Breaking up is harder than you can imagine. Since Valentine’s Day is near, it is a great reminder not to let your personal relationships fall by the wayside. So, how are your business relationships (with your customers) holding up? Have you been tracking your customer retention properly? How long has it been since you told your customers about how much you care about them? If you’re not sure, then your business, my friend, is closer to a breakup (losing a valuable customer) than you think.
Let me tell you: The Truth About Breaking Up.
Getting kicked to the curb (by a customer) is one of the worst things that can happen to your business. Every time you lose a customer, you not only lose their current business. You also lose your future growth with them and the profit you would make from them. To make matters worse, you also bear the expense of replacing those customers.
Here’s an opinion: If you think you’re good at what you do, i.e., if people need your product/service and you’re helping them in every way possible, then you should take this kind of breakup personally. I’m talking about taking it on a “pint of ice cream in front of the TV” level personally. This is because whenever a customer leaves, they basically are saying that you’re not that good and that they’ve found a better match. And I’m not quite sure about you, but if I owned a business, that would hurt!
Although, it is not possible to save a customer or fix the problem when your customers do not tell you the right reasons as to why they’re canceling. So, no matter what reason they tell you, it is important to dig and get to the real reason. That said, the best strategy would be to make sure they don’t cancel in the first place.
So what is the secret to staying together?
Dynamic customer retention strategies!
In reality, it all comes down to three things:
- Creating a strong and unique customer relationship.
- Providing a customer experience that goes above and beyond expectations.
- Customer retention strategies that are upgraded constantly.
In this guide, we will learn about customer retention, how to measure it, why it is important, how to align them with the latest trends, and how to foster it with every new customer you attract.
- What is Customer Retention?
- Why is Customer Retention Important?
- Why Do Customers Leave?
- Quantify Your Customer Retention Strategies
- Eight Customer Retention Strategies and Examples
- Putting in the Effort
What is Customer Retention?
Customer retention simply refers to a brand’s ability to make customers stick to their services. Customer retention strategies are the ones that an organization implements to keep their customers loyal to them. These strategies include everything from the time the customer first interacts with your brand to when they face issues.
Customer retention is different from customer acquisition.
Retention caters to customers who have already signed up for your services/products. Customer retention is more than just transactions. It gets as personal as you can think. Studies show that customers view their relationships with brands as similar to their relationships with friends. Customers would only stick to your brand for the long term if your services are reliable and authentic.
Businesses that understand the importance of effective customer retention invest in customer retention plans because they see it as the biggest revenue driver.
A good retention strategy would be when your existing customers have the option to switch brands, and they choose to stay! With this loyal customer base, your brand will be more likely to weather volatile markets.
Why is Customer Retention Important?
Let’s get straight to the reasons:
1. Customer Retention is More Cost-effective
More than you can imagine!
The probability of converting an existing customer is 60 to 70 percent. The probability of converting a new prospect, on the other hand, is only 5 percent to 20 percent.
Fun Fact:
Did you know that acquiring a new customer is more expensive than holding on to an existing one? Wondering why? Well, the answer is simple:
- You will not need to spend big on marketing, advertising, or sales outreach.
- Plus, your customers already trust your brand and support reps. They do not need more convincing from your end.
2. Word-of-mouth Publicity
Loyal customers won’t just provide repeat business. They’re more likely to communicate free recommendations to their colleagues, friends, and family. This works wonders for any brand looking to create a cycle of retained customers. Your companies can adopt this buzz marketing and cultivate customer loyalty for long-term success.
3. Keeps You Aware of The Red Flags!
Red flags are alarming. Mindful customer retention strategies will help you understand how loyal and satisfied your customers are. It’ll also help you find out if there are any red flags that may turn off potential customers. You can identify these loopholes and actively work on them.
4. Increased AOV (Average Order Value)
Sometimes customers are also willing to spend more. Studies show that loyal customers are 23% more likely to spend on your brand than the average customer.
Data shows that increasing customer retention by 5% can increase your profits from 25% to 95%. On average, the existing customers provide 65% of a company’s business.
Why Do Customers Leave?
Here, we’re going to find out what those red flags are. What makes a customer trigger? What makes them leave?
