Once you’ve closed the deal and your prospect has signed on the dotted line, too many businesses think the sales process is complete. The truth is, it’s only the start of your opportunity to create a lifelong customer.
Discover the top 12 customer retention strategies below and avoid churn to improve profits.
What is Customer Retention?
Customer retention refers to a business’s ability to keep customers loyal and become repeat buyers. Those who don’t stray towards competitors. It’s the opposite approach to customer acquisition and lead generation as it focuses on customers who have already bought from you. It’s vital to any business’s longevity and indicates whether your product, service, and value are working well to please existing customers.
Customers who view their relationship with your brand as a friendship are more likely to see you as reliable, and authentic, and know what they need most. In essence, it’s brand loyalty. An essential asset to keep your business afloat in volatile and unpredictable circumstances or markets.
Why is Customer Retention Important?
Customer retention is essential to maintaining business simply because it’s cost-effective. Attracting new customers is costly, as much as 5-25 times more than nurturing an existing customer.
The average success rate of selling to an existing customer is 60-70%, whereas the success rate of selling to a new customer is only 5-20%
Market Metrics book
The upside for those who can maintain reasonable customer retention rates is customers will likely spend a whopping 67% more than those new to you and your value. In turn, this helps to produce recurring revenue. A portion of income that is expected to continue and makes business activities predictable and stable- something businesses always need.
Also read: What It Takes To Be A Great Customer Success Manager: A Guide
Benefits of Maintaining Good Customer Retention
- Increase word-of-mouth marketing: Loyal customers are likely to talk to others about your brand, the oldest form of marketing.
- Cultivate customer loyalty: The right customer retention strategies help create a unique experience for customers that engages them in a meaningful interaction with your brand, ultimately building loyal relationships.
- Increase customer lifetime value: Customer retention helps maintain sustainable growth, a necessity for any business looking to expand.
- Increase revenue: The more purchases loyal customers make, the more money they’re likely to spend.
- Gather data:Â Data is valuable, and loyal customers produce a lot of it. Many use it to gain actionable insights that can increase profits.Â
What is a Customer Retention Strategy?
A customer retention strategy outlines businesses’ ideas and plans to maintain and build overall customer lifetime value. Simply put, customer retention strategies are how companies ensure customers stay with the brand. They’re vital to any business looking to boost revenue while growing relationships with loyal customers into trusted long-term “friendships”.
How Do You Measure Customer Retention?
For your customer retention strategy to succeed, you must measure it. In particular to determine how well your strategy is working and whether it’s a good enough rate to continue to expand. There are plenty of metrics you can use to measure customer retention rates. Check out 9 essential customer retention metrics & formulas and start to gather good customer retention data.
Also read:
- 16 Proven Sales Strategies For Small Businesses
- How To Sell During a Recession | 6 Expert Sales Tips
- How to Master the Art of Cold Calling
Customer Acquisition Vs. Customer Retention: Why do customers leave?
Many businesses think they need to focus on either customer acquisition or customer retention to be successful. However, both strategies aren’t mutually exclusive, and every business needs a strong combination of both. With that said, there are many reasons loyal customers may leave. As a result, if you don’t plan a combined strategy that uses innovative retention strategies, you won’t maximize the ROI of your acquisition efforts. The question still remains: Why do previously loyal customers leave a business? Check out several common reasons below:
- They don’t need your product: Don’t worry; customer attrition is normal because customers will not always need what you offer.
- They don’t like you: Offering discounts will only get you so far; if customers don’t like you or your offering, they’ll leave eventually.
- They don’t like the price: Price is one of the most common objections in sales, so when businesses start making sudden adjustments – that’s when they lose customers.
- The product or service doesn’t solve their problems: Too many businesses claim to solve problems they don’t or exaggerate the ability to solve problems they can only sort of solve.
Top 12 strategies to improve customer retention
Hopefully, you’ve armed yourself with several customer retention formulas and now know precisely how effective your customer retention is. Now, it’s time to improve upon it by discovering several effective customer retention strategies below. Then apply them to your processes:
1. Create a smooth onboarding process
You’ve heard the phrase “First impressions are everything”. But have you taken it into consideration with your customer onboarding process? A solid onboarding process can ensure you and your customer are set for success, even for years to come – that’s why it should focus on removing as much friction for the customer as possible. Remember, customers will never forget their first experience with your brand, and if it was strikingly positive, they’ll stick around for the long term and maybe even tell their friends about you.
2. Watch for signs of churn
It’s simple, you want to maintain or even increase your customer retention rate, and the best way to do that is to prevent the customer from leaving. To do so, you need to be on the lookout for the warning signs of “customer churn.” Most of them may be particular to your business and their past buying habits, such as product usage, customer service inquiries, and purchase patterns. Regularly analyze these variables and then take the appropriate redeeming action to ensure customers don’t lose loyalty and leave.
3. Create an effective customer retention program
Customer retention programs are specific initiatives that focus on encouraging your customer’s loyalty – these can either be company or customer-led. However, creating a customer retention program isn’t exactly a cut-and-paste process. There are various options for well-tailored customer retention programs, and so the one you choose depends on your intent and end goal. For example, popular types of customer retention programs include:
- Customer Loyalty Program: Reward customers for their continued commitment and excite them to continue purchasing with special discounts, personalized deals, or points.
