Clients not coming back? Here are 10Customer Retention Strategies that can help you reignite their interest inyour brand.
It goes without saying that the success ofyour company depends onyour clients. However, it may bethat you focus too much ontrying toreach new customers. But what about the existing ones? Doyou care about what they do, how they shop, what they think ofyour brand? Ifnot, then you should definitely learn more about the latest customer retention strategies and start using them ASAP.
Read this article tolearn:
- What customer retention is
- About the difference between retention and loyalty
- How customer retention management can lead tomore loyalty
- What benefits you can gain bynurturing your existing customer relationships
- About TOP 10customer retention strategies for 2022
Okay, soWhat isCustomer Retention?
Long story short, customer retention isabout how good agiven company isatmanaging its customer relationships. It shows its ability toengage clients over specific periods oftime and influence their shopping behavior sothat they come back toits brick-and-mortar and online stores more often inorder tobuy more products (or services). Inother words, itiswhat the company does tostop customer turnover (the percentage ofcustomer base lost over agiven period oftime).
Believe itornot, not only isretaining customers less expensive than acquiring new ones, but italso generates more profits.
According tothe research done byBain&Company, a 5% increase incustomer retention rates can produce from 25% to95% revenue growth.
So, asyou can see, itisagame worth playing.That’s why inthis article wewill present 10customer retention techniques that will help you keep your clients close and boost your customer retention rates.But first…
Retention vsLoyalty: What’s the Difference?
Customer retention and customer loyalty – two terms that most oftoday’s marketers use thinking they are synonyms when, infact, each ofthem means something different. We already know the definition ofcustomer retention is– the ability toretain acustomer for aspecified period oftime, presented inanumber/percentage ofcustomers who are still active.
As for customer loyalty, itisabout measuring and monitoring how often aparticular customer buys and uses the products and services offered byyour company.
The similarity and dependency between those two terms iseasily noticeable, asit isnot possible tocreate customer loyalty without aneffective retention strategy. Acquiring and maintaining comprehensive customer data facilitates predictive analytics, which make itpossible toidentify trends incustomer behavior, reduce churn effectively, and – ultimately – run asuccessful loyalty program.
Here's Why You Should Take Good Care ofYour Existing Customers
Here’s the formula alot oftoday’s companies follow – 1. get acustomer tobuy our product, 2. wait for the money toland onyour bank account, 3. find another potential client and goback tostep one. Little dothey know that this business model iswhat makes them lose thousands, ifnot millions, ofdollars amonth. Why?
Because aperson who has already bought and used your product might recommend ittotheir friends and family members (given that they are happy about the shopping decision they made). This isfree marketing, sotospeak. No need topay anyone tospread the word, when itspreads itself onits own, right?
A satisfied customer already knows your product and your brand, therefore aform oftrust between them and the company has been established. Instead ofrepeating the process offinding acomplete stranger whom you can sell something, it ismore profitable toinvest inclients you already have. After all, they are the walking adverts. Make acustomer happy and you can besure that atleast afew other people will learn about the experience. Plus, ithas been proven that satisfied customers are more likely tobuy another product from you than those who never came across the name ofyour company.
Also, customer retention gives you aquality insight into how satisfied your customers really are – not only with your product/service but, more importantly, with your customer service. Most clients who leave dosobecause they are unhappy with the way acompany has treated them. Unfortunately, inmost cases you will not know what happened. Perhaps they have been disappointed inthe past soitiseasier for them tojust switch tothe competition rather than fill out complaints and tell you what went wrong. But you can be100% sure that they will tell their friends orshare abad review onsocial platform. With one lost client, you can lose plenty more.
IMPORANT: 3KPIs You Need toMonitor AtAll Times
The big question is– how doyou measure customer retention? Well, there are three customer retention KPIs that you should betracking onadaily basis sothat you know whether you are successful atkeeping your customers happy and engaged inthe long run – ornot. Those KPIs are:
- customer retention rate (CRR)
- customer churn rate (CCR)
- repeat purchase ratio (RPR)
1. Customer Retention Rate
The first one isconsidered one ofthe most essential metrics that can help you verify whether your customer loyalty strategy works asexpected.
Of course, the rate should beclimbing atasmart pace. Anincrease would indicate that you and your team are doing astellar job atgetting your customers tobuy more ofyour products (or services).
Bear inmind that when the rate remains atthe same level for months – orgets lower – itmeans you’re not putting enough effort into customer retention and, asaresult, you’re losing both alot ofmoney and achance tohelp your business grow.
The formula for calculating Customer Retention Rate (CRR) isasfollows:
Customer Retention Rate = Customers atthe End ofthe Period - New Customers Acquired / Customers atthe Start ofthe Period
2. Customer Churn Rate
This one isabout calculating the rate atwhich clients turn away from your brand and stop purchasing your products (or services). Itinvolves looking atvarious form ofclients discontinuing toengage with your company – from them ending their subscription tonot making any purchase over afixed period oftime.
Therefore, toexperience growth, your company must doeverything inits power tomake sure that, for example, the number oflost subscriptions islower then the number ofnew subscriptions.
The formula for Customer Churn Rate (CCR) is:
Churn Rate = (Number ofExisting Customers atStart ofTime Period - Number ofExisting Customers atEnd ofTime Period) / Number ofExisting Customers atStart ofTime
3. Repeat Purchase Ratio
Last but not least, there isthe Repeat Purchase Ratio (RPR) which indicates how many customer have returned tobuy products orservices from your company again.
It isoften used bysales and marketing teams toevaluate the performance ofthe company’s customer retention strategy. The higher Repeat Purchase Ratio, the bigger the loyalty ofyour customers (and your revenue, ofcourse).
The formula for calculating Repeat Purchase Ratio (RPR) is:
Repeat Purchase Ratio = Number ofReturning Customers / Number ofTotal Customers
There are more metric that you can use tooptimize your customer retention performance – including Product Return Rate (PRR), Customer Lifetime Value (CLV), and Net Promoter Score (NPS) – but the three we’ve mentioned should bethe starting point from which improve your strategy and increase revenue. Speaking ofstrategies…
Don’t Waste Your Time – These Are 10 Customer Retention Strategies Your Company Should Apply Today!
1. Maintain the Highest Standard ofCustomer Service
It has been proven that people are more affected bynegative events than positive ones. In practice, itmeans that your clients are more willing todwell onanything negative connected toyour company, and tocomment onit– both inreal life and onsocial media.
The value ofvery good customer service cannot beunderestimated. Even ifthe client isnot happy with the product, their attitude towards the company can remain highly positive ifthey are approached byapologetic staff, willing todoanything tokeep them satisfied. Eventually, the negative event can bechanged into aprofitable one.
Having said that, you need toremember that high customer satisfaction can beproduced only byexceptional employees. Appreciate your staff, because their positive approach totheir job, and tocustomer service, will result inhow clients see your company. Anyone who represents your business needs tohave apositive and professional attitude.
The customer service team needs tools for handling client communication asfast aspossible and without asking too many questions. Each client has toknow that the company recognizes them, knows their shopping history and will solve any problems quickly. Remember that sometimes treating someone asunimportant may lead tonot only losing this client, but potential profit – maybe even your reputation (you never know when anunsatisfied customer decides toshare their story and “warn” others).
2. Build and Maintain aRelationship with Your Customers
Use customer service tobuild trust with your clients and drive brand awareness. Ifacertain customer trusts you, even ifyou make amistake, they will bewilling toforgive you. Instead ofmaking excuses, simply admit that mistakes issomething that even the best companies do. After the first purchase, you receive alot ofinformation about aclient. Use ittokeep intouch with the client – tosend them discount codes, special promotions, and small gifts. This will give the customer many reasons toremember your brand, come back inthe future, forget about your competitors and, maybe, recommend your products and services totheir friends.
3. Personalization isKey
No one likes tobetreated like everybody else. Each customer isdifferent and thus requires adifferent approach from you. Nowadays, clients demand acustomized shopping experience. Personalized messages and discounts can make adifference between more business with aparticular client and losing them forever.
4. Appreciate Your Clients
If your clients are happy with your products, share something nice about your company – show them some love. Take aproactive approach. Itcan besomething simple, such asadiscount code, better promotions for the most loyal customers or“thank you” messages. Make aneffort and the appreciation will bemutual.
5. Clearly Define and Set Customer Expectations
You need toshow your clients what they can expect ofyou atavery early stage ofyour relationship. Alittle trick: set expectations lower, and surprise the client with aquicker reaction. Inaworst case scenario, this will also give you more time todeliver onyour promises. Here's asimple example: inanautomatic response for customer enquiries, promise aresponse within 24hours, even ifyour support team can handle the message quicker. Ifthe client gets the response after anhour ortwo, they will beimpressed bythe fast reaction. This also means , you give your team enough time toget things done, even ifsomeone gets sick and their duties have tobepassed tosomeone else. Remember, always stick toyour word and meet the deadlines you have set yourself.
6. Use Social Media The Right Way
Nothing boosts the customer retention rate like good handling ofsocial media. Your clients are onsocial media right now, soyou need take advantage ofthat opportunity. Depending onthe type ofyour business, run your business accounts onFacebook, TikTok, Twitter, Instagram, LinkedIn, YouTube, Snapchat and whatever else your clients are using. Verify which channels your customers are the most interested inand communicate with them via those platforms. Not only will you beable toreach them, but you will also learn about their opinions regarding your company and encourage them toshare and, ultimately, become brand ambassadors.
7. Collect Feedback
Don't beafraid toask customers what they really think about your company. Catching mistakes early ongives you room for improvement. You can avoid negative public feedback byasking questions onapersonal level. You can reach out toclients via short messages orasurvey such asNet Promoter Score (NPS), which measures customer satisfaction.
Ask about their customer service experience; dothey like your products? What would they change? Genuine customer feedback isworth more than expensive market research, and will make your clients feel important and empowered tomake achange.
Information from surveys, together with aforementioned transactional data stored within the loyalty management system, will allow you toget toknow your customers and their shopping patterns better, which iscrucial incustomer retention management.
8. Make Your Website and Mobile App Customer-friendly
The easier your shopping process is, the better. Your clients need tounderstand how your website/application works, and the payment process needs togive them plenty ofoptions tochoose from. Any difficulties onthe way and you will experience abandoned carts and unpaid orders. Simplify your processes asmuch aspossible, run tests with focus groups, introduce more language options and make the content understandable for every client.
9. Become Your Customer's Source ofExpert Knowledge
Be anexpert inyour business and educate your customers, sothat itisyou towhom they will come for advice and help inthe event ofproblems. Use positive testimonials about your products, maybe start ablog with insightful posts. Stop focusing onselling only your product/services – provide them with your knowledge aswell.
10. Use Customer-management Platforms
The more customers you get, the more complicated itbecomes tohandle them all inaprofessional manner. This iswhy you need the right loyalty marketing tools that will help you and your employees provide customers with high-quality service and content.
An appropriate loyalty management platform will allow you to take good care ofyour client database, that istosend automatic messages, suggest promotions, create personalized offers, and issue payment reminders.
In other words, itwill help you introduce aproactive retention strategy and facilitate your customer retention processes sothat you can reach your audience with the right message atthe right time and place. Plus, thanks tobusiness process automation that will help you realize your customer retention plan, you will have more time and energy tofocus onother areas ofyour business.
Build Your Customer Retention Strategy Today
The important thing is– many ofyour competitors have already introduced some ofthe strategies discussed inthis article, which means they are using loyalty marketing platforms torealize their plans. Remember - the longer you wait, the more difficult itwill become for you tocatch up. Therefore, you should start working onyour customer retention strategy asap, not only togain acompetitive advantage, but – more importantly – toremain competitive. There’s notime towaste. The success ofyour loyalty program – and thus your business – depends onit. Good luck!
