7 good reasons to finally invest in customer loyalty
Posted: Sat Dec 21, 2024 4:16 am
Many companies make the mistake of investing heavily in costly acquisition campaigns, with sometimes uncertain results, to the detriment of their existing customer base. However, retaining a customer costs on average between 5 and 10 times less than acquiring a new one (source: Harvard Business Review). If you still doubt the relevance of investing in the loyalty of your customer portfolio, here are 7 good reasons to start doing so now.
To sustain your turnover
Among the recipes for increasing turnover , there remain the two basic ways, namely, acquiring new customers or capitalizing on current customers (provided you already have some, of course!).
Satisfied and loyal customers are customers who already know you and trust you because you have proven to them the quality of your product or service .
The latter will have a propensity to consume more according to the america cell phone number list RFM matrix (for Recency, Frequency, Amount):
by reduced latencies between purchases. ( Purchase recency is calculated from the date of the last purchase recorded in the database)
through more frequent purchases (increase in purchase frequency)
by an increase in the average basket (amount)
In fact, the probability of selling a product is between 60 and 70% for an existing customer, compared to 5 to 20% for a prospect (source Marketing Metrics).
And yet before Covid-19 only 16% of companies surveyed by Econsultancy invested more of their resources and media budget in retention.
The key is the promise of revenue: customers ready to spend more with the brands they love .
Build loyalty to reduce your acquisition costs and improve profitability
Knowing that acquiring new customers requires much greater resources (marketing investment, time and effort from your sales team, activation of different channels , etc.), loyalty is by nature the other essential option for increasing your turnover, while trying to reduce your acquisition cost.
In fact, we invite you to calculate the customer acquisition cost (CAC ), an indicator that allows you to become aware of the investment you must make to recruit a new customer.
The more you retain this customer over time, the more they consume and the more you make your investments profitable. In the jargon, this is called Customer Lifetime Value, which corresponds to the sum of the expected revenues over the lifetime of a customer.
Here is the formula to calculate it: CAC = (CM+CC)/CA
CM = the total cost of marketing investments includes media purchases, prospectuses, flyers, press inserts (PQR/PQN), magazine press, TV spots, brochures, POS, radio, digital, displays and other billboards, etc.) and support from your agency to acquire new customers
CC = Total cost of investments of the sales department including invitations, trade fairs, open days, incentives... to acquire new customers
CA = Number of customers acquired during the period
To sustain your turnover
Among the recipes for increasing turnover , there remain the two basic ways, namely, acquiring new customers or capitalizing on current customers (provided you already have some, of course!).
Satisfied and loyal customers are customers who already know you and trust you because you have proven to them the quality of your product or service .
The latter will have a propensity to consume more according to the america cell phone number list RFM matrix (for Recency, Frequency, Amount):
by reduced latencies between purchases. ( Purchase recency is calculated from the date of the last purchase recorded in the database)
through more frequent purchases (increase in purchase frequency)
by an increase in the average basket (amount)
In fact, the probability of selling a product is between 60 and 70% for an existing customer, compared to 5 to 20% for a prospect (source Marketing Metrics).
And yet before Covid-19 only 16% of companies surveyed by Econsultancy invested more of their resources and media budget in retention.
The key is the promise of revenue: customers ready to spend more with the brands they love .
Build loyalty to reduce your acquisition costs and improve profitability
Knowing that acquiring new customers requires much greater resources (marketing investment, time and effort from your sales team, activation of different channels , etc.), loyalty is by nature the other essential option for increasing your turnover, while trying to reduce your acquisition cost.
In fact, we invite you to calculate the customer acquisition cost (CAC ), an indicator that allows you to become aware of the investment you must make to recruit a new customer.
The more you retain this customer over time, the more they consume and the more you make your investments profitable. In the jargon, this is called Customer Lifetime Value, which corresponds to the sum of the expected revenues over the lifetime of a customer.
Here is the formula to calculate it: CAC = (CM+CC)/CA
CM = the total cost of marketing investments includes media purchases, prospectuses, flyers, press inserts (PQR/PQN), magazine press, TV spots, brochures, POS, radio, digital, displays and other billboards, etc.) and support from your agency to acquire new customers
CC = Total cost of investments of the sales department including invitations, trade fairs, open days, incentives... to acquire new customers
CA = Number of customers acquired during the period