Charm your customers, again and again, so they choose you over your competitors, again and again. Well, this is what Customer Retention is all about, precisely.
The what, why, and how of Customer Retention, explained!
In this blog, we delve into the world of customer journey retention explaining why winning back customers is crucial to any business, why it matters, how to measure customer retention, and customer retention strategies to delight your existing customers.
The main goal of any enterprise — large, small, medium, or a startup, is to increase sales and bring in more revenue. Obviously, no? The tactics brands adopt to bring in more customers is what makes the difference.
Yes, every brand does need a lot of new customers to try out their products or services. No doubt about that. But at the same time, do not go light upon the existing customers. They should be rekindled, re-informed, and reinstated into choosing your products/services over your competitors.
If you are unable to retain customers, YOU ARE LOSING A LOT OF OPPORTUNITIES AND… SALES!
What is Customer Retention?
Bringing back old customers and making them buy your products is ‘comparatively’ easier than new customers acquisition.
You might’ve heard this sentence many times. It does ring true. And the hardest part of retaining customers is not as simple as the sentence. It takes a LOT of effort, time, and patience. But once you’ve mastered the art, you can lay back and relax (for a while). Because the customers will keep coming back.
Customer Retention Definition: Customer Retention is an activity undertaken by a brand to make its existing customers buy their products or use their services again after the first purchase. To get customers hooked onto what your business offers, strong retention strategies are a must.
The best customer retention strategies in service marketing enable you to form lasting relationships with customers who will become loyal to your brand. They might also spread the word within their circles of influence, which can turn them into brand ambassadors and bring in new customers.
Customer Retention Statistics
A study states that the success rate of selling to an existing customer is 60-70%. Whereas the rate of selling to a new customer is only 5-20%.
Here are a few more interesting customer loyalty stats that say why you must put extra efforts to transform customers into ‘your’ true-blue customers.
- 82% of companies agree that retention is cheaper than acquisition.
- 75% of consumers say they favor companies that offer rewards.
- Over 70% of consumers are more likely to recommend a brand if it has a good loyalty program.
While the above three stats might make you go wow, here’s a fact which is scary — Businesses lost $75 billion in revenue due to poor customer service in 2018, says Forbes.
Importance of Customer Retention
Agree or not, but staying in touch with your customers even after they purchase is a sweet thing to do, and paves a path towards customer loyalty. Let’s take a look at the benefits of customer retention and customer retention solutions for every business to sell more and make more profits.
Increase In Revenue
It usually takes a lot of time for online shoppers to finalize a brand they are going to buy products from. But in the case of customer journey retention, they jump the queue as they’ve already purchased from your online store and have trust in your brand, that leads to better conversion rates which in turn reflects an increase in revenue.
Gain Competitive Advantage
Sadly, you are not the only brand selling that product (unless your product is super-unique). There would be a hoard of brands selling the same product or offering the same service. But if you delight the customer in their first outing, you have a competitive advantage of the customers relying upon you, choosing not to browse relevant brands.
Establishing brand loyalty is a significant advantage. After repeated purchases, customers become faithful to your brand and would not have second thoughts about buying again. They might also go an extra step to recommend your brand to their pals. Nothing beats word of mouth marketing.
Better Conversion Rates
How much of your online store traffic turns into customers? Not all, right? Because the average eCommerce conversion rate stands at just 2% which is low. But customer retention strategies help better conversion rates because the visitors already know what page they’ve landed onto. And they’re now in a substantial position to make decisions because they already know in and outs about the product they tried and tested earlier.
Some customers, despite dissatisfaction, stay with the brand because the earlier brand relationship was important to them and they will give the brand another opportunity. For example, Apple has so many hardcore fans across the globe who love the products the company manufactures. And your brand can develop your fanbase too, with continuous innovation and establishing an emotional connect with your customers.
Low Or No Marketing Effort
You will spend less effort, time, and money (comparatively) to convince customers to buy since they already know your brand well. All this when coupled makes it a no or low marketing effort. Marketing Teams don’t have to slog hard to win over customers. All they need to do is smart work with sleek tactics to reach customers who are aware of your organization.
