Two major factors determine a business’s profitability: the first is acquiring a customer, the second is retaining them. This article will begin with a discussion of why you need to focus your energy on customer retention. We’ll finish with some of favorite, most actionable strategies for improvement.
The Benefits of Investing in Customer Retention
Most entrepreneurs concentrate the bulk of their effort on customer acquisition and, understandably, attracting a new customer should be a top priority.
But are you working to keep them?
The greatest myth in the entrepreneurial world is that, to make money, you need to focus on customer acquisition. The reality, however, is that the most efficient way of increasing your revenue is retaining your customers.
Why do we insist that customer retention is more important? Well, for starters, because it is much cheaper than acquiring a new customer.
According to research carried out by Invesp, acquiring a new customer is five times more expensive than getting the existing ones to continue spending on you. Which makes sense: a retained customer is a customer you already have a relationship with. Your priority, therefore, should be customer engagement. How do you keep them coming back for more?
Let’s answer that with some of our favorite engagement ideas:
7 Actionable Ideas to Improve Customer Retention
Practice Customer Lifecycle Management
By utilizing customer lifecycle management (CLM) effectively, your company can make significant strides forward.
CLM has you divide your customer base according to which engagement stage each customer is in with your brand. You can then communicate to these different segments with targeted messaging.
Why? Well, it wouldn’t make sense to speak to a first-time visitor to your site the same way you’d speak to a VIP. Using these targeted messages, you can work on increasing the engagement of customers, moving them from a visitor to a customer, all the way up to a champion VIP.
First, you need to define what these stages of engagement are for your company, and what metrics indicate moving from one stage to the next. Next, you can create targeted campaigns for each segment. Once you have everything running, you’ll have a strong backbone of customer communication. As soon a customer moves from one stage to the next, they will begin receiving the campaigns for that new stage.
You can still add campaigns on top – these CLM campaigns just make sure your business is always improving customer engagement in the background.
Request Feedback (And Use it!)
Before you start fixing something, you need to figure out what’s broken. Ask for customer feedback, and act on what you learn. The better you are at solving customer issues, the more likely you are to keep those customers around.
Customers have plenty of options in 2019 – you need to make sure you’re giving them what they want. Once you know what’s making customers churn, you can start solving the problem at its source.
How? Send customer surveys by email asking what they think. Send post-purchase surveys to see how they felt about the transaction process.
One popular approach is using Net Promoter Score (NPS) to discover how your customers feel about your business. With NPS, customers rate (on a scale of 0 – 10) how likely they would be to recommend your service. To find a general idea of how well you’re doing, subtract the percentage of “detractors” (rated you 0 – 6) from your number of “promoters” (rated you 9 or 10), to get an overall score from -100 to 100.
The higher your score, the better. To get more specific feedback, reach out to your detractors and ask them what they had problems with.
Be Clear About Expectations
If you are dealing with products that take a certain amount of time for their benefits to be appreciated, it is usually best to tell that to the customer when selling to them.
If there’s one thing that any customer appreciates is honesty. This is because, at one time or another, people have been duped by businesses claiming that their product will do something for them, and then falling short.
This creates a certain level of distrust in customers, and this is why people are usually afraid of buying from brands they are not familiar with.
However, by being honest about expectations, the customer will be more trusting of your brand. A trustworthy brand nurtures customer loyalty which translates to more customer engagement and customer retention.
Constantly Communicate Results
People are usually more willing to keep purchasing from a brand that delivers results and ROI. If a customer can clearly see how your product influences their objectives, it will be a lot harder for them to leave your offerings for a competitor’s.
The implication, then, is that you need a stellar system for tracking the metrics that are most relevant to the customer, based on the goals that you established with them.
As such, you need to be transparent with the results, in addition to where you can improve, and what you intend to work on.
Create Memories of Success
Research by Live Science shows that people are more prone to remember negative events as opposed to those that were positive. Thus, even if you have a lot of positive events, the few negative ones are more likely to be remembered in the long-term.
As such, it is in your best interest to work on creating better and memorable experiences around your successes. You need to continually remind your customers why they chose you in the first place.
Whenever a negative event occurs, ensure to communicate clearly and explain how you are going to remedy the issue.
If something great occurs, be sure to thank the customer for their involvement. Appreciation is one of the most crucial factors that determine a relationship’s success. Utilize this retention strategy, and you will multiply the amount of happier customers, which only means more customer engagement.
Create a Consistent Experience
As we covered earlier, the biggest contributor to customer engagement is trust. The only way to build trust is through consistency. Your customers need to know that they can count on you to get the job done and deliver the results they need.
As such, you cannot afford to have inconsistencies in your offerings. Create an efficient system that ensures this gets done every time. Consistent customer experience is arguably the most critical retention process strategy for cultivating customer engagement.
Strong customer loyalty makes it possible for your business to profit, even if an acquisition is down. a great deal of acquisition. Putting in the work to foster that loyalty is the tricky part. Tricky or not, it’s clear that retention marketing is the missing piece of the puzzle. It’s where companies need to start investing more of their resources. Retention statistics from recent years have laid bare the importance of customer lifetime value, showing why it’s more valuable in the long run to focus on maintaining quality customer relationships, rather than trying to just gather the greatest number of customers possible.