Are you burning thousands of dollars in advertising your product to prospects? Are your marketing efforts falling face first? Are quality leads difficult to generate?
Well, it’s time to make a big ‘U-turn’ and look towards your most important business asset- your existing customers.
Existing customers drive your business forward one transaction at a time. However, you will still see many businesses caught in the trap of devoting a majority of their time to customer acquisition. When, in reality, you can generate more business nurturing the customers you already have.
In this blog, we will explore the top customer retention strategies- right from using customer support software for omnichannel experience to using the power of social proof for keeping customers glued to your business.
Let’s do this!
What Is Customer Retention?
Customer retention refers to the process of turning customers into repeat buyers and preventing them from switching to competitors. The primary objective is to create loyal brand advocates and increase the customer lifetime value (CLV).
A high customer retention rate indicates that a majority of users are impressed by the quality of your products or services and have no desire to look for alternative brands.
Why Is Customer Retention Important?
Marketing and sales professionals will always tell you that it is easier to sell to existing customers compared to getting new customers for the business.
But how true is that?
“According to Harvard Business Review, acquiring a new customer is anywhere from five to 25 times more expensive than retaining an existing one.”
Existing customers are the lifeblood of any company who keep the business moving forward. Rather than spending thousands of dollars on advertisements and customer acquisition, you can focus on keeping existing customers happy for better results.
Studies have shown time and time again that the probability of selling to existing customers is far more compared to selling to new prospects. In fact, existing customers are 50% more likely to try new products compared to new customers.
How to Calculate Customer Retention Rate?
The customer retention rate is the percentage of customers who were loyal to your business over any given period of time.
To calculate customer retention rate (CRR), you first need to decide the time period for which you want to measure, and then identify the following:
- Number of customers at the start of the given time period
- Number of customers at the end of that period
- Number of new customers added over the duration of that period
Once you have identified all these factors, it’s time to use the below formula:
15 Customer Retention Strategies That Actually Work
Now that you know how important customer retention is, how do you retain a good proportion of your customer base? Here are the top 15 ways to retain customers and keep them coming back for more.
1. Have a Smooth Onboarding Process
Customer onboarding is an important stage in the customer journey that educates new customers on using your products or services better.
Since onboarding involves the first interaction after a customer has bought from you, a smooth onboarding process can set the right tone for further interactions.
Here are some top onboarding tips for your new customers:
- Highlight value: A great onboarding is an important customer retention strategy that can help prevent churn among new customers. All you have to do is highlight the value your product can bring to a customer and solve their problems.
- Drive attention to important elements: Bring the customer’s attention to important elements within your website or app. For instance, Slack shows automated pop-up messages to help users understand its tool better.
- Offer personalized training sessions: Conduct personalized training sessions for your customers or business clients to teach them about the complexities of your product or service.
2. Set Clear Expectations
In today’s competitive business environment, customer expectations are going through the roof. There are always close competitors who are willing to do or offer something extra.
In such a situation it becomes important to keep all your customers on the same page. Set clear expectations right from the start and be honest when making a promise.
For instance, if it takes a minimum of 3 days to deliver your product, promising the customer that the product will be delivered anytime sooner will only lead to a negative experience.
In addition to making realistic promises, you must set the right Service Level Agreements (SLAs). A SLA defines the level of service a customer can expect from your brand and lays out the consequences if the services are not rendered properly. This tremendously helps your team set the right expectations and live up to them.
3. Spread the Word With Periodic Newsletters
Do you share newsletters with your existing customers to promote customer engagement and boost sales?
Well, if not, you should.
Newsletters are a simple and cost-effective way of reaching out to customers and marketing your products or services. You can simply share updates about new product features, awards and recognitions, promotions, or new offers.
By sharing exclusive content with your customers you promote the idea that your company values them and that you are consistently improving your services and growing your business.
Sometimes, when you share offers with customers, they can bombard your inbox with product-related queries. You can use email management software to manage newsletter responses from your customers.
4. See What Your Competitors Are Doing Right
Having tough rivals in the market is both a boon and a bane for any business. On one hand, you have to constantly match their offerings, on the other hand, you also feel the motivation to improve your existing process and become a dominant player.
So how to involve competitors in your customer retention strategy?
Well, you just need to watch and learn. See what they are doing right to retain customers and pay equal attention to what they are doing wrong. For a solid competitor analysis, you can keep the following points in mind:
- Track their social media pages and see how they are using content to engage with their target audience.
- Subscribe to their newsletter to learn about new product features or offers
- Check how your biggest rivals are rewarding their most loyal customers. Are they giving exclusive offers? Are they giving them special treatment through personalized discounts?
- See what they did wrong and avoid going the same path. For instance, if they shared their opinion on a social issue that provoked customers, avoid doing that at all costs.
5. Make It Easier for Customers to Buy From You
If you’ve ever stood in a supermarket aisle unable to find what you were looking for, you must have wondered, “Oh lord! Why does this have to be so difficult?”
As a business, it is your responsibility to ensure that customers have a hassle-free buying experience- no matter if they are buying their daily milk or expensive furniture.
