Does your business focus more on customer acquisition or customer retention? The most common answer is acquisition but the focus should be on retention. With the right customer retention strategies, you can ensure steady revenue and avoid losing market share to competitors.
These strategies for customer retention will help your business:
- Save money compared to customer acquisition
- Retain existing customers
- Improve the customer experience
- Build trust with your customers
- Boost profits from loyal customers
- Gain five-star reviews of your product or service
And much more...
Let's dive in.
What is a customer retention strategy?
A customer retention strategy is made up of individual tactics that increase customer satisfaction and keep customers buying from a company in the long term. Customer retention strategies help you build a loyal customer base and increase long-term profitability.
And since you’ve already put in the hard work to gain their business, it only makes sense to encourage them to become a repeat customer. With an average of 68 percent of sales coming from an existing customer base, you can see why implementing a retention strategy is crucial.
Related: Strategies to Increase Revenue from Existing Customers
How to calculate your customer retention rate
To calculate customer retention rate take the number of customers at the end of the period and subtract the number of new customers. Then divide that number by the customers from the beginning of that same period and multiply the remainder by 100%.
Keep in mind that different industries have different benchmarks. What’s average in one could be considered high in another. Either way, building a retention strategy that makes customers want to stick around is always something you should be improving.
Customer retention strategies to reduce churn and grow your business
Now you’re ready to build a cohesive plan to increase customer retention. Here are 10 customer retention strategies to get you started:
- Deliver exceptional customer service
- Create a thoughtful customer onboarding process
- Make it personal with personalization
- Empower your team
- Get the whole company involved
- Use automation to re-engage customers
- Track relevant KPIs
- Use on-demand and self-service tech
- Educate your customers with quality content
- Reward loyal customers
1. Deliver exceptional customer service
Improving customer service is a vital customer retention strategy, seeing as 89 percent of customers say that poor customer service damages their impression of a brand. And with so many communication channels available for people to express their opinions to a wide audience you don’t want any damaged impressions floating around.
Put simply, remarkable customer service leads to retention. Retention leads to more sales. More sales lead to business growth and reduced churn.
Several factors go into great customer service:
- Authenticity: Does the process feel tailored to each individual?
- Integrity: Do you believe that your product or service truly provides what it promises?
- Empathy: Are you dedicated to helping customers solve their problems with your product or service?
- Effort: Are you willing to do the necessary work to create a relationship?
- Expectations: Do you anticipate, meet, and exceed customer expectations?
- Resolution: If expectations are not met, how do you resolve the issue?
Try this: Take some time to go through each factor and gather customer data, feedback or use focus groups. What matters most will vary from customer to customer but you’ll often be able to pick up on certain themes. From there think about where you can make improvements and how you can create a better customer experience.
2. Create a thoughtful customer onboarding process
You need to engage new customers right from the start and the best way to do that is with a robust onboarding program. This is your chance to train customers on how to make the most of your product and maximize their return on investment.
Try this: Create an automated email series that introduces new customers to your brand, provides instructions on how to use your product or service, and opens the door for communication.
3. Make it personal with personalization
Out of all the factors that influence customer experience, personalization is easily one of the most important. If your team is overly focused on uniformity during customer interactions (i.e mandatory scripts), you’re likely to create a cold and uncomfortable environment that leads to low customer satisfaction. Instead, treat every customer as the unique individual that they are by catering to their experience based on their personal history, concerns, and preferences.
Try this: Take personalization up a notch by learning as much as you can about your customers using the data you gather. Analyze your findings to create personal and unique interactions and campaigns. Chatbots, for example, can easily collect and analyze customer data to understand what each person might be interested in. They can then pop up while the customer is browsing and offer to show them relevant items and information.
4. Empower your team
As a customer, there’s nothing worse than hearing, “We’ll get back to you.”
A great way to avoid this is by empowering employees to resolve issues as they come up by providing them with training that offers a variety of resolution options to suit different customer scenarios. A one-size-fits-all approach to finding resolutions often creates impersonal experiences devoid of empathy.
Try this: Allow your team flexibility instead of boxing them in with rigid responses. For example, if you deliver a service, give your customer service team a small list of resolution options to choose from when handling complaints such as a discount for future services, additional services for free, or full or partial refunds.
5. Get the whole company involved with customer retention
A lot of companies only focus on front-line teams like customer support when developing a retention strategy. Instead of training only those who see or speak to customers, get all teams on board.
Try this: Align all teams — from customer support and sales to product development and marketing — by breaking down exactly how each contributes to customer retention goals. From there, the team leads can narrow down even further the ways employees can deliver results that lead to customer retention.
6. Use automation to re-engage customers
The power of automation opens up a whole world of possibilities when it comes to re-engaging customers. Automation not only saves on time and resources but also makes it possible to reach out to multiple customers simultaneously while keeping interactions relevant and personalized.
Try this: Customers often provide their email addresses to receive newsletters and promotions. This is the perfect opportunity to re-engage with personalized content based on their data. Send content or product suggestions or promotions based on their shopping history. The more personalized, the more likely a customer will continue to interact with your brand.
7. Track relevant key performance indicators (KPIs)
Measuring the right metrics is one of the most important customer retention strategies. Tracking the KPIs that are most relevant to your retention goals gives you a clear picture as to whether the processes in motion are having the desired impact. KPI performance also highlights customer issues that might need addressing or optimizing.
Try this: NPS surveys shine a light on customer satisfaction and separates fact from opinion. For example, survey results may show that there are fewer promoters than you thought and that customer satisfaction is actually lower than you believed. These surveys can also highlight the things your customers love about your brand so that you can deliver more of them. Use NPS survey data to address customer concerns and mitigate the danger of churn on the horizon.
8. Use on-demand and self-service tech
The modern customer is busy. They don’t have time to wait around on the phone or chat queue to have their inquiry dealt with. They want answers and they want them now. Self-service technology like FAQ sections and knowledge bases empower people to get the answers they need when they need them.
Try this: Imagine a customer comes to your website to resolve an issue they’re having with your product. The issue itself is quite common and easily solved with access to the right information. Instead of waiting around to speak to an agent, point them towards your knowledge base to access the information they need.
9. Educate your customers with quality content
Customers appreciate it when you solve their problems. One of the best ways to do so is through high-quality, valuable content. A content strategy based on a thorough understanding of your customer personas and their problems, challenges, and needs is a fundamental customer retention strategy.
Try this: Targeted content that answers key questions and helps your customers solve their problems builds trust and positions you as a go-to for their industry questions. When you’re deemed an expert, customers are much more likely to buy from you. And once they’re in, continuing to provide them with relevant content keeps you in the forefront of their mind for their next purchase.
10. Reward loyal customers
There’s no better way to show customers you value their business than by rewarding them for it. It’s also a win-win because it provides an opportunity for customers to take advantage of special offers and it opens the door for your team to cross and up-sell.
Try this: Customers who have been loyal to your company for a long time may feel neglected if you don't show any appreciation. Try sending an email on the anniversary of their subscription with you that includes an offer to upgrade at a discounted rate to a better service package based on their usage habits. This is a small token of appreciation that shows you’re paying attention and you value their business.
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Customer retention strategies make a difference
So there's our list of the top customer retention strategies to retain existing customers and build a loyal customer base.
Customer retention strategies take time to implement and you must be patient while harvesting your reward — which in this case is growing your business, reducing churn, and turning customers into loyal fans. Remember that what works for one industry or business might not work for you. It’s a long game that requires you to keep experimenting and improving.
With that in mind, which of these customer retention strategies does your business implement? Are we missing any?
Let us know in the comments below.