What is customer retention?
Customer retention is a variety of actions taken and activities done to reduce the number of customer defections. Customer retention aims to assist businesses and organisations in retaining as many customers as possible. This is often done through loyalty and brand loyalty initiatives. Long-term customer retention and converting customers into devoted customers are the company’s goals. It is vital to keep in mind that retaining customers starts with the initial interaction and turns them into repeat clients maximising their lifetime value. Improving customer retention is crucial for the growth of companies.
What is the importance of customer retention?
Most businesses devote more time and resources in acquiring new clients. Customer retention, however, is quicker and seven times more affordable than customer acquisition. Customer retention gives a business insight into how devoted and satisfied a customer is as well as how effective your customer service is. This makes it easier for small businesses to spot warning signs that could drive away clients. In the long run, improving customer retention pays well.
Lower cost than gaining new customers:
A report from Econsultancy states that 82% of businesses think that customer retention is cheaper than customer acquisition. However, various businesses and companies spend much more on customer acquisition rather than fostering relationships with existing customers.
Increased average order value:
Retaining current customers is cost-efficient. Existing customers who are happy with their purchases will continue to spend more money with the same businesses. According to research, repeat and happy clients are 23% more likely to spend money with you.
More profits
Improving customer retention will have a positive impact on profits too. Increasing customer retention by 5% can increase the profit of the businesses by at least 25% to 95%. It is also a proven fact that existing customers provide most of the business to company.
Brand promoters
Loyal customers of a business tend to share their positive experiences and become brand promoters. Spreading the praise by mouth is priceless. According to a report, 60% of customers talk to friends and family about a brand they are satisfied with. Thus customer retention is a must-have for all businesses.
10 successful customer retention strategies
Retaining existing customers is less expensive the acquiring a new one. Every business should first consider customer retention before preparing to get new prospects. These 10 successful customer retention strategies will help small businesses to grow profits and excel.
1. Personalisation
The majority of consumers find the brand’s irrelevant messages annoying. Personalising communications is a best practice in marketing, thus small firms should implement it. In search of that customised touch, many clients flock to local businesses. People appreciate personalised greetings and notes from brands and companies. CRMs (customer relationship management tools) are contemporary marketing tools that aid in understanding specific clients. It enables cross-platform tracking of customer behaviour. These technologies assist in determining when a consumer returns and the orders that they place. Small businesses benefit from their client’s loyalty when they take the time to remember the little things about them.
2. Feedback and customer surveys
Asking customers what they think of you will help firms in building a lasting relationship with them. Send surveys and feedback forms to existing customers to get feedback on the services and facilities. Businesses can diagnose issues and their causes with the help of this feedback. Understanding what needs to be corrected and improved is useful. This not only enables you to develop new services to meet the needs of the customers, but it also helps the customer feel heard and appreciated. Customers appreciate it when brands solicit their feedback. The brand makes them feel taken care of.
3. Be responsive
Another crucial customer retention strategy is speedy response time. When customer service does not respond, customers become irritated and frustrated. Customers dislike lengthy problem-solving processes and delayed responses as well. Businesses should adapt to the fast-paced world by becoming more quick and responsive. A dedicated customer support team can be really helpful in resolving the queries of the customers on time. The customer support team may not necessarily have answers to give right away, but acknowledging a customer’s question can show that you care. Businesses should be responsive even when getting a negative comment. Businesses can convert a disgruntled customer into a loyal one by handling complaints professionally and working to put things right.
4. Educate your customers
Businesses should never let customers wander in search of how to buy or use a product. It is crucial to offer resources that make it easy for new and existing customers to learn about the product. Offer private training sessions with a salesperson, customer service representative, or onboarding specialist. Send consumers instructional emails or instructional films for self-learning. An informed consumer is aware of the best places to ask inquiries and find answers.
5. Communicate with customers
Constant communication with customers is the key to online customer retention. Preferred channels like social media and email are the best way to reach customers. Businesses can also send things like a birthday or seasonal e-cards, invitations, and pre-sales offers. Constant communication makes customers feel valued and reinforces why they chose you.
6. Surprise your customers
All people enjoy surprises. A great customer retention strategy is to surprise your customers with something original. Customers are strongly affected by these surprises, and they always remember the brand name. Freebies and discounts are excellent ways to make the consumer happy. Another thoughtful touch that makes consumers feel special and cared for is sending handwritten messages or cards of gratitude. With these actions, small businesses can build close bonds with their customers.
7. Quality matters the most
When it comes to excellent customer service, nothing can be more important than quality. According to market research, customers were nine times more likely to be engaged with a brand whose product or services were of top quality. Make sure that the customer does not feel hurried or disregarded. Fast services are only enjoyable when they are of good quality. Businesses should always fulfill their promises to customers.
8. Customer loyalty programs
Customer loyalty programs succeed in customer retention when they are started correctly. Do not wait for your consumers to take advantage of loyalty benefits; give them as soon as they sign up with you. Offer VIP or gold memberships to your most loyal customers. It makes them feel valued and they keep coming back to you. Small enterprises can provide their clients with updated payment or discount options. This can assist in keeping your current clients and generating goodwill for your company.
9. Persuasion
Customer retention may depend on your ability to persuade them repeatedly. Do not give up on visitors of your website who leave without buying something or subscribing. Always keep in mind that getting the customer back is more important than getting the transaction. Be prompt in responding to client questions. Customer’s favourite products can be brought up to help in retaining them and increase sales.
10. Over deliver your promises
With so many brands in the market, customer expectations have hit all-time highs. The only way to be competitive is to over-deliver on your promises. Businesses should be willing to go above and beyond to create the best shopping experience. This is the only way to keep the customers coming back to you.
How to calculate customer retention rate
Customer retention rate is the percentage of customers that a company has retained over time. Subtracting the number of new customers acquired from the number of customers still active at the conclusion of the term will yield your CRR. Divide that amount by the entire number of clients in the beginning, then multiply the result by 100 to get the percentage.
Formula
CRR = (Customers at end of the period – New customers during this period) / Total customers at the start of the period) x 100
Acquisition of new customers always seems more alluring than retention of the existing ones. However, customer retention is easy and less expensive in comparison to acquisition. Communication and responsiveness play a very crucial part in customer retention strategies. Prioritise your customer service to keep your customers engaged. Above-mentioned strategies will give you some fresh ideas for retaining current customers. Small businesses should go above and beyond for keeping their customers loyal. Ignoring customer retention can impact revenue resources.