- Customer Onboarding Program: Teach customers how to use your product or integrate your solution seamlessly.
- Customer Advisory Board: Create a panel of loyal customers who will tell you what you do well and don’t and any suggestions for improvements.
- Testing Group: Help provide specific, actionable observations from the customer’s perspective and keep customers interested in new features and products.
Overall, these different customer retention programs usually work in tandem to secure a customer experience that cultivates loyalty and positive sentiment and makes customers more willing to continue purchasing.
4. Deliver fast customer support
One of the main facets of customer loyalty is customer satisfaction. That’s why speedy replies are a top customer retention strategy, and ideally, they’re attached to a fast solution. So much so that 73% of Zendesk customers surveyed in their 2021 Customer Experience Trend Report said that “speedy support resolutions” are fundamental to a good customer experience.
To deliver faster customer service support, you should consider simplifying customer service workflows to smooth over the way they handle tickets. For example, one of customers biggest pet peeves is having to provide information multiple times. To avoid this, you can create various support request forms and conditional ticket fields to give your customers a relatable form that only asks for information related to their problems.
5. Engage with omnichannel automation
An automated omnichannel approach to re-engaging customers is where you set up follow-up or value-based cadences to reach out to them through multiple communication channels. This type of re-engagement strategy is crucial to keep modern buyers who often switch between different channels when interacting with a brand. An example of the different ways you can connect with prospects and customers using an omnichannel strategy includes using a combination of the following media; email, chatbots, social (often LinkedIn), phone, WhatsApp, and messaging platforms.
6. Personalize interactions
There are many ways to personalize your email marketing efforts to improve your lead nurturing strategy as a whole. No one wants to buy from a nameless brand or company to whom they can’t connect, which is why using your prospect’s names naturally in your sales email subject line is an excellent method of grabbing their attention – and trust quickly. By combining this type of personalization with the lead’s behavioral triggers, such as downloading gated content or visiting a specific page, you can deliver the right message to the right people at precisely the correct times.
7. Incentivise loyalty
It’s always nice to feel appreciated as it’s a form of respect and trust. That’s why when you reward customers; they’re more likely to stick around in the long term. Types of loyalty incentives include tactics like discount codes, special offers, and loyalty point programs that are also usually personalized to the buyer themself, making them more likely to repurchase in the near future.
8. Consistently gather feedback
Customer feedback is the holy grail of data and insights for your business. It’s also the quickest way to identify what is and isn’t working for your customers. To utilize this valuable tool in the most effective way possible, you should give customers a chance to have their say by providing them with customer satisfaction surveys. These can be as simple or complex as you need, but you can gain valuable data just by asking for a “thumbs up or thumbs down” on different topics.
However, individual customer feedback should be more specific than a simple survey. Once a resolution ticket is complete, customer service agents should ask customers questions such as:
- Can you describe your overall experience with our [product/service]?
- What about [product/service] isn’t working for you, and why?
- How do you prefer interacting with customer support? (Omnichannel options)
9. Keep over-delivering on promises
You should always go the extra mile for customers to fulfill their expectations and deliver an excellent experience. This includes actively getting ahead of issues before they become a problem for your customer. For instance, you could identify the top issues your customers are currently facing by understanding their perspective better through surveys and taking steps to fix them.
10. Create a community with user-generated content
People love to belong to something, whether that’s a community or group – they like to be involved. That’s why creating exclusive gated user-only content is a great customer retention strategy, as it creates a user community that benefits your customers. By having access to valuable and helpful resources, they can also be part of a like-minded community that allows them to discuss noteworthy topics and ask questions about your products and services.
11. Listen closely to lost customers
Former customers are a gold mine of valuable information and shouldn’t be ignored. Not only because if you listen to them, you might have a chance of getting them back, but because they also have valuable insight as to why customers leave.
If customers don’t complain about anything at all, ever – that’s a bad sign. Unhappy customers don’t usually take the time to complain; instead, they save time for themselves by simply quitting doing business with you and finding another similar solution.
As a result, you should always reach out and listen to lost customers. They can tell you all about hidden issues that will, over time, negatively impact your brand reputation, customer retention, and ultimately your bottom line.
12. Track and analyze customer retention metrics
Customer retention metrics are the factors used to calculate the probability of retaining and attracting customers to your business. That’s because you can’t know if you’re doing well at keeping customers, especially high-value accounts, without good customer retention data.
Improving customer retention often starts with better customer experiences
Don’t make the mistake of prioritizing sales over nurturing loyal relationships with customers. It isn’t a realistic long-term strategy in today’s increasingly competitive world. If you want to retain valuable accounts, you should discover our best customer service resources below to help you connect with customers.
Grow Valuable Accounts to Protect Your Competitive Market Advantage with SOCO®
Key Account Management training supports account managers in developing the application skills needed to review and grow their most valuable accounts systematically while also helping them create actionable plans to cultivate long-term relationships as trusted advisors who provide immediate, measurable, sustainable business results to key clients.
