There is no comparison between the cost of losing a single consumer and the cost of converting them. And if you’re not careful, customers will slip through your fingers. How can you avoid this? By establishing an effective customer retention plan.
One of the most effective ways to increase a company’s profitability is to turn customers into repeat buyers. In some circumstances, boosting client retention by only 5% might result in a 95% increase in profit.
What Is Customer Retention?
Customer retention is acquiring recurring customers and preventing them from turning to a competitor. It is a metric for measuring the long-term success of sales and marketing efforts by tracking how many clients are maintained for a year, that is, the investment return in new customers.
Having repeat customers who spend more money on your products or services over time showcases the effectiveness of your business. However, retaining customers requires time because you must earn their trust, which involves a long and nonlinear process.
It represents an integral part of business strategy that can assist companies in gaining a competitive advantage. Customer retention keeps a company's existing customers and increases loyalty by delivering quality products, better service, or more rewards.
Why Is Customer Retention Important?
Customer retention is critical since existing customers account for 60-70% of all sales. Loyal consumers are more inclined to tell others about their positive experiences and are more likely to buy from you in the future.
Customers like these are your most significant support and help you better understand your brand. They will provide honest comments on your product and customer service, allowing you to make the required changes to your firm to increase its success.
Customer retention is critical for the following reasons:
- Retaining loyal customers will increase your revenue.
- They recommend and give favorable feedback about your brand to family and friends.
- Returning customers are more likely to spend more money on your brand in the future.
- Returning customers provide a higher return on investment (ROI) than acquiring a first-time customer.
Customer Retention Calculation
Do you want to know your customer retention rate (CRR)? You can compute the percentage of clients you've retained over time using a CCR calculator.
The cost per acquisition (CPA) is an economic term that refers to the cost incurred by a business for each new customer. In other words, it is the cost for a company to gain one new consumer loyal to its brand and continue to purchase from them.
7 Ways to Effectively Boost Customer Retention
Here are some helpful techniques and resources to help you achieve your customer retention goals.
1. Make use of CRM software
Customer relationship management (CRM) software can help you retain your customers by tracking their behavior gradually. It can inform you about their purchasing habits, product consumption, and when they quit purchasing from you.
You can also monitor customer service encounters to learn about their issues. Such significant customer behavior characteristics can serve as warning signs that you can use to improve customer retention.
Once you understand your consumers' purchase behaviors, you will be able to identify relevant points at which they stop purchasing from you. These points provide a clear direction for your customer retention tactics. Customer Data Platforms (CDP) could greatly help during this process.
2. Take advantage of email marketing
When you know when and why your customers depart, you can target them with emails. Email marketing is a valuable internet conversion approach.
Incorporate email marketing with CRM to deliver targeted emails to customers who are no longer active or intend to buy your product but decided not to at some point. You can give them discounts on unused products, free trials, or other benefits.
Besides that, you can use email marketing to follow up with customers who request assistance. Ask for input from them, get them to post customer reviews online, and collect data.
3. Pay close attention to the questions
Your website created the user journey, created the product pages, and set the prices. You have understood everything about your store since creating it. But that doesn’t mean your customers see the same thing. Do you know how you require a second set of eyes to check your emails when you can't see your typos?
Attending to your customers’ questions regarding your store nourishes quality relationships with your customers — and it’s also a simple but effective SaaS customer retention strategy. Make customers feel at ease enough to inquire. The more comfortable they feel about communicating with you, the longer they stay with your brand.
4. Take notice of complaints
Every criticism you receive is a mini-customer satisfaction survey, and you should use them to enhance your retention rates. If you receive a complaint, do not dismiss it.
To meet your customer's needs, it is a good practice to handle the issue as soon as possible is a good practice. Additionally, you could improve customer retention after resolving issues with product survey questions and find out where you can improve further.
5. Personalize by going beyond using first names
CRM and email marketing technologies make personalizing your communication more effortless than before. Good personalization provides the appearance that your company addresses each consumer connection individually. CRM systems keep track of client purchases, preferences, and support history, so you can use that data to personalize your emails' entire content.
Personalization increases customer retention by providing better customer experiences. Personalizing your customer interactions encourages people to stick with you. They get the impression that you care, which leads to a stronger bond with your company.
