Are you looking for effective and impactful customer retention strategies to retain your existing customers?
Customer retention is one of the biggest assets ignored by most of the brands and businesses as they are obsessed with lead generation and acquiring new customers. To boost your brand/business value, revenue and sales your marketing techniques should always include effective and impactful customer retention strategies.
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By focusing on customer retention we are not implying that acquiring new customers and leads is not good for your business. But retaining your existing customer should be your primary choice as it can benefit your business in many ways.
According to the recent survey by SAS and Loyalty 360, compared to the new customer 68% of the business/sales come from existing customers. Convincing your existing customers can take less effort and cost compared to your new customer because they already know about your brand and service. Look at the below ecommerce start to know why customer retention is important for your business.
In the article, we will help you to differentiate between customer acquisition and customer retention. Not online thet but this article will also offer you effective and impactful customer retention strategies that you can use and implement to retain your existing customer.
If your business is getting lots of cart abandonment rate then checkout article on Reduce Shopping Cart Abandonment Using Different Techniques In 2020
Customer Acquisition Vs Customer Retention
Many brands and businesses get confused in identifying the difference between customer acquisition and retention. Both are two different things.
The main goal behind customer acquisition is to gain new customers to grow sales and revenue. Customer aquisition is more focused on marketing that means identifying the potential customers and offering different lead magnets to attract new lead.
It is dependent on various channels like paid ads, commercials, or direct marketing (speaking directly to the client to get business). Customer aquisition strategy generally includes identifying potential customers, creating and implementing different marketing strategies, communicating with potential leads, and measuring the success of the marketing strategy.
Compared to customer acquisition, customer retention is all about focusing on and nurturing existing customers to build a strong relationship with them. Once your existing customer starts trusting you then they will never hesitate to purchase and use your product and services.
Customer retention strategies include optimizing your customer service, product quality, seamless communication, offering loyalty programs, and more. Remember your existing customers are the ones that will give you more profit than new customers.
Most of the brands and businesses commit a mistake by ignoring their existing customers are focusing on new customers below we have discussed why you need to care about your easing customer. If you are confused whether you should focus more on customer acquisition or retention then looked at the below chart (Remember both are important but your existing customer can offer more profit then new customer)
How to Calculate customer retention rates?
If you want to calculate the customer retention rate for your business then you can follow the below steps which will offer you a brief insight into how you can calculate customer retention rate.
- Firstly, it is recommended to decide the time period (month quarter, days, and more)
- Next, identify the total number of customer you had at the beginning (customer purchased form your online store)
- After identifying that next you need to divide the total number of customers you had at the beginning and end of the time period.
- At the end of the time period, you might have gained new customers so before dividing you can subtract new customers by the total number of customers at the end of the time period.
- After identifying that you can divide the number of customers at the end of the time Prayer by the total number of customers at the beginning.
- Multiply the obtained number with 100 to get the customer retention rate.
Why should you always follow up with your existing customer?
Before jumping into how to improve your customer retention lets look into why you should care about your existing customer.
Most businesses and brands around the world think that by providing great products and services they can make their customer stay. But the harsh truth is that if your marketing strategy does not include converting your existing customer into a loyal customer then sooner or later they may leave. Look at the below image to differentiate between new and existing customers.
Staying connected with your existing customer can offer your various benefits:
High conversion rates
When we talk about conversion rate then your existing customer can offer a better conversion rate compared to your new customer. If your existing customer has purchased a product with satisfactory experience then they will never hesitate to buy again from your website. Because the first purchase enabled you to build a strong trust with your customers.
Less marketing efforts
Finding a new customer may take time product may take time and marketing and lots of effort as well as expenditure. But your existing customer already knows about your brand so just you have to pitch your product idea as ask them to buy your product.
Optimize your performance
Optimizing your performance and improvising your customer service are the key elements to outperform your competitor and become successful in the competitive market. Your existing customers are the ones that will help you to improve your performance and service by giving feedback and filling survey forms.
If you are selling a product to a new customer then you have to offer some incentive to grab their attention which will directly affect your margin and profit. But when it comes to selling to an existing customer then it is more information focused than price. Your existing customer has trust in your brand and business that makes it easier to convince them to buy your product than a new customer.
According to a recent survey by the brain and Company attracting new Leeds will cost you five to 25 times more than an existing customer. Or in simple words Nurturing your existing customer saves more moany the getting new customer.
Build a Long term relationship
If you want to convert your paying customer into a loyal customer then it is important to build a strong long-term relationship with them. When it comes to converting a new customer into a loyal customer then it will cost you 16 times more than converting an existing customer. Yes, converting an existing customer into a loyal customer is more cost-effective than a new customer.
Customer Retention Strategies To Boost Your Revenue and Sales
1. Offer a brief introduction about the customer journey
Businesses and brands focus on selling products by offering different incentives but your sales process should also help customers to determine whether the product and services are right for them or not. Highlighting these types of features will help you as well as your customer in the long run.
It is always recommended to showcase how your product and service have helped other customers by sharing your existing customer experience. You can make use of testimonials so thet customers can start trusting your products and services. Through testimonial, your new customer will come to know how your existing customers felt after working with your team and all these will result in building a strong bond with them
This process is very much similar to performing research before buying any product. By providing these case studies and testimonial you are letting your customer know how you work and product and services offered by you rand and business. If your customer gets familiar with the different aspects of your functioning then it will help you to build a strong bonding and offer the happier experience your customers.
2. Set Expectation for your customer
Setting expectations enables you to empower your customers. Undoubtedly every customer has expectations form the brand and business they are selecting i.e. from offering the best services to attending their queries and problems immediately.
If you fail to set up expectations then there are chances thet your customer can become upset form your brand. most of the time customers stop using your service because 68% of them believe that you dint care about them. To set expectations first you need to identify your customer’s expectations.
Yes, it is difficult to satisfy someone that you are not aware of but you can start by identifying and understanding what your customer desire. Once you become aware of them then it will become easy for you to set the expectation.
For example, most of the ecommerce website promises to offer the best customer support with free shipping that increases customers expectation but when they visit checkout page and find taxes that are equal to shipping then most of them may get upset.
Same goes with the customer support, at the beginning almost every ecommerce website promise to offer the best customer support but later they fail to meet the expectation.
That’s why it is always recommended to set expectations so that your customer can know what type of service they are going to get Make sure the expectation
3. Build strong relationships with your customers
To convert your customer into loyal customers first you have to win their trust. Without trust, you have to spend a lot of time convening your customer to buy your product. That’s why it is recommended to communicate with your customer in a way that promotes trust and enable you to build a strong relationship with them.
Getting access to customer behavior data will help deliver products that encourage and persuade customers to accept your offer. These data will eventually help you to build trust with your customers which will result in long term relationships.
Once your customer realizes that your brand and business are not trustworthy then without any hesitating they will shift to your competitor’s website. If your services are not satisfactory then they will write and spread negative reviews that will affect your online reputation. That why you should focus on building a strong relationship with your customer.
4. Highlighting product results on a daily basis
Your product KPI (key performance indicators) is one of the most important metrics that allow you to know how effectively your product and business is performing. Your KPI allows you to visualize your product’s future. KPI ins not only important for you brad or business but it also helps you to convince your customer about your products.
If your customer is able to identify how your product is influencing their goal and results then it will convince them to continue with your brand with strong bonding. If you are tracking your product and business-related KPI metric then it is always recommended to communicate the results with your customer as it will help you to build.
Even if you discover thet your service has some flaws and you are going to upgrade it sooner then let your customer know about it. Because transparency is the key to success.
5. Leverage Customer Feedback or Survey forms
Survey forms are the best way to engage your existing customers. It allows you to optimize your service and communicate with your old customer so thet they don’t forget about your brand. Many companies think that customers avoid surveys from but in reality, they enjoy filling the survey forms. Creating a user-friendly survey form will surely help you to engage your customers.
If your customers are happy with your service and think that you can improve in some areas then sending survey forms will surely encourage then to express themselves. While creating your survey form make sure you are highlighting all the pain points and asking your customer suggestion on that by offering multiple suggestions to select.
6. Share positive memories with your customer
Undoubtedly every customer remembers their negative experience more than the positive ones. Even though they had come across many positive events but the negative events are the one thet creates bad memory and lasts for long.
