5 Stand-Out Benefits of Customer Retention

7 min read

The benefits of customer retention are sometimes lost among the hype and excitement that surrounds new business acquisition because the truth is, it’s just not as fun.

Think about the atmosphere that overcomes your sales floor when a member of the team closes out a big deal. There’s genuine euphoria, right? Not only are you happy for the individual rep for closing out the deal but you know it takes you one step closer to achieving your sales targets.

Those reps able to master new business acquisition are subsequently treated as heroes; their names topping the CRM leadership board and faces illuminate the break room wall.

And you know what, there’s absolutely nothing wrong with that – new business is an incredibly important revenue stream for all companies.

The only problem is it does take the shine away from its less than glamorous, though by no means inferior cousin – customer retention.

Working quietly away from the hustle and bustle of a noisy sales room floor, customer retention can be a profitable sales strategy despite its lesser known status. In fact, as we’ll discuss in more detail a little later on by avoiding the high costs often associated with pursuing new business it can actually be more profitable

SO there!

It’s not always the loudest in the room that commands the most respect.

What are the benefits of customer retention?

Apart from being considerably cheaper than acquisition, there are several more benefits of customer retention that we are going to focus on in this article:

  • Cost of customer acquisition
  • Upsell and Cross-Sell
  • Successful referral system
  • Build advocacy
  • Shut the back door

Cost of customer acquisition

It’s no secret, pursuing new business can be an expensive venture.

Just think of all the moving parts involved when courting a new customer:

  1. Email campaigns
  2. Social media sites
  3. SEO
  4. PPC
  5. Web banners
  6. Retargeting ads
  7. Outbound sales teams
  8. Prospecting leads

Each of these steps has a hard cost. Whether it’s the inbound marketing team managing the paid advertising and content strategies or the outbound sales teams prospecting and calling cold leads. Not just in salaries but in advertising budget as well as the tools required for prospecting.

What’s more, according to the 2018 Hubspot State of Inbound prospecting leads has never been more difficult.

When asked what has become more difficult in sales compared to the last 2-3 years the field sales teams surveyed responded:

  • Hearing back from prospects 40%
  • Reaching the decision maker 31%
  • Closing deals 30%
  • Identifying good leads 28%

And even when a new customer has been successfully courted it can take weeks, months perhaps even years before you turn a profit, depending on the length of your sales cycle.

So when you combine these points with the fact that there’s a 5-20% chance of selling to a new customer compared to 60-70% for an existing customer and you can see the attraction of taking a closer look at home.

But surely there’s a cost involved with keeping customers happy, right?

That’s true, there is a cost. Additional sales or customer success staff may need to be hired and trained in order to attend current clients’ needs.

However, if you remain unconvinced of the benefits of customer retention take a look at the research undertaken by Bain and Company.

They found that an increase in customer retention rates by just 5% could transpose to between 25-95% profit margins, again depending on the industry and length of sales cycle.

Up to 95% for just 5% more input. That’s huge.    

Again, I want to make it clear this is not to discredit the work of customer acquisition; it is a vital stream of revenue one which without there would be no new business, but rather to highlight the untapped wealth laying in your current customer base.

Upsell and Cross-Sell

Another one of the benefits of customer retention is the ability to upsell and cross-sell products and services.

Unfortunately many field sales teams make the assumption that once an initial sale has been made, that’s it – no more work to be done here.

But there is, if you listen carefully to your customers.

Field sales reps in constant contact with customers are in the perfect position to know when a customer’s needs expand beyond their initial offering. When that’s the case, and they have the budget behind to do something about it, that’s the moment when a potential cross-sell or upsell can be made.

For example, imagine you are an agent or broker working in the insurance industry.

You’ve got a meeting with an upcoming client in order to renew a standard policy on a vehicle. However, on your way in you notice an additional vehicle parked in the driveway which gets the gears turning. After an initial discussion with the customer you discover that they are in fact unhappy with the service offered on the additional vehicle and are open to discussing a possible switch if there was an offer to be made.

As an upstanding field sales agent you of course happily oblige. A new sale, free of charge from an existing customer.

It’s also in this type of situation where an intuitive personal sales assistant app comes in particularly handy.

The software automatically analyzes the data of the upcoming sales visit, informing field sales reps of the services that sold well when partnered with the particular product or service they are about renew/sell. This kind of information is extremely powerful in increasing the quality of upsell and cross-sell opportunities.

Sticking with our insurance agent, another possible use case of a personal sales assistant app is that during your last visit you noted the customers were due to have a baby in the next couple of months. The app analyzes this data and before your upcoming appointment handpicks some life insurance policies tailor-made for the customer based on their needs.

