The best customers are the ones who keep coming back to you for more, who choose you over competitors. They always boost your earnings. And therefore, customer retention plays a significant role in the management of a successful business.
Don’t you want to build meaningful, long-term and revenue-generating relationships with your customers? Then applying customer retention strategies will take your business a long way.
A study from Loyalty360 shows that the success rate of selling to an existing customer is 60%-70% more than acquiring a new customer. Another study by Harvard Business Review found that acquiring a new customer costs anywhere between 5 to 25 times more than retaining an existing one.
Your business may be small or large, customer retention strategies are equally critical for both.
What is customer retention?
“Customer retention is a simple concept—happy customers who feel important and are regularly communicated with, in the right way, will keep coming back.”
Strategically, the main focus is to keep the customers coming back and purchase your products repeatedly. In simpler terms, retain your customers so that they stick to your product or company and do not choose other competitors in the market.
What are the benefits of Customer Retention?
For the long term success of any company or product, customer acquisition or customer satisfaction is essential, but the key role is played by customer retention. Why is customer retention important, and what’s all the hype about, you may ask. Let’s put all doubts to rest with these benefits of customer retention.
- Increase in repurchasing behavior
- Declined price sensitiveness:
- Positive word of mouth:
Repurchasing and customer retention have a direct, positive relationship. Customer retention leads to repurchase leads to increased turnover as customers will keep returning. Hence, a positive relationship will have a tremendous impact on business.
Retained customers are loyal to the company or product. To them, the company/product meets their demands. They find it challenging to give up with a minor increase in price because the customer benefits they get outweigh the change. It makes them more likely to accept a price rise.
Satisfied and loyal customers advertise your product for you by positive word of mouth. Word of mouth is considered a powerful marketing tool even in the modern business age. Prospective customers are more likely to believe a fellow customer’s recommendation over a brand’s self-advertising. Without much effort and money, it turns out to be an economically beneficial method with better results.
These are just some of the various benefits that customer retention provides. Other advantages include decreased costs for acquiring new customers, strengthening the unique selling proposition (USP), getting qualitative feedback and more.
How can businesses retain customers?
Now that you’re aware of customer retention and its benefits, let’s talk strategy.
Customer retention strategies are the plans you make to retain the customers you’ve acquired. It includes developing programs to increase customer loyalty and decrease turnover.
One of the best customer retention examples would be the Starbucks rewards program. Starbucks engages with customers by offering them discounts, special access and exclusive offers through their loyalty card. It’s one of the most appreciated and well-known customer retention strategies and keeps them coming back for more.
We’ve already established the fact that retaining customers is much more important than acquisition. But the question arises – how can you retain customers?
Top customer retention strategies
- Provide great customer service
- Care for your customers
- Keep in touch with them
- Maintain a good record
- Provide quality services
- Train your employees
- Polls and surveys
Customer service is key. Customers measure how useful your tool is at every step, especially when they run into a problem or face issues with your company/product. Having friendly and quick customer service at such vital moments rebuilds their confidence in the product and makes them stick for longer.
There are several times customers leave when they think that you stopped caring for them. Don’t isolate your customers. Take their feedback seriously, reassuringly respond to them and resolve the problems, if any.
Communication is the most important factor in maintaining customer relationships. When you communicate with your customer, you’re more aware of their needs, and you can fulfil them. In turn, they choose to stay with you and continue using your product.
Loyal customers are the ones who will stick to your products or company and will choose you over your competitors. Maintain a customer database and figure out who these loyal customers are, and then make conscious efforts to maintain a positive relationship with them. Putler’s RFM analysis can help you spot your loyal customers in just a few clicks.
Providing quality products and services will give you an edge over competitors. If you lead in your field, customers themselves would not want to leave you in the first place. Focus on the quality of the services you provide to make your customers stay.
In an isolated state, not everyone will realize how important a loyal customer is for the company. Training your employees, informing them of the importance of customer retention and asking them to take the initiative and develop beneficial ideas for customers can effectively involve employees in strategic processes. It makes them feel empowered and responsible, motivating them to work better.
