8 Reasons Customer Retention Increases Profitability
Published on: 20th June 2017
By PYXI CRM Team
After reviewing the infographic, we can highlight the key reasons why customer retention leads to increased profitability.
These are as follows;
- The cost of acquisition occurs only at the beginning of a relationship: the longer the relationship, the lower the amortized cost.
- Account maintenance costs decline as a percentage of total costs (or as a percentage of revenue).
- Long term customers tend to be less inclined to switch and also tend to be less price sensitive. This can result in stable unit sales volume and increases in dollar-sales volume.
- Long term customers may initiate free word of mouth promotions and referrals.
- Long term customers are more likely to purchase ancillary products and high-margin supplemental products.
- Long term customers tend to be satisfied with their relationship with the company and are less likely to switch to competitors, making market entry or competitors’ market share gains difficult.
- Regular customers tend to be less expensive to service because they are familiar with the processes involved, require less “education”, and are consistent in their placement.
- Increased customer retention and loyalty makes the employees’ jobs easier and more satisfying. In turn, happy employees feed back into higher customer satisfaction in a virtuous circle.
PYXI CRM is customer experience and relationship management software. PYXI helps you improve the experience your customers have with your business.
PYXI CRM Team: 20th Jun 2017 17:19:00