Cut Down Costs
According to Bain and Company, attracting new customers will cost you 6-7 times more than keeping existing customers; while, a mere 5% increase in customer retention rate can increase a company’s profitability by 75%! That does not mean you should not cater to new audiences. All we say is ‘up’ your focus on the existing customer base. Because re-shine the gold you know rather than embarking on a new voyage to find treasure.
Customer Retention Strategies
The ‘what’ of customer retention, told.
The ‘why’ of customer retention, said.
Now, how to improve customer retention?
- Surprise your customer
- Product Customization
- Leverage customer feedback
- Stay in touch with customers
- Offer discounts
- Customer Loyalty Programs
- Embrace Complaints
- Take customers behind the scenes
- Educate customers
- Easy checkout options
- Consistent service
- Build a community
- Adapt to market trends
Customer retention is a game strategically and smartly played to sway over the hearts of your customers. We have compiled some of the best customer retention strategies which are successful. Check them out!
From offering special services to customers and prioritizing personalization, explore some of the never-ending benefits of customer retention that any brand vying to retain shoppers can try to see the results.
Surprise Your Customer
Who does not love surprises? Everyone loves it, right?
The surprises don’t have to be expensive or big. Sometimes, it is the littlest things that warm up hearts. Imagine waking up to see a box of roses near your doorstep when you wake up. The surprise planned and executed by a boutique you went to recently.
Or, a box of chocolates waiting at your work desk when you reach the office.
Or, a dinner date free coupon if you run a hotel.
Well, surprises vary from the products and services you offer. There ought to be a sweet way to surprise and delight your customers which you know the best.
Satisfying a customer is no easy task. But what if we hand over the task of designing a product directly to customers? So they design the products, the way they love. Sounds exciting, right? That’s what Product Customization is all about.
The demand for custom products is not gonna come down anytime soon. A study by Deloitte says 20% of customers are okay paying more for custom products. And guess what, you can reduce the return rate by 32% as customers are involved in the design process from scratch.
Check out how a brand has been showing the success path to brands worldwide.
Leverage Customer Feedback
Flaunt it because you have earned it.
Customer feedback can help you achieve greater success. Because most consumers don’t even buy products/services without checking out what others have to say.
Whenever a customer says something extremely happy about your brand, flaunt it, others also would gain trust to believe what your brand offers.
Stay In Touch With Customers
If you keep notifying customers about brands daily, you will be in their spam, ignore, or worse, the block list. If you don’t follow up with customers after a purchase, you won’t even be in their minds. A tricky situation, indeed!
Find a balance.
Firstly, a communication calendar is a chart that keeps track of customer communication. It will be via letters, events, phone calls, thank you emails, missed you emails, special offers, magic moments, personal cards, and so on… All these create a positive outlook towards your brand and help in building relationships, even long-lasting ones.
Maybe cutting down the price might make them reconsider the buying decision. Maybe.
There would be customers who’d have viewed the product and did not buy it because it was pricey. That customer might not be the only one. You can create a list of all who viewed and can send a discount coupon slashing price by a reasonable amount. This can make the buyer go a step ahead and order the products.
Not just that, you can even send them discounts on newly launched products.
Discounts work, and you know that!
Customer Loyalty Programs
There would be customers who stick to your brand. No matter what. What are you going to do to make them feel special?
You can create a customer loyalty program to reward customers who make continuous purchases. Heard about exceeding customer satisfaction? This is how you can do it. Out of nowhere, customers received a special offer after a normal purchase, and that happiness is what converts into brand loyalty.
Okay, here is the stat to support our claim — the top 10% of your customers spend three times more than others. Hard to believe, but have to believe, some facts like these.
When customers don’t like a product or a service, you are not just losing a customer.
- You are losing their trust
- You are also missing out future customers
When a customer is dissatisfied and complaints about a product or service, reach out with an apology (It’s okay to say sorry) and ask them why they felt so. Listen out and resolve it.
They’d feel the happiest when the brand does it. And this might even win back their trust in your brand.
Take Customers Behind The Scenes
Take customers into your factories. Take them into your warehouses. Take customers into your office spaces. Show them how you work. Show them who does what work. Show them what goes behind manufacturing the products they love. Beyond the products, show the faces which slog hard to offer compelling products.
