Business owners have a lot on their plate. You know the struggle, from chasing new customers to ensuring the inventories last for the next season. But there’s one problem entrepreneurs know all too well; customer retention. The rise and fall of businesses rely on how well they can ensure customers make repeat purchases and become loyal patrons.
It sounds easier than it is in practice. Many think attracting new customers is much easier than keeping their current ones. Contrary to this belief, the MARKINBLOG survey reports that 82% of organizations claim that customer retention efforts cost less than acquiring new customers.
Customer retention boils down to the quality of your product or service. Nevertheless, plenty of factors can reel your customers in to keep coming back.
Why is Customer Retention Important?
Imagine your target customers as a bowl of marbles. At first, there seemed to be enough marbles to last you. There may be a lot of new customers buying your products. But if you’re unable to have repeated purchases, then sooner or later, you’ll run out of customers or marbles in this bowl metaphor.
So customer retention means stability in terms of the average order value and business income. Moreover, loyal customers have trust in a brand and are more likely to buy different products from the same store. Meaning you can have higher profits, as stated by a Salesforce report in 2020 that states 91% of customers would purchase another item after receiving positive customer service.
Most importantly, your loyal customers will be willing to recommend your brand to their friends and family. Think of it as a free endorsement when you get positive reviews of your product on their social media page. You can encourage your customers to help promote your business at a small cost by providing a special discount when they leave a positive review or follow your Instagram profile.
Strategies to Drive Customer Retention
Want to increase customer retention? Remember these customer retention strategies for your business to take off and stay top of mind.
Improve customer support
Respect and kindness can go a long way. Often, customers need reassurance and validation. Even if you make a mistake, your customers will forgive you if you give heartfelt apologies and a reward as a token of appreciation. Almost 3 out of 5 customers agree that good customer service is key to making them loyal to a brand. Understandably, you can’t serve your customers 24/7, but a live chat or online support desk tool will help you tremendously.
Ensure the customer dashboard or account platform is functional
Be it a shopper account on your website or e-commerce, always keep an eye on customers’ complaints and fix any existing bugs. Help new customers create an account by ensuring all the steps are easy to follow. Doing this will increase customer satisfaction and help you leverage customer data, such as transaction history and interactions.
Collect customer feedback
Ask your customers for their opinions whenever you can. It can be in the form of a 5-star rating, comments, or a short survey. Many customers are more than happy to give their honest opinions freely. But you can step it up by offering a small discount to keep them happy.
Create exclusive promotions they cannot miss
Fear of missing out is real. Make a personalized and time-limited offer to your customers. You can also make it an exclusive offer for loyal customers after several purchases. Many companies have successfully implemented this strategy. Take Zalora, for example, which sends customers birthday promo codes and exclusive holiday deals.
Personalize their shopping experience
Give your customers some product recommendations based on their past purchases. Put their name in a greeting message of your promotional messages. That way, your customers feel more connected to your brand, creating a sense of belonging. A McKinsey report also claims that personalization generates 40% more revenue for companies.
How do you measure retention rate?
There are several customer retention KPIs you must be aware of:
- Customer Lifetime Value – A metric to measure the revenue you can get from a single customer.
- Customer Retention Rate – A percentage of customers the company can retain.
- Churn Rate – A rate that shows how many customers have chosen to stop buying from you.
All businesses must begin planning for a solid customer retention strategy, even during the first year. With a new business, gaining new customers is more important. But jump-starting the customer retention approach will save you time, effort, and money in the long run. After all, your success in keeping a low churn rate can potentially attract new customers.