Five customer retention strategies you need today
‘A bird in the hand is worth two in the bush.’
Though the proverb is hundreds of years old, its wisdom is as relevant as ever when it comes to sales growth and retention. The truth is, it’s all too common for organizations to stake their success on winning new customers, and as a consequence, they can run the risk of overlooking the value of the customers they already have.
The blind spot can result in a huge missed opportunity. It’s been shown that a considered approach to customer loyalty can create real, sustainable benefits to your bottom line.
In fact, a 5% increase in customer retention can increase company revenue anywhere from 25–95%, according to research from Hubspot. And if you’re not convinced by the potential gains, think about the potential avoidance of losses. It’s six-to-seven times more expensive to acquire a new customer than retain an existing one.
Fortunately, there are strategies available to brands looking to drive revenue increases through retention. Here’s how to keep your customers from finding another place to roost.
Customer retention rate: Things don’t stop at the sale
Before you set out to make improvements, it’s important to establish a baseline. In order to measure your customer retention rate (CRR), you need some key pieces of information:
- S: The number of existing customers at the start of the time period;
- E: The number of total customers at the end of the time period;
- N: The number of new customers added within the time period.
You can then use the following formula to work out the customer retention rate (CRR):
- [(E-N)/S] x 100 = CRR
Say you had 110 customers at the beginning of the period and 150 at the end, with 60 of those being new to the brand. You’d subtract 60 from the 150 for a total of 90. Divide this by the starting number of 110 for 0.82, then multiply by 100 to get your final CRR of 82% — which means, in this hypothetical situation, you retained 82% of your customers.
A high CRR will mean the business is serving existing customers in a way that keeps them coming back. For many customers, this could come down to price; for others, it could relate to marketing, or as explained by TELUS International chief information officer Michael Ringman, the wider digital customer experience (CX).
While many companies choose to focus on new sales and what happens up to the point of purchase, brands focusing on customer retention create additional opportunities. The goal is to ensure that things don’t stop at the sale — meaning that sales operations adopt a service mindset. This conclusion could lead to having account managers in place to look after customer needs, or a more personalized marketing strategy that focuses on cross- and up-selling.
For this to work, your customer service, marketing and sales teams need to be songbirds singing from the same hymn sheet. Always up-to-date and accessible documentation that outlines customer retention processes and policies enables each member of the team to do their part in improving brand loyalty.
Customer retention strategies
If you’re only working to find new customers when existing ones aren’t willing to stick around, you’re trying to fill a leaky bucket. Instead, without oversteering away from new customer acquisition and new sales, introduce balance with the following customer retention strategies.
1. Deliver personalized experiences to improve customer retention
Look at how existing customers are interacting with your product or service and think of ways you can help them make the most of what you offer. According to Adobe, 42% of customers are frustrated by impersonal content — which is all the more reason to tailor what, and how, you communicate to your customers’ preferences. You might do this with personalized offers based on previous purchases, by segmenting your email marketing audience or by developing customer personas based on existing data to deliver content in a more genuine way.
There is value in developing an authentic relationship with your customers. By listening carefully to what your customers are thinking about, or challenged by, you’ll put yourself in a great position to add value and offer solutions.
2. Offer support on the right channels
If your understanding of your customers is indeed growing over time, you should be pretty familiar with the places they go for help. Meet them where they are so they can seek support naturally. If your customers are active on Twitter — be there. If they frequent a particular subreddit — be there too.
Beyond offering support to existing customers on the right channels, it’s important to bring your channels together into a cohesive experience. Omnichannel customer experience enables you to serve customers in a consistent manner no matter where they are. When omnichannel is done right, and combined with personalization strategies, brands create a frustration-free customer experience.
But the benefits of omnichannel CX don’t end with the customer — it can increase operational efficiencies for your team too. By doing away with siloed support channels, you lower agent effort and empower them to handle queries and help existing customers across all channels.
3. Be receptive to customer feedback
Listening when a customer is unhappy is crucial for turning a bad situation into a positive experience. Interestingly, even after a mistake, 78% of customers will do business with a company again if the customer service was excellent, according to Salesforce’s State of the Connected Customer report (fourth edition).
Surveys following a call or live chat experience can help you understand how you can improve the support experience even further. This not only shows your customers that you care — which itself can increase brand loyalty — but it also helps you continually grow and learn as a business.
4. Create a customer marketing program
Customer marketing is a powerful strategy for your entire sales operation. Effective efforts in customer marketing can help to retain the customers that you feature and act as word of mouth endorsements that can bolster your brand’s authority.
Case studies, testimonials, video interviews and podcasts show potential customers just how much you value your customers, and often bring a human, unbiased element to your online presence. These tactics can create a real lift to your brand loyalty — 72% of consumers say testimonials and reviews increase their trust in a business according to BigCommerce.
5. Prioritize customer care
Survey findings underline the importance of customer service to any retention program. Customers who receive outstanding customer service are 93% more likely to return to a business, per Hubspot, while a recent TELUS International survey found that nearly 60% of consumers said they would rather sit in a traffic jam than have a poor customer experience.
What does a better customer experience look like? To start, support should be accessible. Consider creating self-service resources that customers can use to find answers — just make sure you continue to give your customers an option to connect with a live agent if needed. If they enter a never-ending loop of self-service, all your investment in prioritizing customer care will be for not. Finally, when they do connect with one of your agents, take care that the support offered is genuine and empathetic.
Improve your customer retention
While a steady stream of new customers is important for any business, it can’t be at the expense of the experience of your existing customers. By keeping your customers happy, through the strategies detailed above, you stand the best chance not only of retaining them, but of giving spark to the positive word-of-mouth that leads to growth.
If you’re looking for a team of experts to help you improve your customer retention rate, get in touch today.