Say stories of what went behind the creation process. This would develop a humane attachment of customers towards your brand.
You have amazing social media platforms within the pursuit to show behind the scenes insights and footages.
You don’t check up on Facebook or Instagram to always post pictures of yourself, right?
Similarly, customers, all the time will not be wanting to keep buying stuff. But for sure, they are gonna spend more time with phones in their hands. And it is your responsibility to appear on the phones of your customers to keep them engaged and entertained.
Send a newsletter, share interesting posts, talk about people, and say stories about your lives. Or maybe, try email marketing customer retention. Educate your customers more about the things that would make everyone’s life better so they’ve got a purpose to stay in touch with you.
Educating your customers about various facets of life gives a positive experience and might make them steer the wheel to your base again.
The 8:2 mantra!
For example, if it takes 8 minutes to decide what to buy, it should not take even 2 minutes to complete the buying process. The first as well as the last impression on your online store should be seamless and sweet. Because as many as 28% of shoppers abandoned carts at the checkout as it took a lot of time.
No brand would want customers to leave the store from the last pitstop.
Create a shopping experience which complements the checkout process. Keep it quick, keep it hassle-free, and add one more point of making customers be at peace throughout the buyer journey.
Consistent Customer Service
Show, then sell. Say, then sell.
Purchasing is a process and knowing the fact that not all visitors turn into customers at the first visit itself, you need to be consistent with relevant information about your products to the buyers.
Outside your eCommerce store, show what all products you’ve got before asking them to buy; say why and how your products or services stand apart before asking them to buy.
Captivate and convince them at every touchpoint so they are sure that nothing beats your product in providing value to the buyer.
Build A Community
The opportunity to create a space with customers is abundant.
There is tremendous beauty in starting a community and bringing together like-minded people. There is abundant joy in realizing your tribe. There is an adventure in exploring new connections. There is always happiness when people with the same wavelength come together.
It may or may not be completely related to your products. Create something that would be more than just a platform to showcase your products – a space where customers can freely express what they feel like, with no holds barred.
Adapt To Market Trends
You’ve set a routine, you’re comfortable, complacent. All this is understandable. But that is the best part about change, it fights against complacency. It makes you grow.
Brands should always be on heels to change the way you market your products because the trends are always changing, unexpectedly.
Swim with the tide and when the swimmers decide to take a detour, make sure you too. This way, you can stay relevant in the competition and sometimes, ahead of time than your competing brands.
How To Measure Customer Retention Rate?
Measurements. Metrics. Money.
Now that you know why customer retention strategies must be a priority for every business to sell more. Let’s discuss how to calculate customer retention?
To maximize your retention efforts, you need to understand how to track and measure some key retention metrics. Once you know how to calculate them, you can put them to work in your online store for lasting, profitable results
Pro-tip: Do not measure once and stop. Do it periodically. And that is when you’d know if your efforts are paying off. The market keeps changing. So will your metrics also. Knowing your customer retention rate must be a regular affair.
Though there are multiple methods to measure customer satisfaction and retention, this is one of the most sought after.
Customer Retention Rate Formula: Number of customers at the start of a month – the number of customers at the end of the month/number of customers at the start of the month.
(Note: The above-said is not the only way to know how to calculate customer retention)
This way, you can always keep a check on how your retention strategy works.
Customers don’t make snap judgments when they are buying something. The very fact that they bought something from your brand is itself a sign of positivity and trust that they’re on your brand. That trust does not come easy. That trust is crucial. Make sure you never let go of that.
Focus on customer retention strategies as much as you do on customer acquisition. Devise strategies. Set a roadmap. Talk to your customers even after they buy it. Engage buyers with engaging, entertaining, and educational content. And importantly, stay relevant and don’s stick to the same ideas.
Wait near your door to welcome back customers to shop with you!
You decide to create them, to nurture them, to build trust again out of the circumstances around you. And you decide to open the door to let them in then to foster their growth and happiness in your products/services…
Hope you’ve enjoyed reading. If you have any exciting ideas or questions, I’d be happy to learn more from you. Also, if you want to listen from us, join our community and be the first to receive industry tips and insights to grow your business.