Your customers are one of your company’s most important assets. That’s clear from the amount of time and money businesses spend to acquire new clients. Although new sales are important, smart companies also focus on retention.
What Is Customer Retention?
Customer retention means keeping the clients you already have. Pretty simple, right? You know how hard it is to get new customers. It costs a lot less to keep existing customers than to go out and acquire new ones.
Why Should You Care about Existing Customers?
Companies that neglect retention do so at their own risk. It all comes down to profits. In fact, increasing customer retention rates by 5% can improve your profits by up to 95%, according to Harvard Business School.
Why Is Customer Retention Important?
Customer retention drives increased profitability in many ways, including:
- Better Conversion Rates
- Fewer Marketing Requirements
- Scope for Improvement
- Lower Operating Costs
- Increased Sales
Research shows that loyal customers spend more than new customers. And those profits increase with each repeat purchase over time.
Customer Retention Strategies
So, how do you go about holding onto your precious clients? Formulating the right customer retention strategies can help you keep the customers you have and reduce churn.
These strategies include optimizing onboarding, quality customer service, using customer feedback, effective change management, and more.
The CRM: A Key Customer Retention Tool
There are so many ways to drive and improve customer retention, and a lot of them revolve around a robust customer relationship management system, more commonly known as CRM.
Your CRM stores all data about your customers. Then you use that data to drive customer retention. A robust CRM will leverage automation and integrations to help you leverage that data and turn it into action.
Optimize Your Onboarding Experience
It’s one thing to acquire a customer, but to keep them, businesses need to deliver value. Your onboarding experience is your first opportunity to dazzle your new customer, and you should take advantage of it.
1. Educate New Customers about How to Use Your Product or Service
New customers have a lot to learn, so make sure they get the training they need to succeed right out of the gate. Education can be active or passive, synchronous or asynchronous, formal or informal. The key is that it must work for you.
2. Deliver Value ASAP
Focus on delivering immediate value. Analyze your customer journey to identify what KPIs predict customer success and drive customers to those activities from day one.
3. Develop “Quick Start” Guides and Tutorials
Make it easy for your customers to succeed by providing the tools they need to hit the ground running. Produce content that spotlights those key predictors of success and make that content easily accessible.
4. Provide Contextual Onboarding
Not every customer needs every feature of your product or service right away. Use contextual onboarding to deliver the right information at the right time for each unique situation.
Provide Stellar Customer Service
High-quality customer service is mandatory in today’s increasingly digital environment. It’s not just a nice-to-have. It’s a must-have. In fact, 96% of consumers cite customer service as one of the keys to driving customer loyalty. So not only is it important to customer satisfaction, but it’s also vital for retention.
1. Set Realistic Expectations
Use your Service Level Agreement (SLA) to set the expectations on day one. The only way to meet your customer expectations is for those expectations to reflect what you actually do. You should also set ground rules in other areas not covered by your SLA.
2. Over-Deliver on Promises
Now that you’ve set those expectations, it’s time to over-deliver on them. If your help desk promises a response in 48 hours, aim for 24. This is an easy way to build customer satisfaction, which leads to customer loyalty.
3. Fix Mistakes
Mistakes happen. It’s just a fact of business. But how you handle those mistakes can make the difference and turn a customer on their way out the door into a customer for life.
And speed matters. Customers who have complaints handled quickly go on to make future purchases and are willing to spend more.
So when it comes to complaints, make sure response time is fast, that you resolve the issue on the first try, and that your reps are empowered to make things right.
Listen to Your Customers
Customers have strong opinions, and you can tap into those opinions to optimize retention. Social media makes it so easy for customers to speak their minds. However, your job is to turn that feedback into valuable data.
Smart businesses create a customer feedback loop to help them find out what their customers like and do not like to take advantage of all they have to offer.
1. Gather Data
Use surveys, polls, and other feedback mechanisms to extract how customers feel about their relationship with your company. They also help you understand what customers care about and expect from products and services. Get a sense of what makes customers happy and what ticks them off.
2. Learn from Customer Complaints
Complaints can power more effective service in the future. They are so valuable because most customers don’t complain; they just walk away. In fact, for every complaint you get, there are 26 others out there who are dissatisfied but not complaining. So those complaints are actually a valuable commodity. Customer complaints give you a window into what you need to work on.
Make sure to provide avenues for customers to lodge these valuable complaints. More and more people are using email and social media to air their grievances about a brand’s poor customer support. Make sure your company is monitoring, resolving, and learning from this important feedback.
3. Address Concerns on a Priority Basis
You probably can’t do everything all at once, but strive to do the most important things first. Once again, data is your friend here. Use all the resources at your fingertips (and in your CRM) to identify what is most important, and then make an action plan.
Manage Change Effectively
You’re always making your products better, but new products and features mean change and change can be hard on customers. It’s frustrating when you open your app and things aren’t where you left them.
How you handle change is critical. You can leave your customers to figure it out—and maybe quit trying to figure it out—or you can walk them through this important moment. Provide effective and timely resources to ensure customer success. Check out these strategies for keeping customers in the loop through the inevitable change and growth in your company.
1. Knowledge Base
Asynchronous resources in your knowledge base are vital to any updates or changes to your products or services. When they see that new icon, they need to find out what it is right away.
Make knowledge base articles and videos more available with a few easy clicks so nobody is left in the dark.
2. Timely Communication
Email newsletters and announcements about planned changes in advance and at the time of the change, so your customers know what’s going on. After all, although customers might like fun surprises, nobody wants to log in and find their favorite feature is gone.
