Customer retention is as important for a business as customer satisfaction, if not more. To put things in perspective, a research conducted by folks over at Harvard Business School revealed that when companies improved their customer retention rates by 5%, their profits went up by 25% to 95%.
However, retaining a paying customer over a long period of time doesn’t just happen on its own; it requires periodic re-engagement with the customer. Before we explore the techniques of better customer retention, let’s take a look at what customer retention actually means:
So what really is customer retention?
A business is known by its ability to convert and keep a customer. Retention can be defined as the set of actions and initiatives that are taken for the latter. Low customer retention is best explained by the leaky bucket analogy; in this analogy, we look at a bucket with a hole at the bottom; even if you put a hose in the bucket and keep pouring in water (customers), sooner rather than later, the water will seep out of the hole and eventually you will lose all water (customers) unless you do something about the hole (improve your customer retention). Often, small gestures like requesting feedback regularly, sending small and personalised birthday gifts and cards and weekly newsletters can make a customer feel like they belong and that a company cares.
So how do I improve my customer retention?
Now that we have established the fact that our businesses need to retain their customers for long-term success, let’s take a look at some of the ways you can keep engaging with your customers to increase chances of retaining them:
1. Personalisation is key:
It’s not efficient to compose a separate message for every single customer but dividing customers into groups (based on preferences, history, location etc.) and sending group-specific messages can also go a long way in establishing an emotional connection with a customer. Customer relationship management systems make it easy for companies to not only retain important information about each customer but they also allow them to send them personalised emails/messages based on that information. If a customer feels emotionally connected to a company, then they feel an innate urge to keep coming back for more purchases.
2. Add rewards to your requests:
One of the first question that pops up in the mind of a person who is asked to do a favour by somebody else is, “What’s in it for me?” Even though filling a small feedback form often takes less than a couple minutes, people don’t bother filling them out or writing a review unless they get something in return. A good way to guarantee feedback or reviews is by pairing your requests with rewards. For example, giving a customer 20% off their next purchase if they fill out a feedback form will incite them to spare a couple of minutes. This will help in two ways:
a) The customer will feel more connected to your business since they just spent some moments to think about it and then wrote a review for you.
b) The customer will return to your business to avail the discount and make another purchase.
3. Great service ensures greater chances of retention:
The better your service is to first-time customers, the greater your chances of retaining them will be. When it comes to service, quality always beats speed. The preceding statement can be substantiated by the fact that around 86% of customers are comfortable in paying more if it guarantees a better customer experience, according to a report by Oracle.
Another aspect of great customer service is making customers feel like they are known. Even though conversation with customers might seem unnecessary, many experts believe that customers like it when they are not rushed and are shown that they are important.
Choosing the right platform for customer service is also very important. For some businesses, emails might still be the way to go but for others (for example, hosting companies), live chat might be an absolute necessity.
4. Share customer feedbacks on social media:
Sharing engaging content on social media plays a vital role in enhancing chances of customer retention. However, sharing customer feedback or reviews on your social media might not be the first idea that would come to your mind. However, customer reviews have proven to be powerful tools for engagement purposes as customers find it more credible when they hear from people like them who have actually used the product/service.
5. Schedule your interactions with your customers:
You are more likely to follow-up with your customers if you have a schedule monitor that reminds you. Most CRMs come with scheduling features that allow you to set up follow-up calls and emails etc. for certain customers. By helping you keep track of your appointments, these CRM tools can go a long way in ensuring that you meet customer expectations.
This technique is also important for assessment purposes. Consider a scenario where your appointments have piled up to the point that you know you will not be able to keep up with all of them. In such scenarios, you can check the schedule of a colleague and assign some of your appointments to them. (Note: Remember to never break your promises to customers, even if it means asking a favour from your buddy.)
A CRM paves the way to better retention
Customer relationship management systems make life easy for people who are trying to better the customer retention rates of their companies. It was okay in the brick and mortar ages to come up with marketing strategies on paper but in the modern day, when you have the luxury of owning sophisticated tools why wouldn’t you? A CRM can:
- Help you enhance levels of customer service
- Identify possibly profitable customer segments.
- Eliminate unsuccessful and illuminate successful marketing strategies and campaigns.
- Reveal customer preferences and needs.
- Manage customer channels more effectively.
- Improve overall customer experience by providing periodic valuable insights.
It’s good to read what our views are about Act! CRM software, but it’s better to hear it from people like you who have recently used the Act! CRM and bettered their customer retention:
“We now have a complete picture of an account’s history and current status, so we can exactly tailor the service we offer to each customer’s needs. With 30% of the orders we take coming from existing clients, it shows that our higher level of service is helping repeat business.”
Dasha Skelton, Connect Vending
“With Act! all members of our sales team can find out everything they need to know about a customer at the touch of a button, so relationships flow much more smoothly. Because our customer service is even better, we’re retaining more customers than ever using Act!”.
Angela Banks, Sales Manager at MCJ Casings
If you believe that you need to enhance your customer retention rates as well, then you can start by requesting a free demo for Act! CRM.
Customers will only stick to you when you give them reasons to do so. In this article, we talked about some of the most efficient and proven techniques to enhances your chances of retaining customers and transforming them into long-term patrons. Always remember that the better your re-engagement techniques with your customers are, the more emotionally connected they will feel.