Published: Sep 02, 2022 | Updated at: Sep 02, 2022
Did you know that 65% of a company's business comes from previous customers? It's no secret that customer loyalty is a perk, but how do you know if your customers are coming back for a second purchase and beyond?
Finding out involves learning about customer retention. What is customer retention and what are the different strategies that can improve this rate? Keep reading to find out.
What Is Customer Retention?
Customer retention is a company's ability to turn customers into repeat buyers and prevent them from switching to a business competitor. This metric indicates whether or not your service or product pleases your existing customers.
All businesses can benefit from learning about customer retention, but this rate is most beneficial to service providers and subscription-based companies.
Customer retention is important because it can keep your current customers happy. This is a more cost-effective strategy than acquiring new customers.
By understanding customer retention, you can turn existing customers into repeat customers. Since these individuals already trust your brand, you don't have to spend extra on advertising, sales outreach, or advertising.
Loyal customers are free business. Not only that, but they are more likely to recommend your business to someone they know.
Here are the main reasons that customer retention is essential:
- Cost savings
- Positive word-of-mouth marketing
- Customer loyalty
- Increased customer spend
- A better bottom line
Creating a cycle of retained customers will boost your brand and increase loyalty.
What Are Customer Retention Strategies?
Customer retention strategies are processes that businesses put in place to improve the customer lifetime value. This is different from lead generation or customer acquisition.
Customers that have signed up for a service or have previously purchased one of your products can be retained.
This involves transactions and customer relationships. Customers want to build relationships with brands that are authentic, aware of what matters, and reliable.
When you focus on your current relationships, shoppers will continue to choose your brand even if they come across other options.
Here are some strategies that can improve your retention rate:
Strong Onboarding Experience
Creating a strong onboarding experience for your customers can improve your customer retention strategy. When customers make an initial purchase, your business has the chance to leave a good first impression.
For example, a customer that has an initial onboarding experience may chat with customer service. If your customer service mishandles information instead of helping a customer, the customer might not come back.
Make sure your customer service team can rectify points of conflict. Using an all-in-one CRM management app can help with this.
Personalized Customer Experience
You can also improve your retention rate by providing a personalized customer experience. Customers aren't always looking for the same thing and might be looking for tailored solutions.
Avoid a one size fits all solution for customers. Personalization is key to finding solutions to different customer problems. From this, customers will feel inclined to continue business with your company.
Customers feel that their experience is more personalized when a business offers omnichannel support. Select more than two channels that your customers are using so that they can contact you with ease.
Building customer trust is essential to a successful business. Don't assume a customer trusts you just because they buy from you. Trust takes time to build.
How reliable your customer service and overall business is to prospects is important to delivering value to customers.
Follow through with your brand promise. Over time, this will impact whether or not your brand is perceived as trustworthy by customers.
When you ask for feedback from customers, you can find areas where your business needs to improve. It's hard to improve a business, or a customer retention rate, when you don't know how customers are feeling.
You can obtain customer feedback in different ways. If you have an app with live chat features, you can ask customers how satisfied they are with the services they receive.
Additionally, you can ask customers to leave reviews on products they buy or on your business page. Once you gather enough feedback, you can analyze results and look for trends.
Customer satisfaction surveys are common and get right to the point. It's useful to ask specific questions in this survey, such as:
- What isn't working for you?
- How would you describe the experience with our service or product?
- Which channel do you prefer to use for customer support?
Supplement surveys with the feedback that the customer service team gets. These team members work closely with the customers and can identify regular complaints.
Rewarding customer loyalty can improve customer retention. Customers enjoy brands that appreciate them and provide them with reasons to stick around.
Strong incentives include:
- Discount codes
- Special offers
- Loyalty programs
You can use point-based loyalty systems or tiered rewards. These programs can also help you collect detailed reports.
How to Measure Customer Retention
To know whether or not your customer retention strategy is working, you need to measure the metric.
Calculate customer retention by choosing a period of time you want to measure. From there, identify the following:
- Number of customers at the start of the period (S)
- Number of customers at the end of the period (E)
- Number of customers added during the period (N)
Use this formula: [(E-N)/S] x 100. This will lead to your customer retention rate (CRR).
Customers that struggle with customer retention typically have a high churn rate. The churn rate refers to the number of customers lost during a period of time.
High churn rates and low customer retention rates signal a problem with the customer experience.
Implement a CRM Program
Customer relation management software is a key tool to achieving maximum customer retention rates and positive customer interactions. The right CRM software can allow businesses to scale without sacrificing customer services and relations.
Halsell is an all-in-one CRM and project management app that can help businesses like yours improve customer retention.
Along with implementing a CRM program, use the customer retention strategies in this guide to reap the most benefits.
Don't wait any longer to get started, contact Halsell today to learn how the CRM program can work seamlessly with your business.