Increase the value of communication by including links to resources and webinars. That way your customers don’t have to go searching for help.
3. Live Webinars
Written communication and asynchronous resources are great, but live webinars can take you even further. You provide a live person in real-time to demo new features and answer questions. This gives you the opportunity to showcase and put the right spin on what’s new.
Personalize Customer Interactions
According to Accenture, one-third of customers left a business relationship because of a lack of personalization. So it makes sense to prioritize personalization throughout the customer journey.
Optimize your CRM to personalize interactions. Use profiles to store data so you can customize each touchpoint with ease.
1. Personalize Follow-Ups
Using a customer’s name is personalization 101, but you can take it to the next level. Check in about their specific issue or problem, and find out if your product or service is helping. If you’ve added this data to your CRM, this is easy!
2. Map Out Touchpoints
Develop a frequent communication calendar or a programmed sequence of events, phone calls, special offers, and more. Once again, your CRM will come in handy to help you map your customer journey and find key moments to connect.
3. Handwritten Notes
In these days of automation, something like a handwritten note really stands out. Use your CRM to collect data to drive that special interaction. For example, the online pet retailer Chewy sends hand-signed birthday cards to its customers’ pets.
Make Customers Feel Special
This is good advice for any relationship. In business, customers who feel special are more likely to become loyal and you return business. Smart companies work proactively to make their customers feel seen and heard.
1. Special Offers
Special offers are a great way to delight your customers. Not only do special offers and perks show the value of being your client, but they also increase the scope for cross-selling and up-selling. After all, a buyer in a good mood is going to buy more.
By now, a holiday email may not be enough to make your customers feel like you care. It’s predictable and everybody’s doing it. So take things to the next level and provide your customers with surprises. One way to do this is through gift-giving, which is also a good strategy during the prospecting phase. It helps you stand out from the crowd of stale outreach.
Identify your most loyal customers, long-time customers, and most profitable customers, and reward their commitment to your brand. Not only do rewards delight customers, but they also build goodwill and loyalty. This paves the way for customer advocacy.
Build Customer Advocacy Programs
Customer advocacy is nothing new. At its most basic level, this is when your customers recommend your products to others. Companies like Apple see high levels of organic customer engagement. However, you can expand and nurture advocacy no matter what your current levels look like.
Customer advocacy programs encourage active engagement and social sharing of your product or service. In a world where people are more likely to buy from a recommended brand, that can really drive your bottom line.
You’re collecting customer data all the time. Put that data to work to identify your most loyal customers. Then put those customers to work for you.
1. Loyalty Programs
Loyalty programs are a great place to begin building customer engagement. They open the door to communication between you and your customer. And they help you collect valuable data.
Plus loyalty programs offer many opportunities to make customers feel special, as mentioned above. After all, who doesn’t love getting enough loyalty points for their free Starbucks coffee?
2. Customer Forums
Create a discussion board or open forum for customers to discuss your products. Canadian brand Instant Pot built a robust Facebook community around its electronic pressure cooker. Members can ask questions, offer advice, share recipes, and more. They also post pictures of their pressure cookers.
3. Encourage Engagement
Although some customer advocacy happens naturally, sometimes you have to ask. Encourage customers to share their experiences with your product on social media. Create hashtags and communities everywhere.
When your customers do engage, your company should engage right back. Interact with tagged posts with likes and comments. Send thank-you notes. Make sure the customer knows you’re listening.
4. Incentivize Advocacy
Reward customers for advocacy. For example, you could offer a gift card to people who buy gifts for others. Other companies do giveaways where you get to enter by tagging friends. This holiday season, Panera is offering customers a $10 bonus card when they purchase $50 in gift cards for others.
Use Automation Tools
Customer retention can be labor-intensive. After all, you can’t write each of your customers a handwritten letter or take them all out for a round of golf. That’s where sales and marketing automation comes in. Take advantage of the wide variety of tools to help you hold on to every hard-won customer and keep sight of prospective customers.
1. Identify Signs of Churn
Your CRM can help you identify signs of customer churn. Make sure you’re tracking KPIs that show engagement. You can then use customer behavior and triggers to take action. Haven’t heard from a customer in a while? Purchase patterns changing? All of this data is at your fingertips.
2. Re-engage Customers
Automation can be used to re-engage with customers you haven’t heard from in a while. We all lead busy lives, but this doesn’t mean you should let your leads go cold. Most CRMs can notify account managers when it’s time to reach out; some can even generate outreach templates.
Implementing a chatbot on your website is also a great way to re-engage with customers. These bots can use IP addresses and browser cookies to craft personalized conversations with returning prospects the moment they land on your site.
These interactions will become more common. In fact, chatbots, voice assistants, and interactive voice response (IVR) will power around 95% of customer interactions by 2025, therefore reducing the workload on your reps.
3. Email Campaigns
Email campaigns continue to produce results. They keep your company top of mind, encourage participation, and drive sales. These days, it couldn’t be easier to produce customized marketing campaigns and more.
For example, you can set up email campaigns to reach out to customers who bought a certain product and upsell them on a related product. You can even set up elaborate drip campaigns. The sky’s the limit.
On Your Way to Retaining More Customers
Customer retention is vital to a thriving bottom line. Luckily, your CRM contains all the data you need to develop an effective retention plan. Data gives you a clear view of customer habits, patterns, and more. This helps you understand customer behavior. When combined with sales and marketing automation, you can avoid customer churn and thrive going forward.