The Value of Customer Retention



Customer Retention

Ask any seasoned marketing expert and they’ll tell you keeping a satisfied customer is a lot more cost effective than finding a new one. Loyal customers are endemic to the success of any retail endeavor. If you’re singularly focused on beating the bushes to drive new traffic to your site and taking your existing customer base for granted, you’re guilty of missing the value of customer retention—and it’s going to cost you in the long run.

Loyal Customers Buy More

Statistics show 80 percent of a store’s sales volume comes from 20 percent of its customer base. Said differently, eight of every 10 of your sales comes from two of every 10 of your customers. A thinking person would surmise it might be good to keep those two people happy about buying—yes?

Further, the probability of selling something to a returning visitor to your site is between 60 and 70 percent. Meanwhile, the likelihood of a purchase by a first-time visitor is between five and 20 percent. Even better, repeat shoppers are 50 percent more likely to try new products and they spend approximately 31 percent more than new visitors.

But wait, there’s more.

Repeat customers are also more likely to serve as brand advocates, telling everyone about the experience of doing business with you. And, as any savvy marketer will confirm, positive word of mouth is the absolute best form of advertising.

A Practical Example

Bob has searched far and wide for a console table to fit his new place. Finding it at your online store he makes the purchase. When it arrives at his home, there is a slight flaw in the glass.

Contacting your customer service department, he is put through all nine circles of voice mail hell. Plus, he’s left on hold for seven minutes each time—only to eventually be told your return policy doesn’t cover such issues because he could have done it. Resigning himself to live with the flawed table, Bob covers the imperfection with a potted plant.

A few weeks later, one of his friend’s visits, notes the unique design of the table and falls in love with it. When she asks Bob where he got it, Bob regales her with the details of your after sales service.

How likely do you think Bob’s friend is to visit your site (let alone make a purchase), or for any of their other friends to do so for that matter?

What’s more, Bob is now actively looking for a coffee table to complement the console table. There’s goes yet another sale you could’ve had—if you’d valued Bob more.

One of your most important assets when you start a furniture business—or any business really—is your reputation. You just sullied yours unnecessarily. All you had to do was be responsive to Bob’s needs, accept the return graciously—or at least offered a fix—and you’d have created a loyal customer with the potential to influence a countless number of conversions for your site.

The Bottom Line

If you think your obligation to a customer stops once the product is delivered, you’re shooting yourself in the foot—big time. Repeat customers are the lifeblood of any business. While there might seem to be an infinite number of people on the planet, the reality is only a certain percentage of them are interested in what you have to offer. When you find someone who is, that person is to be cherished, respected and above all, made aware of your gratitude.

It is next to impossible to overstate the value of customer retention. If you want your business to thrive, you’d best act like you know.


Awestruck by Star trek as a kid, Jake Anderson has been relentless in his pursuit for covering the big technological innovations which will shape the future. A self-proclaimed gadget freak, he loves getting his hands on every piece of gadget he can afford.

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