Customer retention simply means a routine of retaining your existing customers over a specific period of time so that they return to you for their needs and continue availing of your products and services. After all, you as a business have invested time, effort, resources, and of course, money in acquiring them. That is why businesses need to adapt to an effective customer retention strategy to be in the leagues of industry leaders.
“65% of a company’s business comes from existing customers, and it costs five times as much to attract a new customer than to keep an existing one satisfied.” (Source)
Despite this, some businesses contradict this idea and don’t prioritize their client retention strategies. This results in following an approach that is not customer-centric and businesses tend to leave their truly loyal and existing customers unsatisfied. Therefore, having a full-time customer retention strategy is a catalyst for your revenue growth.
We will talk more about customer retention strategies as we go further in this article but first, let’s understand the difference between customer retention and customer acquisition.
Customer retention is a strategy for businesses to avoid their loyal customers from not thinking of your business as a primary spot to avail products or services as per customer needs. It also involves encouraging customers to spend more by taking initiatives like upselling, cross-selling, loyalty programs, upgrades, and more.
The main purpose of customer acquisition is to get new customers through different marketing strategies including effective communication and attracting new customers.
Below is a one-liner explanation about the difference between customer retention and acquisition.
The objective for both is, though, similar, to make the customers use the products and services; the company is offering.
Acquiring new customers may be beneficial but it also includes a lot of hard work from your workforce and cost. However, the expenses involved in repeat business are significantly lower. By targeting current customers who already have a certain interest and will in your product, you’re giving yourself a much better chance of converting a prospect into a sale lead.
Businesses want to be as profitable as possible, and simultaneously, grow as much as possible. They usually focus solely on acquiring new customers when it comes to growth. They forget about the gap between how many customers you win and how many you lose. It only matters. That is why customer retention plays an important role in profit and profit growth for your business.
Selling more to your existing customer is both cheaper, and more profitable rather than selling to a new one. It has been accepted by businesses worldwide. Look at this unbelievable statistic about selling to new and existing customers.
The success rate of selling to an existing customer is 60-70%, while the success rate of selling to a new customer is only 5-20%. (Source)
Your customers want to be valued right from the beginning of their journey with you as a business. If you are unable to make them feel valued, they’re going to look elsewhere and you may end up losing a portion of your revenue. That’s why you need to invest in effective customer onboarding. The onboarding process offers to teach new customers how to use your product or service to the best of their abilities. When customers feel valued and know that businesses are there to solve their queries, they struggle less with the product during its usage.
Customer onboarding can be simple and self-serving, like an instruction manual or pamphlet, or it can be more hands-on, like a complete product walkthrough, depending on your product or service. With an effective customer onboarding process, you can deliver value to your customers right from the start of their customer journey. This makes sure that they will keep looking back at you and choose you to fulfill their needs.
Loyalty programs mainly exist to encourage customers to keep doing business with you. It is used as a powerful tool in relationship marketing. Customer loyalty programs intend to create a lifetime relationship with your business.
When customers have a good relationship with your company, they overlook any other competitors’ offer and are motivated to buy from you.
Did you know your top 1% of loyal customers spend five times more per visit than the rest of your customers? (Source)
With loyalty programs, any customer can make decisions efficiently, reduce time to process any information, achieves better cognitive consistency in decisions, and reduce the perceived risks associated with future decisions. Thus businesses need to make sure that they continuously engage with existing loyal customers through these programs to provide better CX and keep them on their toes in growing with your brand over time.
Proactive customer service means informing the customers in advance about an inconvenience and sharing the status or a solution you’re putting in place to resolve the issue. This can seriously dip customer churn. It also adds value to the customer’s business experience and proves a commitment to customer success.
87% of people are happy to be contacted proactively by companies regarding their customer service issues. (Source). This creates a huge impact on customers by doing very little.
This can involve several forms including FAQs, knowledge base, instructional videos, etc. By providing personalized solutions to your customers, proactive customer support helps your business do well by removing any possible bottlenecks.
When you know what your customers want from your business, it is easy for you to retain them. Customer feedback provides insights about your product or service and what customers commonly dislike. It emphasizes the importance of ratings and reviews because it is a great tool to work on increasing customer retention. Once you receive the feedback from the customer, it’s more important to act upon it.
For example, the Net Promoter Score (NPS) is one of the simplest ways to evaluate your relationship with your customers. Your customer support team can, then, reach out to customers who give you a negative NPS. The team listens and tries to improve customers’ experience with your brand. This significantly improves customer retention. Also, customers will appreciate the fact that you’re taking care of their issues. Customers should always feel heard. Let them know that you appreciate their feedback. The customer’s voice is really a prime customer retention strategy that should not be underestimated.
It is a business strategy to make sure customers achieve their desired outcomes while using your product or service. More like proactive customer support, customer success is relationship-focused and personalized customer management. First, it is your job to identify unhappy, unsatisfied customers, and then, assign a customer success representative to their account to provide them with a personalized customer experience according to their needs. If you as a brand can help your customers to enjoy the product or service experience to the fullest, they will always prefer you.
The answer to improving customer retention is keeping an acute focus on customers’ needs. We at Maxicus, understand and empathize with customers and try to put ourselves in their place.
What would you want from a brand to convince you to keep buying from them every time you go shopping?
Involve them when you talk about an improvement and strategy about the future product or service updates. Engage with them at regular intervals to see how they are using your product or service.
Are they facing any issues with your product or service?
Proactively, ask for customers’ feedback and implement changes accordingly.
You need to treat your customers as your partners. Assure them that you’re taking their feedback and suggestions seriously. Convey to your customers that you’re modifying your product or service according to their requirements. Allow them to know that you both are in this together and their satisfaction is your success.Categories: