13 essential customer retention strategies that work
If you’re not focused on customer retention right now, what on earth are you playing at? Sorry, we’re pretty passionate about this – but times are tough for organisations out there, and we just want to give you a fighting chance of smashing your targets for the months (and years) ahead.
If you’re not sure why customer retention is such an important part of those goals, it’s a good job you’ve found your way here. Keeping hold of customers who’ve already bought from your brand – rather than constantly battling for fresh business – makes good business sense. After all, it takes a lot to build customer loyalty – so why lose it?
In this blog we’ll explain a little bit more about what customer retention is and why it’s important, demystify customer retention rates, and share 13 (yes, THIRTEEN) of the best customer retention strategies.
Ready? Let’s do this thing!
What is customer retention?
Customer retention is a crucial KPI (Key Performance Indicator) for your business. Why? Because it shows that something about your brand, product or service is good enough to keep your customers coming back for more.
The ability to keep your customers onside in the face of intense competition (because let’s face it, most markets are pretty well saturated these days) is what customer retention is all about. As a metric, customer retention allows you to measure loyalty to your brand – giving you a handle on your success in the marketplace.
Because customer retention is crucial to business performance, most organisations put a great deal of time, effort and investment into developing strategies that nurture their customers. This level of care and attention is essential if you want to limit your losses when it comes to customers, and increase CLT (Customer Lifetime Value, which is the value of a customer during the lifecycle of their relationship with your brand).
Why is customer retention important?
What’s so good about customer retention when you could just as easily roll out strategies and incentives to entice new business? Well, because it’s not actually that easy to attract new customers; in fact, it’s around five times harder to win over new customers as it is to keep hold of existing customers. It costs more and takes a lot more effort.
Of course, winning new customers is still really important for business growth, but you should never lose sight of the value of the people who are already starting to invest in your brand. Making sure you always see them as humans is key to recognising the value of each one of your customers.
As well as being easier to retain, existing customers are also easier to sell new products and services to. Think about it: when you make the step from new customers to loyal customers, you gain a captive audience who are ready and waiting to see what’s next for your brand. They already trust you, and they’re confident that whatever you have to say (or sell) is worth listening to (snapping up quick-sharp).
So much so that increasing customer retention by just 5% can boost your profits by 25% to 95%! Not only that, but 43% of consumers willingly pay more for products of brands they’re loyal to, and 52% will go out of their way to buy from their favourite brands. Pretty convincing stuff, right?
Customer retention rate
Getting a handle on your customer retention rate helps to take the emotion out of the situation: you might think you’re doing really well when it comes to building a loyal fan base, but do the figures back it up?
Calculating your customer retention rate is a lot easier than it sounds, even if math isn’t really your bag. There are lots of different formulas you can follow, but the most common calculation (which looks more complicated than it is) is: Retention Rate = ((CE-CN)/CS)) X 100.
So, let’s break it down – because we’ve promised it’s easier than it sounds, and we’d hate to let you down.
- CE stands for the total number of customers when the period ends
- CN stands for the total number of new customers that you acquired during the period
- CS stands for the total number of customers at the start of a period
To calculate the customer retention rate, divide the total number of customers from new customers by the number of customers acquired at the beginning of an agreed period. Ta da!
13 strategies for customer retention
- Create a smooth onboarding process
You never get a second chance at a first impression, and when it comes to customer interactions, you want every stage to be as smooth as possible. Personalise this where you can, but the most important thing is to make the customer onboarding process friction-free and unproblematic – whether that’s in setting up a new product or getting started with a service.
- Gather customer feedback
Your best chance of retaining customers and achieving customer loyalty is understanding the customer journey, how people feel about your brand, what they love about your product/service, and where things could be improved. Knowledge is power, and these insights will give you actionable points to work on in meeting their needs.
- Reward customer loyalty
Give your customers a good reason to remain loyal. People like to feel valued, so whether you show that through discounts, a points accrual system, or offers specifically tailored to existing customers, loyalty begets loyalty. Referral systems are also a really great way to harness the power of loyal customers to drive new business.
