Introduction
Did you know that a business gets 65% of its revenue from repeat customers? Companies today go out of the box to retain clients. Customer retention is essential for marketing. It also impacts every department of the company, from interns in sales and marketing to senior management. And Profits increase by 25 to 95% for every 5% increase in client retention. As well as, 60-70% of sales are likely to go to current clients. 82% of companies concur that retention costs less than acquisition & 75% of clients choose businesses that give incentives
Customer retention is just a statistic that gauges customer loyalty or an organization's ability to maintain customers over time. Therefore, the entire business engages in customer retention to keep customers for the long term.
If you are struggling to keep your consumers, here are five awesome strategies that can turn the tide!
What is Customer Retention?
Customer loyalty, or an organization's capacity to retain customers over time, is measured by customer retention. In addition to counting the number of devoted customers, consumer retention can represent or forecast customer happiness, repurchase behavior, customer involvement, and emotional links to a brand.
Customer retention numbers are tied to the first transaction made by a customer and encompass all future contacts. In contrast, customer relationships often start with an initial engagement. Organizations can utilize this feedback after customer retention has been assessed to do data analysis on aspects of customer success and customer experience. For instance, if a decline in client retention is noted, a company may utilize this information to determine the fundamental cause and modify its product offers. Because it costs significantly more to acquire new clients than it does to keep existing ones, customer retention is crucial. Additionally, returning consumers are more likely to participate in word-of-mouth advertising or serve as brand ambassadors.
Why is Customer Retention important for businesses?
An organization risks losing out on recurring business if it does not prioritize customer retention and instead concentrates on growing its client base. Although acquiring new clients, also known as customer acquisition, is crucial, it is far more expensive. Gaining new clients is crucial, but so is keeping existing ones and turning them into loyal patrons.
Five Types of Customer Retention
Customer retention is often broken down into routine, habitual, voluntary, and involuntary. The German Institute for Marketing suggested the following five qualities to help make the differentiation more obvious:
Contextual Binding
In this case, the supplier enjoys a monopoly both spatially and temporally. There are no other options nearby. Therefore the customer is compelled to purchase here.
Legally Consistent
A contract exists between the business and the client to guarantee customer retention.
Technical Requirement
The consumer relies on the supplier for expansions, maintenance, and other services because they employ a certain technological system or piece of software.
Financial ties
It is based either on payments previously made to a provider, which offers the buyer particular benefits or on penalties. It may also include other charges the consumer must pay if he wants to move to the competition.
Emotional ties
From the consumer's perspective, this relationship is voluntary, built on trust, and produced through customer happiness. This binding is very significant because of this.
When to focus on customer retention
The stage of your store's lifetime strongly influences whether you should prioritize client acquisition or retention. A store that opened yesterday is very different from one that has been open for many years.
- Beginning: When opening your shop, you should concentrate on acquiring consumers. At this stage, your acquisition efforts should entirely outweigh your retention efforts. Concentrate on techniques and approaches that can assist you in expanding your consumer base.
- Getting traction: You now have clients and make intermittent sales. At this point, you may start introducing retention aspects to persuade each consumer to purchase more.
- Reliable: Although you aren't nearly an e-commerce behemoth, revenues are increasing. You should consider incorporating more retention into your attempts to increase acquisition at this stage. You can consider launching a loyalty or referral program in addition to taking marketing automation more seriously.
- Established: Your online store has now become well-known. Finding methods to expand is a difficulty that stores of this size frequently face. A retention strategy might encourage consumers to make frequent purchases, raising their lifetime value. The acquisition may result in a lot of one-time transactions. You should be systematic and serious about your retention efforts at this point.
Five strategies for customer retention that work like magic!
1. Monitor and assess turnover numbers.
What you don't comprehend can't be fixed. Businesses should carefully monitor and examine the number of consumers who leave and the potential reasons why they would do so.
We developed a Customer Churn Analysis Template to assist you with that. Utilize this form to gather, organize, and evaluate qualitative and quantitative customer feedback to better understand, lower, and boost retention rates.
