The Customer is always right!
You must have heard that old truism a million times. That statement couldn’t be more relevant today.
The digital world not only shapes customers’ buying experience – it puts them at the center of its universe.
Check out these:
Telling Customer Retention Statistics:
- 91% of consumers are more likely to shop from brands who recognize, remember, and provide them with relevant offers and recommendations.
- 65% of a company’s business comes from previous customers.
- 86% of the customers with great purchase experiences will likely buy from the same company again.
- 5% boost in customer retention increases profits with 25% to 95%.
- 82% of consumers in the US stop doing business with a brand if not satisfied with the customer service.
- Businesses miss out on $1.6 trillion from losing customers to a competitor.
- Acquiring new customers costs 5 times as much as retaining existing ones.
- It costs 16 times more to build a long-term relationship with a new customer, compared to keeping existing.
- 50% of customers direct their loyalty to another business within 5 years.
Repeat Customer Statistics
To understand the importance of repeat customers let’s look at what retention rate means.
What is retention rate?
Client retention rate is the percentage of customers kept. It’s the opposite of churn rate, which is the percentage of customers lost.
How to calculate repeat purchase ratio/rate?
It’s pretty straightforward:
- Notice how many of your clients have returned to buy from you a second time
- Divide that number by the total number of clients your business has had
- Multiply the result by 100
Congratulations – you have your repeat purchase ratio. This is how many clients out of every 100 you can expect to come back for another purchase.
How many actions does the consumer take?
That’s another factor to consider when calculating client retention rate. And it indicates the number of actions the consumer takes, necessary to include them in the repeat customers report.
Have they only logged in? Or have they logged in, signed up for a weekly newsletter and made a new purchase?
Over what time do you measure retention?
Lastly, you’ll need to figure out the right time span within which to measure your average customer retention rates.
That could be anywhere between a couple of days and several months, all depending on your business processes, objectives, and observations.
Let the Numbers Talk
You can probably figure that your business will profit significantly if you manage to keep your client retention rate up.
That doesn’t mean you should stop attracting new customers, of course.
But you probably need to have in mind that:
1. 48 % of all consumers have left a business’s website and purchased elsewhere because the page wasn’t easy to navigate.
This survey found that nearly half (half!) of buyers will skip your product if you can’t make the purchase experience exciting. And that shows the importance of originality for customers.
If you can’t turn your prospects into buyers, you won’t be able to turn them into loyal brand ambassadors either.
2. 83% of US clients prefer to deal with humans, rather than digital channels, when it comes to customer service issues.
I can completely relate to the frustration of having to deal with an automated answer machine.
According to a Harvard Business Review, customers turn to a business’s support team to get a quick and easy solution for their problem.
Satisfactory customer service is what customers want. When that need is not met we come to this:
3. 34% of consumers will never buy from a brand after just 1 bad experience.
This is one of the reasons why companies lose customers.
And it’s not surprising the loss businesses suffer due to poor service amounts to $1.6 trillion.
Another interesting number businesses need to consider is:
4. 42% of consumers’ total online time is on mobile devices.
We can all agree that makes sense, given that cellphones have become an extension of ourselves, in a way.
So it’s only logical that:
5. 57% of people won’t recommend a business if the website doesn’t have a well-designed mobile version.
Customers do expect companies to meet a high standard of service. That’s not enough, though – apparently speed is also a factor:
6. 53% of people will abandon a mobile website if it takes longer than 3 seconds to load.
(Google Marketing Platform)
People appreciate speed across all stages of the customer experience. Even after they’ve already made a purchase and they need some help.
7. More than half of consumers expect a response from customer service within an hour, even on weekends.
Now, you may think you’re doing what’s necessary to make your customers happy.
But look at this:
8. 60% of companies think they’re providing a good mobile experience, but only 22% of consumers agree with that.
These are the numbers for 2017. Now, companies may have marked a slight improvement since then. That said, you’re still going to be way ahead of the pack if you optimize the mobile experience of your website.
Is your business mobile? How do you feel about your service?
If you haven’t put much thought into it, now is the time to look closely at how happy your current customers are. Here’s why:
9. 79% of consumers have made a purchase via smartphone in 2018.
So, digital customer experience becomes increasingly important as the preferred way to shop shifts to mobile.
What’s the average customer retention rate there then?
Divided by industry, mobile retention also differs by months. Let’s look at what Localytics’ findings were for 2017.
- Month 1: Travel & Leisure had the highest retention rate of 44%; followed by Media & Entertainment with 43%. eCommerce/ Retail had 40% and Business & Technology was at 36% retention rate.
The percentage starts to drop after the first month.
- Month 2: Travel & Leisure – 35%; Media & Entertainment with 32%. eCommerce/ Retail – 29% and Business & Technology –27% retention rate.
The client retention rate at the end of month #3 goes down further with somewhere between 3 and 5%.
But what is a good customer retention rate?
Opinions differ but one research by Mixpanel shows that most apps and software have between 6-20% retention rate (for a 2-month time span), depending on the industry.
Now, while customers seem to prefer making purchases through a mobile device, companies need to consider that:
10. 73% of consumers use more than one buying channel on their shopping journey.
(Harvard Business Review)
Customers who use multiple channels to shop spend 4% more in a physical store and 10% more online than the single-channel customers. And every additional channel they use means they spend even more money.
What does that tell us about customer satisfaction and retention?
Customers like to do their research.
11. 65% of buyers research products online before going to a physical store.
Not only that, but customers expect to have the same pleasant experience no matter the way they chose to shop. And unfortunately, they don’t always get it.
12. 71% of customers confirm they want a consistent experience across channels, but only 29% say they get it.
It becomes obvious the hard part of the job is pleasing the clients so they stick around.
The slightly unfair part is – a happy client won’t necessarily go around, sharing how happy they are with you. Unhappy clients, on the other hand, are different.:
13. 62% of clients share the bad experience of your business with people.
Yup, get used to it. Unhappy clients are always more vocal. You’re inevitably going to see negative feedback, even if your business is actually doing fairly well.
Let’s now look at what will actually make customers become part of your brand loyalty statistics.
14. 77% of the consumers and 60% of millennials say they’ve held relationships with specific brands for over 10 years.
So, it’s actually possible to build a lasting relationship with your clients.
And the right service will lead to:
15. 60% of consumers talk about a brand they’re loyal to their family and friends.
The good news is that customers also like to share their positive experiences.
However… turning consumers into loyal brand ambassadors means tending to their needs.
What does that mean?
Here’s what Forbes reports:
16.33% of consumers ended their relationship with a company because the experience wasn’t personalized enough.
Consumers like to be engaged with your brand in a way that makes them feel like you know them.
17. 68% of consumers believe it’s important for businesses to tailor experiences based on the client’s tastes and preferences.
And buyers are ready to pay for that personalization.
18. 41% of consumers, and almost half of Millennials – 47%, agree to pay up to 20% more for exciting customer experience.
The experience your client has is part of what you’re selling, whether it’s a product or a service. Improve the experience – and you can attract better clients and charge more for serving them.
Further stats show that:
19. 42% of people are more likely to purchase from brands that offer original ways to experience their products or services.
Consumers understand that personalized experience means they’ll need to share a bit of personal information.
And according to Accenture, they don’t seem to mind it.
20. 83% of consumers are willing to share personal information to enable personalization.
Now, sharing data comes as part of an agreement that businesses will be transparent about how they use it.
21. And 71% of the surveyed seemed to agree that businesses didn’t communicate with them in a too invasive way.
By 2020 we expect to have more than 30 billion IoT devices, which will rise to 80 billion by 2025. Business will need to transition into a digital-first business model.
While this will help companies optimize their processes, it will also mean customers will have the upper hand when communicating with brands.
Consumers will need to be shown the value of the service you offer and in a much more personal way.
And that can be tough.
But don’t worry, there’s a light at the end of the tunnel.
Ask and listen to what your customers want. They genuinely want you to know what that is, so they can buy it from you.
Rise to the challenge
What do you need to do to make customers stay?
1. Create a dialogue
The future is digital. Companies need to make use of that and turn to technology to help them start an online conversation with their customers. This is where using data to predict the best experience is useful. That way, a business can offer its customers exactly what they want.
2. Offer price premium
Everyone likes a good deal and that remains valid for consumers in a data-driven age. Customer service studies show that people are willing to share more information with a company if that means better experience. This includes personalized price discounts.
3. Get it right – the first time
A bad customer journey can be an issue for any business. If a customer gets disappointed with your service, you won’t see them coming back. So, you should invest in creating platforms that are able to “wow” your customers.
4. Have a “chop-chop” attitude
One thing that is crucial, according to loyalty statistics, is speed. You need to address your customers’ concerns and address them quickly.
That together with helpful employees and friendly service matter the most.
5. Have a human touch
Interacting with a real human is important to clients. Regardless of the technology that supports the customer journey, consumers like to know there’s someone there they can actually talk to.
6. Be consistent
When you create your customer experience, bear in mind your clients will be using different means to shop. Provide convenience, so clients will have the same great experience shopping on their phones, tablets, or in a physical store.
Moral of the story
Business and personal life are now becoming one. Clients expect to be targetted in a way that is relevant to them.
You can go around offering discounts for rollercoaster rides to seniors but they’re most probably not interested. (Although, how awesome would that be!)
More than that, it’s no longer enough to assume someone will be more engaged with your product just because they’re in that demographic group.
People want to feel personally involved and if you want to be on the positive side of the customer retention statistics, start spelling “personal” right.