This is a fun strategy that helps retain customers. It’ll also give you insight into customer perception of your company or product. Create short and interesting polls, surveys or questionnaires for your customers, asking their opinion, experience, suggestions, etc. and see your customer retention rate rise constantly.
It will work for all types of businesses – small or large, niche or settled.
Customer segmentation may seem like an intimidating task, but it isn’t. Putler’s RFM analysis makes customer segmentation easy and quick. It helps segment customers within a few clicks.
Read more about it here – Customer segmentation and optimized approaches for different segments.
One way to personalize communication could be surprising your customers on their birthdays. Yes, birthdays are still intimate and personal events, and this is impactful because it makes them feel that you care for them.
P.S. A cool idea which works irrespective of the segment customers belong to – Surprise them with rewards and personalized offers.
What are negative customer retention strategies?
Wait a minute. You were reading about ways to retain customers. Then what’s this? Read on, and you’ll know.
Negative customer retention is when a company chooses to end its relationship with some of its customers. It might sound disastrous because your main focus above was to retain customers and try everything possible to keep up with them, but the truth is that not all the customers you try to retain are profitable.
Some are not the best fit for your product or service because of the following reasons.
- Not all customers will be happy: As customers might not find the services provided satisfactorily, they may indulge in negative word of mouth even if your company tries its best to resolve every issue.
- Trying unethical ways: Customers may follow unethical ways to use a service or product. For instance, your company may provide domain services. As a rule, you don’t allow customers to buy more than a certain number of domains. But some customers find a loophole and do it anyway, denying other customers a chance to get a better deal at those domains. You end up losing out on prospective customers in hordes.
- Sometimes it’s on the company: Not all customers are unfavorable. Some are loyal and good. But companies may decide to make a business-related decision involving the loss of a particular customer segment. Or maybe, it’s on the company if any factor is creating a loss for them and is becoming economically unmanageable to retain that segment of customers.
There may be many reasons for ending a company-customer relationship. But how can you do it the right way? What are the most effective negative customer retention strategies?
Here are some negative customer retention strategies to let go of unprofitable customers:
- Increase prices
- Offer unattractive deals
- Close their account
- Avoid responding to their emails
- Reduce your services
Commonly, customers look for the most pocket-friendly products or services. Increasing costs will discourage them from buying from you, and they may look elsewhere to stay within budget.
Unfavorable customers are always looking out for great deals and will do everything to get what they want. If they come across yours and find it unattractive, they will move to another brand.
This may happen in case of a particularly unethical issue where the company forewarns the customer and then closes their account.
It may seem rude, but ignorance in customer service is a needed virtue sometimes. When you do this, ill customers automatically realize that you’ve stopped caring for them and will want to leave.
Sometimes customers stay with you even if you choose to increase prices. In this case, reducing the number of services is a strategy that will work for you.
Why should businesses focus on Customer Retention?
As mentioned earlier, the success rate of selling to an existing customer is 60%-70% higher than acquiring a new customer. Customer retention costs less.
Additionally, retained customers become brand advocates bringing in more customers. These customers tend to stick around owing to the power of word of mouth.
But it’s not just about the profit. Customer retention is vital for getting to know customers, resolving their issues, offering them better services and creating a lifelong bond with your customers.
The long term result of any customer experience strategy is to develop and grow business value. And this value is gained through customer acquisition, retention and growth.
Over to you!
A product or company is about providing services or acquiring customers and retaining them by elevating their experience. Increasing your sales and profitability by investing less is key for business growth, and customer retention helps achieve both.
The main goal of customer retention is to create positive relationships with loyal customers and detach from unprofitable and unethical customers. Try applying the strategies suggested above and see your eCommerce business bloom.
BTW if you have any trusted tricks/ strategies/ tools that have helped you retain customers in your business, feel free to share them with us in the comments.