You know how the song goes. Your team spends hundreds of hours analyzing data, developing a customer acquisition strategy, and reaching out to people who’ve never worked with your business before… Only to discover that those people aren’t interested in what you have to offer.
Most people go back to the drawing board at that point and spend even more hours working out different acquisition strategies.
But what if we told you that all of that time would be better spent on developing customer retention strategies? Even though the goal of every business is to develop, you should still cultivate your user base first. Not only it is between 5 and 25 times cheaper but it can also bring you more money.
Today, we’re going to talk about the importance of client retention, discuss what tools can help you the most, and share a couple of proven retention strategies.
What’s Customer Retention and Why Care About It?
Even though you probably have a rough idea of what customer retention is, in this segment, we’re going to define the term anyway. Then, we’ll talk about why customer retention is so significant and finally, we’ll talk about the importance of having the right customer retention strategies in place.
What is Customer Retention?
For lack of a better term, your client retention strategy is a set of initiatives that are specifically designed to encourage your existing customers to repeatedly buy your products. Furthermore, the process should turn ordinary clients into brand ambassadors that will attract even more consumers to your organization and spread awareness about your offering.
Why Is Customer Retention Important?
Why should you put such an emphasis on customer retention versus customer acquisition? It will have a major impact on your cash flow and bottom line. Recent research indicates that raising your retention rates by a mere 5% you’ll increase your revenue by at least 25%. Imagine how much you can earn by improving your rates even more.
How to Calculate Your Retention Rate?
If you really want to find out just how effective your customer retention strategies are, you need to know how to measure them, right? Luckily, unlike many other metrics, calculating your retention rate is not that hard. According to Salesforce, this is the formula for calculating customer retention:
Customer Retention Rate = ((E-N)/S) x 100
In the formula S is the number of people currently doing business with you; E is the number of people you have at the end of a certain period; N is the number of people you managed to acquire during the period you were measuring your retention rate.
4 Types of Customer Retention Tools
Of course, if you want to do the job properly, you need to have the right tools for it. Now, there are literally hundreds of different tools out there that can help you attend to your customers. That’s why we’re mainly going to talk about different types of tools.
Not to worry, we’ll also list more than a few helpful tools that will help you shape your customer retention strategies and tweak them to perfection.
1. A/B Testing Tools
If you own a website and you want to make that your users have a seamless experience, you need A/B testing. It will help you re-tool every aspect of your website from your content to navigation. A/B testing can improve your ads, retargeting efforts, and retention rates as well.
2. Personalization Tools
Offering a product or a service isn’t enough if you want to have devoted followers. Nowadays, people want to have an experience. Luckily, there are tools out there that allow you to treat every customer as an individual. You can do this through product recommendations, ads, and content.
3. Customer Support Tools
Your customers won’t have a sense of loyalty if they feel like you don’t know them. That’s why you need to have your customer support agents know as much as they can about every single customer. Keeping a record for every customer will enable your agents to know everything they need to keep them satisfied.
Recommended tools: Freshdesk and Help Scout
4. Messaging Tools
Keeping people satisfied is a 24/7/365 job. Of course, you and your workers need to have a day off. That’s why you could use customer service messaging tools. It would help to answer basic customer questions and help the people when none of your representatives is working.
5 Proven Customer Retention Strategies
Your mission is to build a devoted client base from the ground up. These people need to have a reason to keep coming back to you. However, you can’t expect to attract more people without keeping your present customers fully satisfied. You can do this by applying certain customer retention strategies that will encourage them to connect with you, share their stories, and build a community of like-minded people around your company.
1. Start an Onboarding Program
You’ve certainly heard about employee onboarding programs but customer onboarding? These programs are there to help customers become more familiar with your product or service and even learn how to use them properly. This can be achieved through in-person meetings held by business representatives or through pre-recorded videos. This is one of the best customer retention strategies because it shows your customers that you’re willing to go the extra mile for them.
2. Create a Retention Calendar
Keeping in touch with the people is a must for every company. Checking up on your customers regularly will help you create a connection with them that will stay strong for years. Of course, you need to know how often you communicate with them. That’s why you should start keeping a calendar. Not only will this allow you to schedule future calls and messages, but it also allows you to know when was the last time you communicated. In addition to calls, emailing and text messaging is also an option, depending on your customers’ preferred communication channels.
3. Introduce a Loyalty Program
Loyalty programs are pretty straight-forward: they award the people for showing their loyalty to your brand with small tokens of appreciation like coupons, swag, or rewards. This small move will keep your customers satisfied, knowing that they are getting more from your company than they asked for. Remember, the top 10% of your customers spend 3X more than the rest of your regulars combined so take good care of them.
4. Encourage Social Responsibility
Being socially responsible is simply a must in this day and age. People don’t want to deal with lifeless corporations anymore. They want to work with someone ready to take a stand with them. Find a goal you and your coworkers believe in and invest some time and effort into it. And if you can afford it, don’t be afraid to invest some money as well. Just a few years ago, Lego invested a good chunk of their revenue into making their product more environmentally-friendly, and their sales increased soon after.
5. Send Out a Company Newsletter
Last of the customer retention strategies we have on the list is a fairly simple but an essential one, nonetheless. Starting a newsletter is a great way of keeping regular shoppers interested in your product and tuned in with your organization. The best thing about it is that it doesn’t require too much investment. You just need to write and send emails to your customers regularly and you’re all good. No need to do it manually either: you can automate the process almost entirely.
Keep Current Customers Instead of Hunting New Ones
The message for today is simple: learn to cherish what you already have. There’s no need to spend hundreds of man-hours and tens of thousands of dollars on chasing and onboarding new customers when you can cater to the ones you already have hooked.
Three things to keep in mind:
By spoiling the existing customers, you won’t have to worry about acquiring new ones ever again. Once you manage to develop a loyal base, your existing customers will do the job for you.