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Published on Friday, May 1, 2020

6 Need-to-Know Customer Retention Stats for Small Businesses

Holding on to your customers is important in the best of times, but especially now. The coronavirus pandemic has brought on serious disruptions for many small businesses, with organizations across the country having to make rapid, unprecedented changes in the ways they operate in order to continue serving their customers.

In a Goldman Sachs survey of more than 1,500 small business owners, 96% say that they have been impacted by Covid-19, with only 13% of them expressing confidence in their contingency plans. It might be discouraging, but it also highlights the necessity of customer retention and the importance of nurturing current client relationships in order to weather the storm.

If you’re running a small business, the customer retention efforts that you undertake right now could make all of the difference in your long term viability. Because even with your doors closed there are still things that you can do to help retain your current customers and put yourself on more solid ground both during and after the pandemic.

Below, we’ve gathered some of the most essential customer retention statistics for small businesses to help you put your eyes on the prize and focus your efforts on activities that will keep your business moving forward.

  1. Repeat customers spend 67% more than new customers (BIA/Kelsey)

There’s a lot more profit potential in repeat customers than new ones. Customers want to spend their money with businesses that they trust, and since there’s no off-set from acquisition costs, you get more out of every dollar spent.

  1. For some industries, a 5% increase in customer retention can lead to a 25% increase in profit (Bain & Company)

The longer a customer stays with a company, the more profit they tend to generate. That’s because repeat customers buy more over time, and are often willing to spend more too if it means staying with a company they know and trust.

  1. The probability of selling to an existing customer is 60-70%, versus just 5-20% for new customers (Marketing Metrics)

You might think that the best way to increase business is to focus on growing your customer base, but the real profit is in selling to your current customers. That’s because in addition to spending more, repeat customers are also more likely to buy in the first place.

  1. 72% of U.S. adults belong to at least one loyalty program (Oracle)

Consumers appreciate loyalty programs, with many of them directly seeking these programs out with companies that they like. And in addition to keeping the brand-consumer relationship strong, loyalty programs also inspire larger purchases, with members spending an average of $42.33 more than those who aren’t members.

  1. 80% of consumers in the U.S. consider speed, convenience, knowledgeable help, and friendly service to be the most important elements of a positive customer experience (PWC)

The coronavirus pandemic has certainly put limitations on what you can do to satisfy your customers, which makes it all the better that the cornerstones of a great customer experience aren’t tied to in-person interactions.

  1. A 2% increase in customer retention is equal to decreasing costs by 10% (Leading on the Edge of Chaos)

While many small business owners are (understandably) cutting payroll and reducing hours to decrease costs, it turns out that increased customer retention can have similar effects without requiring such a major sacrifice.

There is a light at the end of this tunnel. And as a small business owner, one of the best things that you can do in the meantime is to take concrete actions to meet your current customers’ needs and keep them coming back. Amping up your retention efforts will provide you with a cushion to fall back on, and could be the deciding factor in the future of your business.  

 

 

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