2. Lessen customer turnover
A business spends a lot of time, money, and effort developing its first clientele and frequently finds success. The most crucial aspect of gaining clients is what you do after that to keep them on your side for years to come.
After a transaction, many marketers stop communicating with the consumer, which may cause the customer to lose interest. Competitors attempting to win over new clients will readily take advantage of an abandoned consumer. A customer's replacement would be quite expensive for the company! Growth is inevitable and economical if the attrition gap is filled.
3. Keep a calendar for customer communications.
Your staff should aggressively reach out to your consumers even if they aren't providing feedback. Reach out and rekindle your relationship with consumers if they haven't connected with your business in a while. Consider using a communication calendar to manage client interactions and generate possibilities for upselling and cross-selling.
A calendar that records client communications is known as a communication calendar. It notifies you when an existing consumer last interacted with your brand and lets you know when that interaction occurred. It makes it simple to roll out marketing campaigns and proactive customer care initiatives that eliminate obstacles before clients even realize they exist.
4. Consider customer complaints as an opportunity for your business.
Did you know that over 95% of disgruntled consumers who use your goods or services don't file a complaint? They just change businesses or cease using your solution. Furthermore, losing a customer is worse than not knowing the cause!
You must learn about a customer's issue since word-of-mouth advertising is more powerful than it may appear. Additionally, it might be bad if your competition analyzes your customers' behavior and receives a complaint instead of you. Create a system that periodically asks your customers for feedback on your product, and then customize your replies openly and helpfully. How you reply to a complaint will determine how the client perceives your image in the market, which is critical to the success of your business.
5. Onboarding Program
Onboarding is a component of customer success that teaches new customers how to utilize your product or service. Rather than learning on their own, consumers learn with a corporate representative on their terms. Customers not only save time but also grasp how the solution may assist them in reaching their goals.
Because it minimizes churn with new clients, onboarding is also an excellent customer retention tactic. Users may become frustrated when using your product if they do not understand how to utilize it. Customers are on a tight schedule and cannot afford to waste time learning how to use your product. Onboarding guarantees that clients understand how to use your goods or services so that they can finish their tasks on time.
Examples of customer retention
Amazon Prime
Amazon Prime will be a terrific example of a loyalty program's effectiveness. Take a look at the statistics below to see how successful they are:
- By the end of December 2019, there will be over 150 million Prime subscribers worldwide.
- Increase sales revenue by 26% to &75.5 billion in the first quarter of 2020.
- 20% of Prime members shop on Amazon a few times each week, with 7% stating they do so on a (near) daily basis.
Things we can learn from Amazon's Prime:
- The goals of any loyalty program should center on your customers. Establish a mutually beneficial connection with the consumer and give them a memorable experience.
- Prioritize consumers more than marketing your items or services.
Chris Spooner
Chris Spooner is a great example of how to use the "follow-up than one" strategy with his subscribers. It's a website that makes money by providing a variety of graphic tutorials.
Chris Spooner understands how to sell and make an impression on his audience.
- Only two of the eight emails are promotional (the one on 2nd and 16th September)
- Two strives to provide premium members with discounts or free downloads (on the 4th and 18th)
Things we can learn from him:
- Avoid sending frequent promotional emails (consider sending only 25 percent emails in the total emails sent per month)
- The waiting period between two emails should be between three and five days.
- Instead of sending promotional emails, concentrate on ones that give the readers more value.
Conclusion
Building a successful business entails more than just gaining new consumers. Investing in existing consumers is preferable to wasting time and effort on acquiring new customers.
Use these suggestions to improve your company's client retention rates.
Here we have discussed five customer retention strategies that work magic for your business: Monitor and assess turnover numbers, lessen customer turnover, Keep a calendar for customer communications, Consider customer complaints as an opportunity for your business, and Onboarding programs. Hope you love reading these amazing strategies and will apply them to your business.
If you're looking for a reliable and accessible customer service alternative, go no further than BotPenguin!.
