Knowing how to manage customer retention is an amazingly important part of growing a sustainable business. When you increase customer retention rates by only five percent, the company`s profits will increase by twenty-five to ninety-five percent.
Having poor customer retention can be compared to a filling bucket but with holes in the bottom. It is possible to pile on to make up for that but, it is much better to figure out what caused the holes and how to repair them.
That is why, we will talk about the importance of customer retention in marketing. Likewise, about strategies that you can use to keep your customers coming back.
What is and why is customer retention important for your business?
Customer retention involves different activities whose aim is to keep customers for the long term. Also, turning them into loyal buyers. The general goal is to transform first-time customers into repeat customers and maximize their lifetime value (LTV).
It matters to be mindful of customer retention because that way you can understand how satisfied and loyal your customers are. Therefore, how strong your customer service is and if there are any problems, or red flags that can turn off your potential customers. When you focus on customer retention that can pay dividends in the long term. For instance:
Increasing profits.
Keeping customers over time and taking care of them will have a positive impact on the bottom line. As we previously mentioned, increasing customer retention by five percent can increase profits by twenty-five to ninety-five percent. Existing customers make up sixty-five percent of the company`s business altogether.
Lowering cost compared to customer acquisition.
Many companies state that customer retention is much cheaper than customer acquisition. However, a lot of companies spend much more money on acquisition than on nurturing customers they already have.
Brand ambassadors.
The important and best thing about having loyal customers is that they share their positive experiences with others. Therefore, they are becoming our brand ambassadors. We are sure that you can agree that is priceless. Research shows that around sixty percent of customers talk about a brand they like and they are loyal to with their family and friends. That is why customer retention is a must-have for a business. A good word travels fast.
Increasing average order value(AOV).
It is much more cost-effective to keep current customers, also, they are willing to spend even more as time goes on. Loyal customers are more likely to spend money with you than other average customers.
How can you calculate your customer retention rate?
CRR will show the percentage of customers that your company has retained over time. Simply divide the total number of clients you currently have by the total number of consumers after one period to calculate it.
If you want to calculate the percentage, you can divide the number you got by the total number of customers at the start. After that, multiply it by one hundred. That looks like this – CRR = customers at the end of one period – new customers during that period. After that, the total / customers at the start of the period x 100.
Strategies to keep your customers coming back
Even though businesses usually direct their attention on attracting new customers, it is equally, or probably more important to keep the existing ones. Strengthening the connection with existing customers is crucial.
Customers will come and go, usually without letting us know that they are not coming back. Therefore, we must protect the bond we already have by taking care of them once they are there. The ways that can help us with that are:
Keep the experience they have relevant and fresh
Give your customers a reason to come back, do business, and shop with you again. Keep paying attention to the goal and try to improve your offerings. Therefore, let them know what is new. When you make changes and updates you will have a reason to interact with your customer base.
Chose the right people to handle the front line
Even if you have the best product, if the person with whom your customers are interacting is not engaging, that will drive people away. That person should not be unpleasant or difficult to deal with because that will for sure be a problem for your customers. Therefore, you need to make sure that you have qualified people on your team. They have to be kind, friendly, and efficient and provide personalized service. That way you can set a standard and your customers will know that they have someone polite to talk to.
Always assume that they will not remember you
If customers buy your product or use your services once, that does not have to guarantee that they will think of you the next time they need what you offer. Therefore, you are competing for their attention during other everyday distractions. If you haven`t heard from your customers in a while, reach out and let them know that you would much appreciate future business with them.
Show that you appreciate them
Let them know that you are grateful with simple acts and words. For instance, use a heartfelt `thank you` first, without just saying `you are welcome` when they say `thank you`. You can a step further and send a special reward for a referral or a thank you note. Building strong relationships takes some time, but it is worth the effort.
Stay in touch
After the sale, we need to devote resources to keep building the relationship. We should do this before we focus on the next transaction. Therefore, those opportunities can include sending clients a special incentive, being active on social media, or regular communication such as email newsletters. Of course, no need for too much action, your communication should have a purpose and needs to be meaningful.
Listen to your customers
Listening includes a few things. Firstly, pay attention when your customers share feedback. Secondly, proactively ask them what they think of your business. Further, send surveys to customers regarding their opinion about your service, or product they received. Lastly, take that information to heart and act on it when you can.
Collaborate when you can
When it is possible, try to do good things in the community. That can be donating a portion of your sale to hosting a collection for the local shelter, food bank, or non-profit. You can choose the activity that will let your customers help with a good deed. That way they can feel good about doing business with you.
Make contacting you easy for your clients
This means that a good idea would be to be available. You can do this by responding to social media comments, voicemail messages, or emails. In addition, do not make them go through a long chain of menu options before they can reach a person on the line.
Surprise your customers
When you do something above and beyond their expectations, customers will feel excited and delighted and they will tell others. This can be something like sending a gift for their birthday, or just remembering their name can do the trick. Reward your loyal customers by giving them discounts or extras when they use your services repeatedly.
Conclusion
When you are successful in customer retention that means that you are meeting or even exceeding expectations. Customer retention matters because it helps you form the foundation of always increasing earnings. Also, you will be able to boost your brand recognition. That is vital for building strategies that can keep your company in business.
Paying attention to the importance of customer retention, your business can create a customer-centricity that nurtures strong relationships with them. Therefore, you can increase customer lifetime value, build sustainable growth and improve your brand loyalty. Using these strategies, you will make sure that your business is successful.