However, there is one thing that your sales team alone cannot cure. And that is customer churn. If customers don’t return, no amount of new customers can help achieve a steady growth rate for your business.

Yet many sales and marketing leaders in organizations are always busy looking “out there” for new customers instead of introspecting and improving customer retention. In fact, a paltry 40% of businesses are equally prioritizing both customer retention and acquisition.

Don’t let your company fall into the same trap. You should find ways to delight and generate more revenue from your current customers than relying solely on acquiring new customers. Below, we’ll look at the top reasons why.

Why You Should Prioritize Customer Retention

There are several benefits that make customer retention critical to your company’s bottom line.

Every loyal customer presents an opportunity to develop a brand advocate, get more referrals, and encourage word-of-mouth marketing. Let’s take a closer look at each key advantage, one by one.

Get positive word of mouth.

75% of customers loyal to a brand will refer their friends and family to the same. And this desire to spread the word comes from the customer retention efforts of the brand.

A decision to prioritize customer retention initiatives has the power to convert customers into brand advocates, increasing your likelihood of gaining referrals. A recommendation from a third party can be the final nudge that moves a prospect to action and persuade them to buy from you.

When customers are happy with your brand, you can even launch a referral program to realize their full potential in promoting your business. Ellevest is a great example. The company rewards both the referrer and the referee for each successful transaction.

To launch a similar program, you can use a tool such as Early Parrot. It lets you create referral marketing campaigns. These can seamlessly integrate with any of the major website builders in the market.

However, you can’t expect such an initiative to work without a focus on retaining customers. Disengaged customers are less likely to tell others about you, even if you reward them for doing so.

Boost conversion rates.

A customer who has bought from your business twice is 9 times more likely to purchase again than a new buyer, as per a study by Adobe. In other words, current customers help you get more conversions and make more money.

CVS Pharmacy is great at targeting present customers, for example. The company sends customers personalized email messages with deals and coupons based on what they have purchased before.

An email campaign is not the only way to target current customers. You can also insert Google Ads or Facebook pixels within your website’s code. These snippets can be used to run advertising that targets people who have already visited or purchased from your website.

Since the customers are likely to need similar products again, a retargeting campaign allows the company to bring customers back and sell more in the process.

Increase your customer lifetime value (CLV).

In case you’re unaware, customer lifetime value is the total monetary worth of a customer during the period of their relationship with your business. And it’s an important metric that speaks to the overall financial health of your company.

A recent study suggests that 37% of buyers will shell out more money on a business if they’re loyal to the brand. So repeat customers are not just more likely to buy from you as we discussed above, but they are also inclined to spend more.

The result? High CLV and low cost of marketing, which brings us to the next benefit of prioritizing customer retention.

Reduce marketing expenses.

It is widely agreed that customer acquisition costs more than customer retention.

When you acquire customers, you also get to learn about the best ways to reach them. And you have the contact information to reach them again and again in a cost-effective manner.

Acquiring new customers, on the other hand, requires you to allocate a dedicated budget to sourcing new leads, advertising your website, lead nurturing, and customer onboarding. No matter how careful you are, you are always left with a huge dent in your pocket.

Get predictable revenue.

Running a business is a game of risk and uncertainty. But that doesn’t mean you can overlook ways to minimize them as much as possible. And that’s another aspect where customer retention shines more than customer acquisition.

As we discussed above, happy and satisfied customers will keep buying from you again and again. As a result, your overall revenue is more steady and predictable.

In fact, annual subscriptions — a recent business model that has taken the world by storm — relies solely on a business’s ability to retain customers as the main source of growth.

When a customer pays for the annual subscription, the business has a certain amount of assured income for the whole year. And at the end of 12 months, customers renew their subscription based on their needs and level of satisfaction with the product or service.

The global SaaS market (subscription software) is projected to touch $437 billion in 2025, at a CAGR of 12.5%. So you can imagine the kind of growth possible with retaining customers for the long-term.

By retaining customers, you can say goodbye to your day-to-day sales worries and focus more on the future vision of your brand.

Shield your business from the competition.

