customer retention is key in 2023 to keep growing a business

With more consumers relying on mobile devices and apps, customer retention has become a top priority for 95% of marketers according to a new survey from the customer engagement platform OneSignal.

The survey of over 1,000 marketing, product, and C-suite executives found that 71% believe retention will gain even greater importance in the next 3 to 5 years. Industry estimates show that success rates for selling to existing customers range from 60% to 70%, much higher than the 5% to 20% for new customers.

“In a tight economy, increasing customer retention rates by just 5% can increase profits by 25% to 95%,” said OneSignal CEO George Deglin.

The shift towards retention is particularly important for subscription businesses like mobile apps and SaaS, where the ability to retain users drives success.

Personalized messages based on customer behavior can increase click-through rates by up to 58%. Segmentation yields a 21% higher click-through rate. And omnichannel engagements achieve over 3 times higher click-through rates than single channels. In-app messages see click-through rates 25 to 30 times higher than push notifications.

A Tough Economy Increases the Importance of Boosting Retention

A survey from McKinsey & Company about the state of the global economy revealed that companies have more optimistic views about the future than they had a few quarters ago. However, the collapse of the Silicon Valley Bank in the United States prompted executives to adopt a more cautious approach in the last few weeks of the first quarter as it revealed certain unexpected flaws in the financial system.

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Although 88% of the companies surveyed by OneSignal have adjusted their marketing strategies due to the economic downturn, experts warn against making cuts that hurt retention. Customers want personalized communication at every touchpoint, which emphasizes the importance of this retention strategy.

“Companies need to resist the urge to make cuts in the wrong places,” said Deglin. Personalization, segmentation, omnichannel engagement, and real-time messaging will play a pivotal role in growth, he added.

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Customer retention is critical for businesses of all types and sizes as repeating customers naturally contribute to a company’s revenue through their frequent purchases. But just as importantly, satisfied customers often spread positive word of mouth that can attract new customers organically.

Research Shows that Customer Support and Communities Increase Customer Retention

The customer retention rate is a percentage that shows how many current customers make another purchase within a set period of time. It indicates how successful a business is at keeping customers happy and coming back. Industries with frequent purchases like banking tend to have higher retention rates, while those with more competition like restaurants have lower rates.

Research from the online e-commerce giant Shopify suggests a few key ways through which businesses can boost retention. Great customer service is the first driver, as it often leads to repeat customers. Customers who feel understood and valued by a company tend to remain loyal.

Moreover, creating a sense of community through loyalty programs, communication, and engagement can also improve retention.

Being able to calculate the retention rate helps businesses spot issues and opportunities. For e-commerce stores and subscription businesses, tracking data on returning customers is straightforward. While businesses that deal directly with customers face more challenges measuring retention, they can still implement strategies to identify repeat customers.

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Improving retention by just 5% can significantly boost profit margins, Shopify’s findings indicate. In addition, publicizing retention metrics can even strengthen a business’s case to potential investors.

Though factors like product quality, price, and customer service all influence retention, prioritizing customer satisfaction above short-term profits has proven the most effective. Implementing programs like loyalty bonuses and exclusive offers for repeat customers, running email re-engagement campaigns, and building customer profiles in e-commerce stores can help companies turn one-time buyers into retained customers.