Customer retention is fundamental to your bottom line. And yet, Semrush reports that:
- While nearly half of businesses (44%) prioritize customer acquisition, only a meager 18% focus on retention.
- As many as 58% of companies cannot accurately measure their customers’ lifetime value.
- The average U.S. company loses up to 30% of its customers every year due to a lack of loyalty.
This is not good – but luckily, there are steps you can take to make sure you don’t end up in these statistics.
- Customer retention is the ability to convince customers to keep buying your products or services.
- A slight 5% increase in your customer retention rate can boost your profits up to 95%.
- Focusing your marketing efforts on existing customers is significantly cheaper and more effective in terms of conversions than targeting new leads.
What Is Customer Retention?
Customer retention is the ability to make customers keep buying from you. This is different from lead generation and customer acquisition, which are all about attracting potential first-time buyers. Customer retention takes this process a step further and seeks to convert existing customers into repeat customers.
Why You Should Care About Customer Retention
It’s simple: customer retention is great for your ROI.
Back in 2001, Frederick Reichheld, who invented the net promoter score, and Earl Sasser of the Harvard Business School published a now-classic study. In it, they showed that a mere 5% increase in customer retention rates could boost profits anywhere from 25% to a whopping 95%.
Since then, multiple empirical studies and models have confirmed these findings.
But there’s more. According to the 80-20 Rule or the Pareto Principle, 80% of your revenue will come from just 20% of your customers. It is therefore more cost effective to focus on that 20%, many of which will be repeat customers.
9 Proven Tips to Boost Your Customer Retention Rates
Here are nine strategies you can leverage to increase your company’s customer retention rates:https://www.youtube.com/embed/Y6IBkNNkfJg?feature=oembed
1. BUILD STRONG CUSTOMERS RELATIONSHIPS
The secret to repeat business – other than offering high-quality products or services, of course – is relationships. You want to get to know your customers and show them that you care.
To do that, collect insight from customer surveys and marketing research to develop personalized services, offers, and experiences. You should also focus on infusing all customer interactions with a sense of genuine empathy, from your website copy to one-on-one meetings.
2. CREATE SEAMLESS EXPERIENCES
Consumers today expect seamless buyer experiences, both on and offline. To give your customers what they want, make sure your website and any applications you may be using have a user-friendly interface, load fast, and are easy to navigate.
You should also invest in your customer service. Consider offering omnichannel support, and be sure to acknowledge and resolve all queries as quickly and professionally as possible.
3. COLLECT FEEDBACK REGULARLY
Customer feedback is one of the most effective ways to understand your customers’ wants and needs. Customer satisfaction surveys, feedback forms, and insight from your customer support staff can help with that. As you create your surveys, include specific questions such as, “What are some things you didn’t like about your experience with us?”
4. OFFER INCENTIVES TO REPEAT CUSTOMERS
Show your customers how much you appreciate them and incentivize them to keep coming back. Incentives to consider include:
- Special offers
- Discount codes
- Loyalty programs
- Birthday rewards
Loyalty programs, in particular, can be a great way to collect more detailed information about your customers. This can enable you to create more personalized experiences.
5. BE PROACTIVE
You should always aim to be at least one step ahead of your customers. 77% of customers say they are more loyal to brands that offer a good customer experience if they have an issue, and 72% are willing to spend more if a company offers good customer experiences.
With this in mind, anticipate your customers’ needs and provide them with solutions before they even realize they have a problem. Post answers to frequently asked questions, share guides and other informational materials, and consider implementing chatbots that people can ask for help 24/7.
6. BE CONSISTENT
To keep customers coming back again and again, it’s not enough to offer them one good experience and then hope for the best. Aim to provide a consistently high level of service, every time. This is key to fostering brand loyalty and word-of-mouth marketing.
7. HAND OUT FREEBIES
Customers always appreciate it when they get something for free. However, make sure to give them something of actual value – something they would have purchased even if it wasn’t available for free.
High-quality, in-depth, and relevant educational content can go a long way in this regard. It’s a great way to keep customers engaged and position yourself as an authority on the subject.
8. GET INVOLVED IN CAUSES YOUR CUSTOMERS CARE ABOUT
According to Zendesk’s 2021 Customer Experience Trends report, 54% of customers want to buy from businesses that support inclusion, diversity, and equity in the workplace and their local communities. A further 63% want to buy from socially responsible companies.
In light of this, you may want to consider supporting a charity or an NGO whose mission aligns with what your customers care about.
9. KNOW WHAT METRICS TO LOOK OUT FOR
You won’t be able to find out what your customer retention is if you don’t know how to measure it.
The key metric you’ll want to monitor here is your customer retention rate, or the percentage of existing customers that remain loyal to your company over a period of time. Here’s how to calculate it:
- Choose a time period you want to measure
- Identify the total number of customers at the start (CS) and the end (CE) of that period
- Identify the number of new (CN) customers over that period
- Use the formula ((CE – CN) / CS) * 100 = X to find your customer retention rate
Another indicator to keep an eye on is your churn rate, or the percentage of customers you have lost over a given period of time. First, pick a time period. Then, take the number of customers you started with and divide it by the number of customers you lost. Multiply that number by 100, and you have your churn rate.
Need Help Boosting Your Customer Retention Rate?
We can help. Televerde’s industry-defining solutions combine our best-in-class technology and a team of human experts. Together, they will provide you with data-driven customer lifecycle marketing that targets and converts your existing customers to generate sales growth.