The more customers connect with your business, the more habitual they get in terms of preferring your brand. They do not get easily swayed by other brands as long as your product or service is working fine for them. And this is a huge competitive advantage to have in a fickle world.

A brilliant example of a brand that builds customer loyalty with an authentic connection is Bombas. The company openly communicates its philanthropic mission of donating to the needy, which plays a big role in customer retention.

When customers are served with stories that help them connect with a brand’s mission and values, they experience a strong sense of loyalty.

Improve business operations.

82% of consumers agree that they would move to another brand if they experience poor customer service from the brand they were loyal to. As scary as it seems, the truth is that it takes just one bad experience to push buyers away from your business.

That means you must do everything in your power to ensure that your business operations are aligned with customer preferences. And that’s another area where customer retention can help.

Loyal customers give you a valuable source of feedback that helps improve your products, services, and overall customer experience.

Case in point: Southwest Airlines. The company quickly follows up with customers who voice a negative experience or a piece of feedback, even on social media platforms. In doing so, it gets insights straight from the customers instead of relying only on internal research and development.

Wrapping Up

The value of acquiring new customers can’t be denied. However, it’s equally important to level up your customer retention strategy. If you’re focusing only on empowering your sales reps while your customer success team is grasping at straws, then you’re compromising your organization’s potential to succeed.

The solution? Give equal weightage to customer retention. As we discussed above, customer retention is crucial for the long-term sustainability of your business. Moreover, it gives you new opportunities to leverage the trust you have built with current customers to take your business to the next level.

After all, customer retention is what differentiates one-hit wonders from strong and stable brands that dominate their industry for decades.

The post Why You Should Prioritize Customer Retention Over Customer Acquisition  appeared first on SmallBizTechnology.

A worldwide recession is on its way. Perhaps not today. Perhaps not tomorrow. But it won’t be long now. Do you hear the consistent economic drumbeat? Don’t ignore it!

A recession is on its way, and although it is unlikely to endure the rest of your life, it is unavoidable. That’s a fact.

Even if there are warning indicators to watch for — increased interest rates, deflation, stock market collapses, loss of trust in the economy, and so on — there is no magic formula to forecast when and how long it will occur. And no, you can’t count on cryptocurrency to save you.

For example, increasing interest rates and weak first-quarter growth have led some to predict that the next recession would occur sooner than later. Perhaps it will happen. But, then again, who could have forecast the economic impact that the coronavirus would cause at the start of 2020? Aren’t the best-laid plans no more than that…plans?

But, whether it occurs this year or in five years, it never hurts to be prepared.

According to a poll conducted a few years ago, 44 percent of small-business owners questioned had made no efforts to prepare for a prospective recession.

Recognizing that the unexpected might occur at any moment, it is more crucial than ever to be proactive in preparing your organization to weather the next recession. Here are three crucial areas to concentrate on.

1. Take care of your money.

Everything ultimately boils down to money. You can’t keep your business afloat if you don’t have it.

Create an emergency fund. Just as you (ideally) have money set aside for a rainy day, your company should have something for the unplanned and unexpected. Therefore, maintain at least three months’ cash reserves to cover everything from operational expenditures to staff payments. As a result, when the economy begins to collapse, quick and straightforward access to capital is critical.

Obtain capital. Please go into the coming recession knowing what you have access to, whether via investors, lines of credit, grants, or credit cards. This groundwork enables you to plan ahead of time rather than hurry to catch up.

Examine your spending patterns up close and personal. Is it possible to minimize expenses without losing quality? Do you have the ability to renegotiate contracts with vendors and suppliers? Determine the difference between strategic and non-strategic expenditure. Where can you cut expenditures carefully to increase the return on operational expenses?

Pay off your debts — sound advice, recession or not. If you have the means, pay off those high-interest loans or credit cards so you don’t have to make monthly payments.

2. Pursue new business markets.

When a company’s finances are tight, the first item that gets cut is its advertising budget. It’s challenging to invest time, energy, and money in something that doesn’t necessarily provide an instant return. However, even if the economy is a downturn, you must maintain your market competitiveness.

