How to improve customer retention, and why it matters
Customer retention is the ability of a business to keep their existing customers happy and coming back after their initial purchase. Simply put, it’s how you encourage customers to stay loyal to the business, which holds great benefits.
It’s been estimated that a 5% increase in customer retention can translate into a 25 – 95% increase in a business’s profitability. The best way to retain your customers is through excellent customer service – and we’ll show you how!
Why is retaining customers so crucial?
It’s much harder, and more expensive, to get new customers than it is to keep old ones. Businesses have to consider what has become known as a customer’s CLV, or ‘lifetime value’.
This is the net profit a business can derive from a customer over the entire period of their interaction with the company. As returning customers tend to spend more, this net profit can be significant.
They are also known to promote the business through positive word-of-mouth and reviews to friends and relatives, which brings in more customers free of charge. This will boost a company’s ROI, turnover and profitability. Proactive strategies to retain customers therefore has to be a top priority for any forward-looking business.
Our top strategies for improving customer retention
Use customer service tools to help you
Many small to midsize businesses don’t have large customer support teams. However, good customer service tools can help you bridge the gap. CRM software will record customer interactions and create the necessary support tickets to be acted on.
In addition, a centralised service hub can funnel all your customer queries into a common inbox. This can be accessed by all customer support agents to collaborate on more complex tickets.
Establish an easy, customer-friendly onboarding process
Most customers’ subsequent behaviour will be determined by the first interaction they had with your business. If it was good, they are likely to stay onboard. If it was complicated and frustrating, they most likely won’t. A smooth and straightforward onboarding process can win you a customer for many years to come.
Related content: Best practices for successful customer onboarding
Apologise when a mistake has been made
Even with the best strategies and systems in place, mistakes will happen, whether an outage, a billing error, or a breakdown in delivery. Most people are realistic enough to know that mistakes do happen.
It is the way you handle that mistake, however, that will determine whether the mistake costs you that client or not. You need to deal with it speedily and honestly, acknowledge that it was a mistake, apologise and then set it right promptly.
Ensure that you ‘close the loop’ on customer feedback
One of the most important factors in developing effective customer retention strategies is to know your customers and act on their feedback. Understanding your customers’ expectations equips you to craft retention strategies that will satisfy them.
‘Closing the loop’ on customer feedback is achieved when you respond directly to customer feedback. In doing so, you show the customer that their opinion is important to you. Effective closed loop feedback is a powerful tool to turn unhappy customers into promoters rather than detractors.
Reward loyal customers
Customers who feel unappreciated are likely to transfer their business to a competitor. Never take your loyal customers and their business for granted. Reward them for their loyalty with a bonus gift, special promotions, or by setting up a dedicated loyalty programme.
Make it easy for your customers to keep doing business with you
Customer convenience should be a prime watchword. Regardless of what industry you’re in, your products and services need to be easily accessible. It must be easy for your customers to interact with you and buy your product.
This also links back to knowing your customers. Knowing their desires, behaviours, and expectations enables you to create the right tools to let them interact with you seamlessly.
Personalise interactions with your customers
People want to hear the human voice of your business. They don’t want to feel that they’re dealing with a huge impersonal organisation that just sees them as an account number on an invoice.
Identify your target audience and interact with them on their preferred channels. Personalise interactions with customers so they don’t sound like robotic canned responses.
Related content: How to create a great customer service policy
Stay in the forefront of your customers’ minds
Make sure your customers don’t forget about you in today’s competitive and rapidly changing marketplace! Some strategies to hold their attention include:
- Targeted promotions
- Personalised emails
- Contests and surveys on social media
- High-value and relevant podcasts, blogs, informational videos and downloadable content
The benefits of retaining customers are massive. Not only is it more cost-effective, but returning, loyal customers also tend to buy more, and even promote your brand with word-of-mouth referrals.
In some industries, loyal customers can become your best source of new business! They are also your prime source of invaluable feedback and will welcome your promotions and marketing.
Are you finding the prospect of implementing these retention strategies daunting, or just don’t have the resources? We can help! The Digital Customer Care Company’s experienced and skilled team can help you retain your customers and reap the many benefits that will bring your business.