Research by Marketing Metrics puts the success rate for selling to an existing customer somewhere between 60% and 70%, compared to between 5% and 20% for a new prospect.
- Existing customers buy more… and cost you less
Existing customers provide more value. As a brand they trust, you’ll find it easier to cross-sell and up-sell to your existing customers. In fact, research by management consultancy Bain & Company noted just a 5% increase in customer retention could result in more than 25% more profit. Also, time is money, and you will also have to spend less time and effort selling to an existing customer as there should be no need to convince them that you’re the business to go with. As time goes by, you’ll also get a better understanding of their business operations and priorities, reducing the cost of providing your service to them.
- Existing customers can help you attract new ones
Happy customers may agree to provide you with case studies, leave positive reviews, and recommend you to other people. Recommendations and referrals from existing customers should form part of your strategy for attracting new business, as evidence shows these leads have far more potential than those that come to you cold or through other marketing channels. One study publicised by The Drum found referrals resulted on average in up to a 30% increase in the number of new customers attracted to a company, doubled the lifetime value of the referred customer, and increased the amount of their first order by between 10% and 25%. Not too shabby!
- They will leave you if you don’t
Don’t be fooled into thinking a good product will save you from losing custom; today’s customers will look elsewhere based entirely on their experience of doing business with you. In research by Microsoft, more than half (58%) of respondents listed customer service as an important factor in their choice of loyalty to a brand, and some 61% said they would stop buying from a particular business if they had a bad customer service experience. As new businesses enter the marketplace, customers’ options are increasing, and with this their power to vote with their feet. Further research by Superoffice found 68% of customers said they would look elsewhere if they felt a company no longer cared about them, and 14% would move on if they were unhappy with the service they received.
Customer satisfaction: the forgotten growth strategy?
Attracting new business is important, but so is keeping your existing customers happy. Customer satisfaction starts from the very first interaction you have with prospects during the sales cycle. Make sure your customer interactions are the best they can be with HubSpot Service Hub.