Depending on how you market your business, the customer acquisition cost (CAC) can make or break your budget.
- In the travel industry, the average CAC is $7.
- In transportation, it’s $98.
- Look at customer acquisition cost in telecom and you’ll be clutching your chest and weeping at the $315 average.
Of course, all those numbers are relative and highly subjective, but the key takeaway is this: customer retention is important. Once you have a guest on board, it’s well worth it to figure out how to keep them there.
Okay, so customer acquisition isn’t necessarily cheap, but if you have a killer marketing strategy, rank like crazy on Google, and get a steady stream of reservations thanks to social media, does it really matter?
In short, yes.
- Even if your CAC is low, it’s probably still five times higher than the cost of retaining the customers you already have.
- Repeat customers spend 67% more in the third year of their relationship than newbies do when they just join the fold.
- Getting control over guest turnover can drastically increase profitability by up to 125%.
- Increase your customer retention level by just 10% and you may see as much as a 30% increase in company value.
Customer Retention Strategies
There’s roughly a 60% chance an existing customer will come back to make at least one additional purchase. That puts you at a distinct advantage over competitors who’ve never had that customer knock on their door. Don’t blow it.
- Encourage reviews and word of mouth. Giving great service is number one to retain your clientele.
- Keep up a consistently high level of hospitality and you inspire guests to write reviews and tell their friends just how awesome you are.
- That’s how you stay top of mind with past customers and give others a reason to take a chance on your stellar accommodations.
- Launch a loyalty program.
- Nearly 70% of consumers consider loyalty programs before choosing a retailer.
- Half of consumers will change their buying patterns to rise to a higher level of a loyalty program.
- When it comes to repeat business, 83% of customers said loyalty programs make them want to come back again and again.
- Loyalty cards have risen far beyond stamps and hole punches, too. Imagine a wine store that tucks a passport into each wine box sold. Every time a customer drinks a wine, they check off the state where the grapes originated; fill in the whole country and get a free case of wine.
- Never rest on your laurels. Sandals Resorts is known to encourage guests to book their next stay while they’re still on property. It’s an ingenious, idea really; it avoids the whole “out of sight, out of mind” scenario and captures interest while guests are still firmly ensconced in the best location, hospitality, and accommodations the resort can provide.
Don’t assume guests will come back, work to make it happen.
There’s a humanistic side to customer retention as well. It’s a lot more fun interacting with guests you know than guessing as to the preferences and quirks of a relative stranger.
As you build relationships, you feed into a repeat customer’s sense of belonging. Loyalty begets loyalty, creating an exponentially beneficial situation that’s like Cheers for the guest (everybody knows their name… and dog’s name… and love of green M&Ms) and financial and professional heaven for you.