Here are some tips to simplify the buying process:
- Improve the check out experience: Don’t distract the customers with unnecessary notifications or tabs to keep the online check out process simple and neat. For retail stores, it is important to have multiple billing counters.
- Keep multiple payment options: A majority of customers abandon their cart when they are not able to find their preferred payment option. Keep multiple payment options for both online and offline customers and consider popular digital wallets.
- Recommend complimentary or related products: If the customer has not initiated the payment yet and has an active cart, you can recommend products that complement the initial product that they are looking to buy.
A simplified buying process will convert into more sales, happy customers, and eventually improve your customer retention rate.
6. Educate Your Customers
Famous American philosopher Allan Bloom said- “Education is the movement from darkness to light.”
The quote seems more meaningful in today’s business world than ever before. In addition to your awesome product or service offerings, education is one of the most valuable things you can give your customers.
Here are some top methods of educating your customers:
Create a knowledge base: You can create a knowledge base that includes help-articles, FAQs, guides, etc. for customers to find necessary information.
Share engaging video tutorials: Create short and engaging videos that clearly explain your product or service features. Keep the videos short, simple, and share them across multiple platforms.
Offer online or in-person training: Providing initial training sessions can be a great way to get customers acquainted with your offerings. You can arrange the meetings online or in-person depending on the convenience.
7. Have a Bigger Vision
To increase customer retention you need to inspire your customers and make them believe in your bigger vision.
The bigger vision can be the impact your business wants to create other than generating profits. It could be simply to empower marginal people through employment or helping the world fight climate change.
For instance, the brand Conscious Step does a great job of supporting multiple social causes. When customers buy from them, they are not just shopping for style or convenience. They can support people, the planet, and causes like breast cancer prevention, saving dogs, etc.
The truth is that customers who share the same vision as you will automatically be attracted to your brand and respect your hard work for making this world a better place.
8. Give Customers an Omnichannel Experience
The major aim of multichannel customer service is to provide customers with multiple options to communicate to your brand if they have a query to raise or a complaint to make.
But are businesses not already doing that?
Yes, a lot of modern brands are able to manage customer communications on multiple channels. However, they fail miserably at providing an omnichannel experience.
Omnichannel customer service is about taking a conversation that started on one channel forward on another channel without any hassles. For instance, a customer complaint that begins on Twitter can be continued via chat or phone call with all of the relevant context preserved across channels.
Read More: Choose the Best Customer Support Channels for Your Growing Business
9. Retain Customers With a Loyalty Program
Everyone loves being rewarded for showing their loyalty, whether it’s a customer or an employee.
Loyalty programs are proven customer retention strategies that can prove to be vital in building long-term relationships and loyalty with customers.
“According to a study conducted by Accenture, more than 90% of companies offer some sort of loyalty program to its customers.”
So how does a loyalty program work?
A customer loyalty program is used to reward customers for their continued loyalty. In simpler terms, the more a customer buys and interacts with your business, the more they’re rewarded.
For example, the brand North Face offers reward points to customers for every dollar they spend. The collected points can be redeemed for unique travel experiences such as trekking in the mountains and more.
Read More: How to Build Brand Loyalty
10. Leverage Social Proof
Social proof happens when customers conform to the actions of others under the assumption that those actions are reflective of the correct buying behavior.
So rather than singing songs about how great your brand is or how perfect your products are, you can simply use your existing customers to promote your brand for you.
“Social proof is a powerful tool that is often overlooked. Around 92% of online consumers look at a product review prior to making a purchase.”
How to leverage the magical power of social proof?
- Use genuine customer testimonials on your website to convince new prospects
- Create videos of your loyal customers and share the story of how your product is solving their problem
- Share customer case studies on social media platforms or via newsletters
11. Add a Personal Touch
No matter if customers order their daily coffee from a cafe or purchase a new car, they look forward to personalized experiences with their favourite brands.
The success of any brand depends on the ability to offer a unique, personalized experience to a customer at key touchpoints of the customer journey.
How to offer a personalized experience?
Develop customer profiles: Attempt to develop customer profiles or personas and understand who your customers really are. Understand their likes, interests, and preferences, to offer a personalized experience.
Recognize customers for their loyalty: Feature a customer each month on social media or on your website and show everyone how thankful you are for them.
Offer personalized content: Offer personalized content in the form of help articles, educational videos, tutorials, etc. to customers for a great learning experience.
12. Share Relevant Product Recommendations
All your strategies to retain customers will fall short if you are not able to upsell to customers and increase the average purchase value.
Thoughtful and relevant recommendations will make every customer feel like your shop was created just for them. Moreover, you’ll enjoy an increase in conversions, order values, and customer loyalty.
Based on the interests, gender, and previous purchases of your customers, you can recommend them products to buy. For instance, Amazon.com does a great job of recommending products to its online customers.
Amazon uses customers’ shopping behavior to its advantage. If 50% of customers who buy ‘Product A’ also buy ‘Product B’ , it makes sense to display this item on the product page. It also uses a customer’s search history on its online store to display them the products they were previously looking to buy.
