How CRM Helps Improve Customer Retention and How to Get Started
In 2024, customer retention will play a greater role in business — especially in cutting costs and driving sales. Read on to learn more about how to use data for customer retention.
Customer retention refers to the capability of a business to keep its customers over a given period. It’s the opposite of customer defection, which refers to abandoning a product or service in favor of a competitor.
These terms are important for businesses because they affect the sales and income of small-scale and large-scale companies. This is why businesses do their best to avoid customer defections and instead make efforts to increase customer retention.
To determine customer retention, companies usually use the formula:
[(CE-CN) /CS) x 100].
CE = no. of customers at the end of the period.
CN = no. of customers acquired during the period.
CS = no. of customers at the start of the period.
This formula is the simplest way of determining customer retention.
In this article, we’ll explore why Customer Retention is important, what role CRM plays in customer retention, and how you can improve your business customer retention. Let’s get started.
Why Customer Retention is Important
Whatever industry you are in, the only way to generate revenue is when you have customers. This is why businesses exert efforts to contact potential customers. This is also why marketing campaigns are launched to persuade target customers to buy products and services.
However, efforts to generate income from existing customers are much less compared to new or potential customers.
According to a PwC survey, the probability of selling to an existing customer is 40% more than converting someone who has never bought from you before.
Thus, if you have a high customer retention rate, you are likely to experience a sales increase. According to studies, by merely increasing 5% of your retention rate, you will have the probability of increasing your profits from 25% to even 95%.
Furthermore, with good customer retention strategies, you do not have to spend so much to acquire new customers. Looking at some statistics, 49% of US consumers say that their top sources of brand awareness are friends and family. This means that as long as you have good customer retention rates, you won’t have to spend more on marketing to acquire customers.
How to Improve Customer Retention Using CRM
One of the best customer retention strategies is to utilize Customer Relationship Management (CRM) tools.
CRM Systems are known to create a good customer experience and allow easy acquisition of customer feedback.
By using CRM automation, your employees will not have to manually input customer information. Using smart forms, for example, customers can fill out boxes and their data will automatically be migrated and sorted into your CRM database. By doing this, your sales and marketing teams can have the data they will need to improve the quality of your customer interaction and engagement.
They can do this through personalized interactions — giving customers the information they want even without asking them. This improves customer experience and in the long run, customer retention.
Another example is that by using CRM, your sales team wouldn’t be stuck analyzing the sales process, sales cycle, and trends because CRM tools can automate these tasks for you.
This helps them focus on more important tasks related to sales, marketing, and customer support. With a CRM, even a company with a small team can do so much.
Conclusion
Customer retention is important, especially in a highly competitive business landscape. Although this is impossible to improve overnight, with the help of CRM you are moving closer to achieving this goal.
To help you increase your customer retention rate, invest in a proven and reliable CRM system, like Saphyte. Whether you are planning to create loyalty programs, improve customer support, or do other initiatives, Saphyte can help you automate tasks to improve your customer experience and boost your retention rates.