If you and your customer are moving forward with a bunch of negative events and experiences thet it could result in getting negative and bad reviews about your brand and services. Your customer success manager (CMS) should ensure that they engage your existing customers by sharing a positive memorable experience.
When your customer comes across bad experience or customer service then it is recommended to apologize and fix that issue. Whereas if something great happens or your customer feel satisfied with your service then highlight those events so that customer can remember for long duration and stay connected with your brand.
7. Measure your customer lifetime value and segment them
Your brand or business might be having a different type of customer some of them can be frequent buyers and others can monthly or quarterly buyers. Customer Life Time Value (CLV)
Is one of the key metrics that can help you to identify your customer’s worth over a period of time.
If you are selling any subscription then you should be able to differentiate between customers that are taking your subscription monthly and newly joined customer. Because your businesses will surely be having customers that have added more value to your business. You should encourage them and appreciate them for doing that.
If you ignore your existing customer there are chares that you can lose your valuable customer to your competitor. That’s why it is recommended to identify your valuable customers and give them special treatment and preference so that they don’t look for an alternative.
Staying in touch with them can encourage them to share your product with their knowns. So first it is recommended to identify your customer lifetime value depending on thet you can nurture than and stay content with them.
8. Always learn for your previous complaints
The way your structure your business to offer the best experience is all relates to retention but another way to imporve your customer retention rate is by considering your previous mistakes, making note of it, and correcting it.
Don’t take complaints as negative feedback instead appreciate your customer. Because they have spent their valuable time in identifying and informing about you those mistakes. correct those mistakes and let your customers know that you care about your customer and your company has successfully corrected the mistakes.
There are customers that disappear without expressing their difficulties. If you are resolving issues marked by your customers that they are likely to visit back and purchase from you again and if they don’t come across some mistakes then they are likely to convert into loyal customers.
9. Invest time and money in optimizing your customer experience
Today most of the websites are focused on their design and they are investing a lot of money in creating an attractive and persuasive design. Yes your website design matters but other than that it is important to offer the best customer experience. if required you can invest in buying a customer service tool to offer a better experience.
It’s true that most of the website fails to offer the best customer experience, every website has little flaws. There are changes thet your customer can ignore your first mistakes but again when they visit your website adn find the same mistakes then you lose your customer and retaining them will be a tough job.
That’s why it is recommended to spend time and money to optimize and offer the best customer experience to convert your customer into loyal customers of your brand.
Whether you have a small size business or an enterprise-level company implementing the above-mentioned customer retention strategies will surely help you to optimize your company sales and revenue.
But if you are expecting above mentioned customer retention strategies to give your immediate results then it is important to know that you have to be patient to see the results. Most of the companies want to see the immediate results and if they don’t find effective and impactful results immediately then they shift to other techniques.
All the above-mentioned customer retention strategies are not a short term hack but once you start implementing it with patience then it will surely offer you revenue-generating results.
Frequently Asked Questions
1. What is customer retention management?
In simple words, customer retention management is all about managing your customer satisfaction as well as experience with the goal of maintaining a long term relationship with the customers thet you have acquired.
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2. How do you retain your most profitable customer?
Your profitable customers are the ones that bring value to your business that’s why it is important to nurture your profitable customers. If you lost your profitable customer then you can follow the below steps to retain them.
- First, identify why your customers left your brand and business
- Next, find a different way to impress and delight your customers
- While engaging your customer don’t play smart or trick them instead be genuine and ask them why they left and offer them a proper solution
- Offer a different way to reach you
- Show how valuable they are
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3. What is a good customer retention rate?
Like the average conversion rate, open rate, and more there is no good customer retention rate. But you can consider 100% as a good customer retention rate that means retaining all your customers.
4. How do you increase customer retention rates?
- Set and fulfill your expectations
- Deliver more than your promise to your customer
- Be transparent with your customers
- Uplift loyalty
- Communicate and resolve your customer queries
- Learn from your customers complain
- Prove thet your company is adding more value
- Leverage customer feedback and survey form
5. What is the customer retention example?
One of the most popular examples of customer retention is awarding your customers by offering loyalty points or incentives for doing business with your brand and company. By doing this you are encouraging customers to return back on your website to do business with you again.