Consumers are spending less, and they are significantly more intelligent and demanding when they do buy. If you don’t get your name out there, you have less chance that your company will be the one people choose to support.

That is why you want astute, strategic marketing. Therefore, show them why your company is worthy of the award. Help them realize why your service or product is a good investment and how it may give some stability during a difficult period.

3. Increase existing customer loyalty.

Don’t forget about your existing consumers. When all else fails, a devoted client base may be the only thing that keeps the lights on and the doors open. However, it’s a wise business decision to seek out new customers, but it’s just as critical (if not more so) to maintain the ones you currently have.

Most people say that acquiring a new client costs more than retaining an existing one. If you’re continuously bringing in new customers but losing your regulars, you’re moving one stride ahead and two steps back. You don’t want to be performing that dance.

Provide outstanding client service. Therefore, concentrate on fostering loyalty. Don’t save your discounts and gifts only for new consumers.

Continue to examine and determine their requirements and how you might meet them. Remind them of the benefits of sticking with you versus your competitors.

Takeaway: Don’t wait for a recession to prepare for one.

Begin preparing to give yourself a little added protection to help you live through the inevitable. The unavoidable may not occur today. Perhaps not tomorrow. Perhaps…well, you get the point.

This is not investment, tax, or financial advice. For counsel on your specific circumstances, you should seek the opinion of a qualified expert.

The post Three Recession Risk-Mitigation Strategies appeared first on SmallBizTechnology.

The 3 Biggest Mistakes in Pricing Strategy

Finding the right pricing for your products and services is vital to your success. Price too high and your target market won’t be able to afford your product; price too low and your target market won’t trust your product. To increase sales, you must find the right pricing strategy – and to help you out we spoke with Lisa Hendrickson of Spark City, who shared the biggest pricing strategy mistakes and why you should be careful about adopting the lean startup model.

Click to read Why Small Business Needs to Rethink Pricing Strategies and the Lean Startup Model

Branding: Design & Color

Your branding elements are the visual representations of your business that will drive brand awareness and customer loyalty. Since many of us need help with design, we conducted an interview with Pam Webber of 99designs. In our discussion, Pam gives advice on the role of color in branding and the importance of design for small businesses.

Click to read The Importance of Color and Design When Branding Your Business

Review of Robert Herjavec’s Latest Book

You know Robert Herjavec as an investor on ABC’s Shark Tank, but according to his new book, you DON’T have to be a shark – success is available to anyone who is willing to work hard enough for it. The book touches on issues such as hard work and the importance of selling effectively. As a small business owner, will the book help and inspire you? Should you add it to your reading list? Find out by checking out Ramon’s review.

Click to read You Don’t Have to Be a Shark: Review of Robert Herjavec’s Latest Book on Sales, Hard Work, & More

Do You Have an Accountability Partner?

An accountability partner is somebody who helps you stay on track and reach your goals. It could be a mentor, a group of advisors, a business coach, or some other confidant whom you can turn to for a fresh perspective. Being an entrepreneur means that you are your own boss – but that doesn’t mean you shouldn’t have someone who will help you stay accountable. Find out why you need an accountability partner and how to do accountability the ‘right way’ in this article.

Click to read Why Every Small Business Owner Needs an Accountability Partner

Small Business and Health Insurance

The current rules say that small businesses that have fewer than 50 full-time employees do not have to offer health insurance to employees – but should you offer it anyway? This article looks at the pros and cons of offering cheap viagra from mexico employee health care benefits and also shares information on how and where to explore health insurance for your employees.

Click to read Should Small Businesses Offer Employee Health Benefits?

This issue of the Smart Hustle Recap will help you take control of sales with the right pricing strategy, create beautiful branding elements for your company, contemplate thought-provoking topics like health care and accountability, and even add a new business book to your library. In addition to that, there are plenty of other stories you may have missed in the past couple weeks while we took a break from our weekly Recap. Take a few minutes to catch up at SmartHustle.com.

The post Smart Hustle Recap: Developing the Right Pricing Strategy, Using Color in Your Branding, & More appeared first on SmallBizTechnology.