I’m just going to put these self-explanatory stats here:
Another (and more recent) report from CallMiner states three key reasons that drive customers away:
- Poor/Unfair treatment of customers
- The price Vs. experience bias
- Empathetic services
What did you take away from these stats?
In the internet era, it is now very simple for customers to communicate with businesses and other customers. This makes keeping your customers even more important today. If they feel ill-treated, they will not only leave you but also tell people else about it.
German-American Economist
Sounds terrifying, right?
OTOH, there lies the possibility of communicating quickly and efficiently with your customers by offering them some extra attention. This can lead to them becoming loyal ambassadors of your brand.
As a brand, you must continuously keep trying and making efforts to earn customers’ loyalty. Having effective customer retention strategies will give you the ability to identify, track, and sell to customers and make them your long-term sources of revenue.
Are you Empowered Enough?
Consciously invest in customer retention with the right tools and strategies. The right helpdesk can help you implement the right strategies. Strive for the better!
TAKE A FREE TRIAL AND FIND OUT
Quantify Your Customer Retention Strategies
How To Measure Customer Retention Rate?
Customer retention rate is the percentage of customers who came to your brand and stayed loyal over a period of time. It is simple to calculate customer retention rates.
Define a time period across which you need to calculate the customer retention rates. Here are some other parameters you’ll need:
- No. of customers at the beginning of the given time period (S)
- No. of customers at the end of the given time period (E)
- No. of new customers added over the duration of the given time period (N)
Here’s your customer retention rate (X) formula:
Customer Lifetime Value
Customer lifetime value equals the total revenue you can expect from a customer throughout the customer’s lifetime. It helps a business discover its best and most loyal customers.
What About Customer churn rate
Churn rate refers to the percentage of customers lost during a given period of time. Brands that struggle with customer retention usually have a higher churn rate.
Low retention rates and/or higher churn rates are a bad sign for your business. This signals that something about your customer experience is not going well. But, there are several changes you can make to turn the churn around. This brings me to our next and our primary (and important) topic, i.e., Customer retention strategies and how to implement them!
Eight Customer Retention Strategies and Examples
1. Serve, Don’t Sell. Practice Active Listening
The most basic churn problems can be tackled by actively listening to what customers are saying about their experience. Unfortunately, this creates a massive gap between companies that provide stellar customer experience Vs. customers actually receive that experience.
One mantra to tackle this problem: Ask, listen, and improve.
Listening is an active part of customer support. Besides, you must ensure that you’re acting upon it. Even if it means that you have to go beyond limits for that. Customer retention at all cost! Let me tell you about the time when an ecommerce brand went beyond its limits to retain me (an extremely disappointed, angry, and about-to-leave customer.)
I keep trying new dog foods as my dog gets bored eating the same thing. So, I was looking for dog treats and saw this brand on Amazon. The food description seemed fine, and it was ranked first on Amazon’s list. The experience, however, turned out to be pathetic. My dog got sick and had a bad stomach for a week. I was pissed at Amazon for ranking the absolutely horrible and life-endangering product. So I talked to their customer support team, and well, I got a refund. I asked them to report the issue at large and take it forward as there were many similar complaints in the review section of that product. They assured me that they would.
Three months hence, the product is still ranking at the first position, and the negative reviews keep adding. *Sigh*
Guess who’s never buying essentials from Amazon anymore!
They did try to retain me (as a customer) by [providing a full refund. But, some things are above money. Some things are purely about the experience, after-effect, and the brand’s response towards that problem.
So, what do we learn from this?
- Listen to your customers! And ACT upon it.
- It’s not about the money; sometimes bad customer service can be life endangering.
2. Build Retention Hooks
Another example from Amazon. This time, it is about Amazon Prime:
The subscription fee (Amazon Prime) was never about seventy-nine dollars. It was really about changing people’s mentality so they wouldn’t shop anywhere else.
Vijay Ravindran
Ex-Director, Amazon Ordering Systems
Amazon Prime is an amazing example of building retention worldwide. Their idea was to achieve break-even within a year, but it did the trick in just three months.
The Article is Originally Published On:
https://www.deskxpand.com/blog/customer-retention-strategies/