13. Use Surveys to Become a Better Business
Lending an ear to your customers to know how they feel about your products and services is a great way to retain them and become a customer-focussed business.
“According to a Micorsoft study, brands are viewed more favorably by 77% of customers if they proactively invite and accept customer feedback.”
Using customer surveys to collect feedback is a great starting point to understand customer pain points and what needs to be fixed. Here are some best practices to keep in mind while creating and sharing surveys:
- Start with a clear goal: It is important to know the goal behind creating your surveys. For instance, if your goal is to understand why customers are leaving, you will know which questions to include and which ones to avoid.
- Avoid lengthy surveys: Keep your surveys short, simple, and easy-to-understand. An ideal survey should have a maximum of 5-6 questions.
- Offer a survey incentive: Surveys usually have a low response rate as customers don’t see any value in it for them. They feel that their feedback will hardly make a difference to a brand that already has millions of customers. To make the feedback process more lucrative for customers, you can offer them incentives in the form of gift cards or special discount coupons.
14. Create a Communication Calendar
Proactive customer communication is one of the best customer retention tactics you can adopt to enhance the customer experience.
Consider creating a communication calendar to manage customer interactions, communicate at regular intervals, and create opportunities to upsell and cross-sell.
Ensure your communication calendar includes a time frame for communicating about events, birthday wishes, “thank you’s”, special offers, follow-ups, hand-written cards or notes, etc. It must include all major interaction points in the pre-sales, sales and post-sales process.
Customers love buying from a brand that knows how and, most importantly, when to communicate. Planned interactions can keep customers informed, solve their doubts, make them feel special and realize that they are a valuable part of your business.
15. Train Employees to Practice a Customer-First Culture
“When the customer comes first, the customer will last.”- Robert Half
To create a customer-first culture, you need to establish a vision statement that highlights the values of making the customers your top priority. Every new employee that joins the company should be made to read this vision and absorb the culture over time.
You must train your employees to practice the right customer service skills while supporting customers with their issues. Whether it is about practicing active listening or using empathy to make a customer feel better, every customer-facing employee should hone their skills.
Reward employees who receive positive feedback from customers and recognize this behavior for everyone to model. You must also create service level agreements (SLAs) for faster service and discourage the violation of SLAs.
5 Examples of Customer Retention Strategies From Popular Brands
Successful brands know how to retain customers to take their business forward. Here are 5 customer retention examples to inspire you:
1. Canva Shares Knowledge With Customers
To retain your customers, just offering your product or services to customers is not enough. To foster a strong bond, it is important to be a part of their overall learning process and improve their lives.
Canva does an excellent job of providing customers with educational content that can eventually help them become better designers or artists. The Canva Design School was launched with the objective to create courses, how-to-guides, video tutorials to help customers use its product better and hone their skills.
2. Uber Has Mastered the Customer Feedback Loop
Collecting customer feedback is one thing and incorporating it into your business process is another. Uber, the popular ride-hailing app, has successfully created a feedback loop that benefits both customers, drivers, and eventually the company.
Customers can rate their drivers after completing the ride. The company captures this feedback in real-time and gives a rating to the driver. This simple yet constant feedback process has allowed Uber to identify and eliminate problem drivers to improve the customer experience.
3. Xbox Has Created a Community of Gaming Fanatics
Remember the time you instantly connected with a stranger who shared the same hobbies as you do? Meeting like-minded people who share the same interests can be a pure blessing. Thanks to online communities, it is possible now- on a much bigger scale!
Xbox has created an online community of millions who can do what they love the most- play and discuss games. Users can get updates about upcoming games, view gaming news, discuss new features, and connect with other gamers from around the world.
4. Nike Excels at Social Media Customer Service
A single negative online review has the power to scare away potential customers and make existing customers doubt their decision. Modern brands have been quick to realize the potential of social media to offer quick assistance to customers and save their business from a bad reputation.
A great example is Nike that has undoubtedly one of the strongest customer service accounts on Twitter. The brand is quick to follow up with customers who have had a negative experience or are looking for immediate assistance.
5. Starbucks Offers a Captivating Rewards Program
Rewarding customers for doing business with you is a great way to encourage repeat purchases. Customers are intrigued to buy more from your brand when they receive special discounts or offers after completing a purchase.
Starbucks’ Rewards Program is considered one of the most popular customer retention examples. The program has helped the brand create an army of repeat buyers spread across the globe. Through the rewards program, customers can earn free food and drinks, and receive personalized offers for an enriching experience.
Use Customer Retention Tips to Drive Loyalty & Growth
Every business should make a conscious effort to re-engage with customers to reduce churn, increase profits, create a loyal customer base, and get more customers attracted to your business.
Ensure your customers get a seamless onboarding experience and are constantly educated about using your products and services better. Aspects like loyalty programs, communication calendar, and regular surveys can give wings to your customer retention plans.
While giving any of these strategies a shot, don’t give up simply because you didn’t see quick results. Remember, all great things take time!
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