Technology combined with cross-selling can be an extremely profitable sales strategy

Referral system

The benefits of customer retention extend far beyond simply cross-selling and upselling, mind you. If your field sales team is able to keep customers onboard and happy with your product or service then they can act as a successful referral system.

And referrals are a sales rep’s dream.

Again, backed up by the 2018 State of Inbound report which asked field sales teams to confirm their best sources for new business, they majority came from:

  • Word of mouth (56%)
  • Customer references (46%)
  • Media articles (38%)
  • Sales rep (22%)

In over 50% of the cases analyzed sales teams confirmed the most effective source of new business came from existing customers.

A powerful tool then, wouldn’t you agree?

It shouldn’t really come as much of a surprise. When a friend or trusted colleague recommends you a product or service you know there is no ulterior motive. The recommendation they give has your best interests at heart, as they are either doing based on personal experience or that of their trusted network of friends and colleagues.

The fact is that when receiving a phone call from a sales rep, even from those that genuinely believe their product or service helps solve a burdening pain point of ours, we know there’s an ulterior motive at play. They’ve contacted us in order to sell something. They get rewarded for making that sale, regardless of whether or not it’s a good fit for us.

And a lot of prospective leads will always have that in the back of their minds, making it a lot harder to close a sale.

It’s also true that customer’s onboarded via a referral tend to have a lot shorter (and cheaper) sales cycle.

As there’s not so much emphasis on “selling” the product or service as that’s effectively been done for them via their referrer. The job now is to see whether you are both good match for each other, with just the finer details left to be ironed out.

And anyway, once you’ve put in the hard work ensuring they have everything they need (and it is hard work built up over months and even years) it’s only fair that they return the favor and as the statistics suggest, they often do.


One of the related benefits of customer retention that goes hand-in-hand with referrals is customer advocacy.

Customer advocates are those that scream your name from the rooftops, telling anyone who will listen how great your company is, how solid your products are and how the competition simply trail in your wake.

What’s more, they do all this free of charge!

As we just discussed they are extremely important in influencing the buying decision of potential customers, not just through word of mouth and direct referrals, but advocates are also extremely active online.

Social media, forums, websites, product reviews, eCommerce sites and app stores are their new favored playgrounds, and with more and more customers heading that way for more info before committing to purchase, it’s vital you have these communities in place to speak positively about your brand.

But I want to give you another example of how a customer advocate was recently able to swoop in and save the day.

Now it’s true that not all customers are going to be happy all of the time, no matter how great your field sales team are. Sometimes there will be slight niggles or maybe technical glitches (if you’re working in software) that can be frustrating for a client.

As a field sales rep it’s your duty to keep these issues to a minimum and that when they do arise they are dealt with as swiftly and as efficiently as possible. But if all your efforts appear to be in vain, try looking for precedence with some of your other clients.

Do you know any that were having similar difficulties? Maybe from the same industry? Or with a similar type of working process that they were able to work around?

If so, don’t be afraid to put them in touch – brand advocates will always be more than happy to help.

What’s more, peer-to-peer customer feedback is a lot stronger than any assurance that come directly from a brand. Again, there’s no ulterior motive and shows that as the field sales rep responsible you’ve taken a proactive step in trying to solve the issue at hand.

Who knows? One day they may become brand advocates themselves.

Shut the Back Door

Just as there’s a hard cost in courting new customers, there’s a hard cost with them leaving too. What we are of course talking about it churn rate:

The rate at which subscribing customers discontinue their service with your brand

With all the fame and that comes with getting customers through the door, many field sales teams forget to lock the rear doors on the way out!

And after all the hard work put in to get them in the first place it would be a shame to see them leave like that.

To highlight its importance let me give you a little example.

Say that, in you role as area sales manager you set a target of 10% growth for each of your given territories. However, unbeknown to you your company’s churn rate is running at 18%, which means effectively in order to achieve your target of 10% growth, your reps would in fact have to increase their revenue by 28% to account for the loss in customers.

That’s almost triple the initial targets – which I’m going to assume were competitive in themselves.

Again I want to make it clear this is not to discredit the work of customer acquisition teams – the customers they bring through the doors ARE those very customers we are talking about retaining. Without them retention strategies wouldn’t exist. The idea is simply to understand the benefits of customer retention strategies that, aided with the help of mobile sales technology helps you maximize revenue extracted by your sales team.

It would, after all, be a shame to leave money left on the table wouldn’t you agree?