- Refuse to fade into the background
Focusing on customer retention doesn’t mean you can stop marketing yourself. You need to keep your products and services front of mind – particularly when you consider how much competition there is for customers right now. Whether you opt for weekly newsletters, exciting competitions or free resources, don’t let your customers forget about you (or why you’re so great).
- Personalise your customer experience
Customer expectations have changed, and these days, people enjoy the personal touch. Tailoring your offering to meet the specific needs and lifestyle of the consumer is a sure-fire way to keep them coming back for more. If you can avoid a one-size-fits-all approach, it’ll reassure customers that there’s simply no need to go elsewhere.
- Find your USP
Retaining customers in a sea of competitors calls for a clear message of differentiation. So, what’s so different about you? What do you do that your competitors don’t? What benefits do your customers get from sticking with you? And why is your offering so superior? Communicate the answers to these questions, and you’re on the right path to customer retention.
- Own your mistakes
We’re all human, and even the biggest and brightest brands make mistakes. The key is to own them – rather than ignore them, or even worse, deny them. Mistakes can test customer loyalty, but how you handle them will be the deciding factor. Whether you’ve made a billing error or didn’t deliver on a promise, admit it, explain it, and demonstrate a lesson learned.
- Offer up incentives
If you’re providing a service and a customer hits cancel, how are you going to stop them in their tracks? Anyone who has ever tried to change their internet provider or cancel their TV subscription knows the tactics employed here: you need a money-saving offer customers can’t refuse.
- Establish a customer advisory board
Well, doesn’t that sound terribly fancy? In fact, a customer advisory board is simply a panel of customers who can tell you why they love your brand – and most importantly, what steps you can take to improve it. The insights up for grabs here are worth their weight in gold!
- Sell your CSR
Nowadays, customers are far more socially conscientious. In fact, 90% of consumers are more likely to trust and be loyal to socially responsible businesses, while 76% of consumers say they wouldn’t do business with a company that holds views or supports issues in conflict with their own. So, consider your brand values and uphold these with consistency.
- Keep things fresh
You might be known for a stand-out product or market-leading solution, but over time, customers may tire if they never see anything new. Chances are, your competitors are working on the next big thing with hopes of nabbing your customers, so make efforts to avoid stagnation by developing new products, iterations or add-ons.
- Build trust
Customer retention and customer trust go hand-in-hand. You’re never going to score loyal customers if they can’t hold you at your word, so make sure you act in a way that aligns with your brand promise, and consistently do what you say you will.
- Create a brand voice worth engaging with
People love to see a brand with personality – especially when gracing their social media feeds. Whether you’re funny, witty or dead-pan, leading with personality makes it easier for customers to engage with you. Regular engagement helps to establish a sense of loyalty, which in turns leads to retention.
How can Forsta help?
Once you know what your customer retention rate is (thanks to the handy calculation above), you can set about making improvements. Even if your retention rate is already high, savvy businesses refuse to rest on their laurels – particularly when there’s so much competition out there.
So, how can Forsta help you to improve your customer retention rate? With our market-leading customer experience survey software!
We believe that success comes when companies can see what their customers see; that’s why we give you the tools to help you really understand your customers. Our customer experience survey software allows you to see all your data as a single story, offers advanced analytics to get to the root of any issues, automates time-consuming tasks, and helps to drive cultural change across your business with deep insights and hard data.
We’ll even give your team the tools they need to train agents and share best practices – meaning that everyone will be on the same page when it comes to working towards customer retention.
Request a demo to find out more.
Customer retention through customer loyalty
Customer retention is all about creating a loyal customer base; with a loyal customer base comes more profits, deeper relationships, repeat business, improved ROI, maximised CLV (Customer Lifetime Value), unpaid brand ambassadors, and a significantly strengthened employer brand. A decent customer retention rate can also improve employee morale, as loyal customers bring a sense of security – along with the kudos of working for a well-loved brand.
Striving for new customers will always be part and parcel of your business plan; just don’t forget to invest in the people who’ve got you to where you are today.
Want to know how you can really understand customer behavior?
It’s the key to making the right decisions, at the right times. Especially when those times are turbulent.
Check out our eBook Gather: From Feedback to Feelings.
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