Every brand marketer is aware that repeat sales are the prime pillar of business. When consumers buy a brand’s products time and again, the company does not need to spend extra money in attracting them. Despite this, some marketers do not treat customer retention as a pivotal part of their overall customer service strategy.
In this blog collaboration with Simpl, we’ll discuss the key to customer retention along with proven strategies that you can apply to improve retention upto 2x!
What is Customer Retention?
Customer retention refers to a formula that companies use to calculate the retention level of customers. In essence, the total number of customers at the end of a specific period or year, minus the new ones acquired during this time, divided by those at the beginning of the period gives the customer retention rate.
Customer retention helps businesses measure consumer loyalty over time and determine their overall success. To boost customer retention, businesses use numerous strategies to minimize the number of consumers lost during a period by ensuring enjoyable experiences so that they stay loyal to the brand.
The Overall Benefits of Retention
Be it offline or online enterprises, customer retention remains most important for multiple reasons. Companies that focus on retention can develop long-lasting relationships with customers, increasing profits and augmenting loyalty as well as benefits due to repeated referrals from happy consumers. This can enhance the lifetime value of each customer, leading to a sustained rise in revenues.
Some additional reasons why customer retention matters:
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The chances of selling to existing customers are as high as 60-70% but only 5-20% for new ones
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Current consumers are likely to spend 30% more on new products than the first-time ones
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Longstanding customers can offer useful feedback and data for future campaigns/strategies
Six Customer Retention Strategies To Consider
Nonetheless, achieving this objective requires concerted action and is not as simplistic as it sounds. Here are six top tips to help businesses promote greater customer satisfaction for better retention.
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Ensure a memorable onboarding experience
Recall the adage: ‘First impressions count’. When a customer makes the first purchase, this is the time to create an unforgettable experience. Therefore, onboarding must be seamless and frictionless. Customers are bound to recall any bad first experience so this should be avoided at all costs. If any issue does arise during onboarding, this should be rectified immediately so it does not leave any negative feelings in the consumer’s mind. A good onboarding process goes beyond the immediate sale and includes follow-up messages, access to a platform’s self-service knowledge base and congratulatory messages to thank and excite customers.
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Provide personalized services:
Every customer has diverse needs and expectations. Consequently, a one-size-fits-all approach doesn’t work. Instead, companies should focus on providing personalized services to each customer, depending on their behavior/preferences. Therefore, a brand’s products or services should resolve specific problems customers are facing. Personalized services and specific solutions will make customers more inclined to continue shopping at the portal.
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Make every interaction count:
The best way to keep customers returning repeatedly is by making them happy during each stage of their journey. But this requires a robust customer service strategy. Without a proper strategy, opportunities to delight customers can go waste. According to a PwC study, 73% of survey respondents revealed their experiences influence purchase decisions. This highlights the importance of memorable experiences at every stage of the customer journey.
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Accord special treatment to churning customers:
Churn denotes the rate at which customers stop doing business with a brand. Brands can drive more revenue growth by reducing churn. It can be done by efficiently decoding any signs that customers are on the verge of leaving. This may be inferred by their not checking messages for some time, not placing an order or logging into the system. Or they may have voiced their grievances on social media. By responding and redressing the situation proactively, brands can enhance consumer happiness and prevent these customers from churning.
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Reward brand advocates:
Word-of-mouth recommendations continues to be one of the most powerful sales drivers. Some customers may love a brand to such an extent that they will inform everyone in their circle about its products or services. Such voluntary brand advocates bring an actual value that is multiple times their CLV (customer lifetime value). This is because besides spending themselves, they are referring the brand to family, friends, and followers. Such brand advocates should be duly rewarded. Although they cannot be created directly, conducive conditions can be fostered to reward and encourage brand advocates. This can be done via gifts, prizes, and rewards that are personalized and relevant to their specific interests. They could also be given public shout-outs or featured in a case study, testimonial, or podcast.
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Create a customer feedback loop:
It is imperative to understand what customers think of the brand and its products/services for an enterprise to improve. Companies can collect and analyze consumer data and also undertake reviews/surveys through a customer feedback loop. The results can then be analyzed for customer trends, behavior patterns and other insights to improve the user experience. This data could be shared with relevant teams.
For instance, product reviews must be provided to the development team so that any shortcomings in the design are addressed. Thereby, the feedback loop could be used to provide insights to the marketing and other teams. Feedback loops minimize churn and dissatisfaction, make customers feel valued, support crucial strategy decision-making, and address gaps in the consumer experience.
Why do Customer Retention Strategies Make Business Sense?
The six strategies outlined above are among the top ones to promote greater customer loyalty and satisfaction. In turn, these limit churn and enhance customer retention. All of these are crucial when one realizes that acquiring new customers can cost five times more than retaining existing ones.
A Bain & Company study found that the average repeat customers in apparel spent 67% more between months 31 and 36 of their relationship with a brand than they did within the first six months while it was 23% more for groceries in the same timeframe.
No doubt, it makes business sense to focus on building better customer relationships to encourage long-term loyalty for enjoying the benefits of repeat customers spending more.
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