There is one truth in retail that you cannot escape – half of all customers that walk in your doors will never return. This phenomenon is also known as customer churn. Customer churn varies by industry but in retail the rate is highest at about 50%.
As a company you can go out and acquire all the customers in your market, but without a sound strategy in place for retaining all these customers, your efforts will ultimately be unrewarding.
To help visualize customer churn, think of your business as though it is a bucket. Your customers are the water inside the bucket, but there is a hole at the bottom of the bucket. You may have great strategies in place for filling the bucket with new water: print advertising, being featured on a heavily trafficked deal site, and sponsoring events. However, every day water churns and customers go off to your competitors.
To keep your business growing, you can continue to collect more and more water, but it is expensive. In fact, it’s 5-7 times more costly to go out and get new customers than to seal the hole and keep the visitors who come into your shop coming back.
Customer retention and growing your relationship with your customers is the number one focus of the most successful companies in the world. Just 18% of retailers focus more on retention than acquisition, but companies like Amazon and Nordstrom who focus on retention earn 80% of their profits from existing customers.
As your business grows, customer retention will become the number one priority for your business. It’s time to think about filling the holes, and keeping your existing customers coming back. Talk to Baker to see how we can help you today.