6. Develop consumer loyalty programs
Implementing a customer loyalty program can reward customers who buy from you frequently. It provides customers with a reason to keep buying with you. It also shows that your company is paying attention.
Your CRM system could assist you in identifying your company's best customers — the customers you should prioritize. You can design tailored loyalty programs for different categories and provide the most incentives to your best consumers.
7. Set realistic goals for yourself
Customer retention is an ongoing process, like stock investing, where you can't earn millions monthly. Realistic expectations are critical to enhancing your retention rate. It can impact your company's capacity to retain consumers. Realistic expectations are crucial to improving your customer retention rate.
Regarding shipping times, most online retailers cannot compete with Amazon. You may, however, firstly focus on one aspect of shipping, like communication with customers, and strive to keep them updated. Consider things like shipment times, for example.
For example, you may provide clear shipping information on your website. You can send emails to customers informing them that their purchase was received, processed, and shipped.
Some of the Best Customer Retention Software Tools
Zendesk is a help desk application and an online engagement platform that can assist you in providing excellent customer service.
Zendesk allows frustrated consumers to become raving fans who share their experiences with peers through live chat software, knowledge base tools, and forums. Zendesk is a terrific tool because of its simple user interface and excellent ticketing mechanism.
Customer satisfaction surveys can reveal a lot about your company. On the other hand, net promoter score (NPS) surveys aren't the ideal technique to determine how happy clients are with your product or service.
Qualaroo offers several tools that enable you to communicate with new and current consumers, understand what they think, and gain more precise insights into how they feel about various areas of your website.
Users may sign up for a product only to learn they made the wrong choice, resulting in high churn rates and dissatisfied customers. Track user behavior to identify trouble areas rather than assuming where you need to improve.
Businesses may acquire detailed traffic analytics and useful customer trends by investing in a technology platform like Kissmetrics, which is critical for business growth.
HubSpot is a business platform that helps companies attract customers, convert leads, and close and retain customers. All these things are accomplished through an intuitive user interface and a single codebase.
The software assists businesses in managing their promotion, sales, service, and operations efforts — ultimately, it makes these enterprises more effective in developing their business.
To retain customers, you must be seen, heard, and have a well-structured online store to maintain customers. LitCommerce is a multichannel selling expert that will assist you with listing and selling products on the world's top online marketplaces, such as Amazon, Etsy, eBay, Walmart, and others!
You can choose your Main Store from a list of supported eCommerce platforms, from which you want to list products to new selling channels. Also, you can pick the marketplaces where you want to sell and even link products to other marketplaces. For example, you could integrate your Wix and Etsy stores.
How Can CRM Software Be of Help?
Customer retention software users have higher customer retention rates than non-users. Their customers are happier and spend more money as a result.
Monitor customer behavior
It is critical to examine multiple aspects of customer behavior, such as customer happiness, customer turnover rate, what makes them decide to purchase, the specific time they buy products, and many other things. Using retention software enables you to anticipate probable negative results and take action before it's too late.
Reward loyal customers
These pieces of software collect useful information for your clients. Most customers say that the finest encounters with firms are those in which they receive incentives and freebies.
It should come as no surprise that offering prizes for loyalty can help you keep consumers better. They expect firms to offer them exceptional deals to gain their trust over time.
Improve your team's communication
You can forecast and analyze customers’ behavior with your team. Then you may collaborate with the rest of the team to devise a better strategy for attracting new consumers and retaining existing ones.
With effective communication strategies informing and inspiring one another, you can achieve much bigger goals and develop better solutions. Companies that understand retention can concentrate their efforts on the most crucial areas.
In a Nutshell
Gaining a customer's loyalty requires a lot of effort. And once you gain a customer, you don't want to lose them. At that point, you need to do everything you can to retain that consumer and keep them loyal in the long run.
Customer retention is a critical key performance indicator (KPI) for all firms to track, enhance, and expand daily. Follow our seven unique ways to do this thoroughly, and everything from there will be a piece of cake.
Author: Nina Petrov is a content marketing specialist, passionate about graphic design, content marketing, and the new generation of green and social businesses. She starts the day scrolling her digest on recent digital trends while sipping a cup of coffee with milk and sugar. Her little white bunny tends to reply to your emails when she is on vacation.