{"id":11950,"date":"2020-09-11T10:31:41","date_gmt":"2020-09-11T09:31:41","guid":{"rendered":"\/gb\/en\/blog\/?p=11950"},"modified":"2023-04-10T10:59:31","modified_gmt":"2023-04-10T09:59:31","slug":"customer-retention-strategies-your-guide-to-the-art-of-keeping-your-customers-coming-back","status":"publish","type":"post","link":"\/gb\/en\/blog\/customer-retention-strategies-your-guide-to-the-art-of-keeping-your-customers-coming-back\/","title":{"rendered":"Customer retention strategies: Your guide to the art of keeping your customers coming back"},"content":{"rendered":"

You\u2019ve probably heard it time and time again \u2014 the customer is king. But how much of that is true?<\/span><\/p>\n

As it turns out, <\/span>your customers are more valuable than you think<\/span><\/a>. Just raising your customer retention rate by 5% can increase profits anywhere from 25% to 95%.\u00a0<\/span><\/p>\n

Let\u2019s take a closer look at what customer retention is and highlight some key customer retention strategies and customer retention programs to help you keep and delight the right customers.\u00a0<\/span><\/p>\n

What is Customer Retention?<\/span><\/h2>\n

Customer retention refers to your company\u2019s ability to keep your customers. This is influenced by new customers acquired and how many customers leave (also known as churn). Churned customers are those who have stopped using your company’s goods or services during a measured time frame.<\/span><\/p>\n

How to measure customer retention<\/span><\/h3>\n

Before even setting up a customer retention strategy, we need to first understand how to measure its success by looking at the customer retention rate. Customer retention is represented as a percentage. It represents the proportion of customers retained through a given time period. Use this formula to determine customer retention rate:<\/span><\/p>\n

Customer Retention Rate = ((Number of customers at end of period – Number of customers acquired during period) \/ Number of customers at start of period) x 100<\/span><\/p>\n\n\n\n
\n

In a time where customer choice is at an all-time high and attention spans are at an all-time low, customer retention strategies have never been more important.\u00a0<\/span><\/p><\/blockquote>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Example: Don\u2019s IT store<\/span><\/h3>\n

Don runs a successful retail store selling laptops and IT accessories. He starts the year with 150 customers. However, in June, 86 customers churned. By the end of December, he has gained another 29 new customers. Don wants to know what the customer retention rate is for the year.<\/span><\/p>\n

Customer Retention Rate = ((Number of customers at end of period – Number of customers acquired during period) \/ Number of customers at start of period) x 100<\/span><\/p>\n

Customer Retention Rate = ((93 – 29) \/ 150) x 100 = 42.7%\u00a0<\/span><\/p>\n

Don\u2019s customer retention rate is 42.7%. Now that he knows this, he is ready to start developing a customer retention program.\u00a0<\/span><\/p>\n

Once you\u2019ve consistently measured your customer retention rate, you\u2019ll be able to detect trends and identify which types of customers are more likely to churn than others.\u00a0<\/span><\/p>\n

\"Customer<\/p>\n

Why should you focus on customer retention?<\/span><\/h2>\n

Think about your best customers: how frequently do they buy? What is the value of their sales? How often do they recommend your business to their friends and family? Customer retention increases your customers\u2019 lifetime value and boosts your revenue. And yes, you also need to <\/span>pay attention to Gen Z<\/span><\/a> \u2014 they expect a lot from customer service. If that expectation isn\u2019t met, it could have big consequences for your business.<\/span><\/p>\n

\u00a0Here are three reasons why you need to pay attention to customer retention.<\/span><\/p>\n

1. It\u2019s cost-effective<\/span><\/h3>\n

It\u2019s <\/span>five times more expensive<\/span><\/a> to attract a new customer than it is to keep existing customers. You need to spend more effort to help new prospects overcome barriers, earn their trust, and encourage them to spend. Stretch your marketing and sales budget by keeping your existing customers happy.\u00a0<\/span><\/p>\n

2. You\u2019ll get reliable spenders<\/span><\/h3>\n

An existing customer already knows and trusts your brand, so they\u2019re <\/span>more likely to come back and spend more<\/span><\/a> than newer customers. Your customers\u2019 first few purchases are a calculated risk, so they\u2019ll keep the cost low. But as they grow to trust your brand and build a relationship, they\u2019re likely to increase their spend.<\/span><\/p>\n

\"Customer<\/p>\n

The success rate of selling to an existing customer is 60-70%. The success rate of selling to a new customer is only 5-20%. Source: <\/span><\/i>SuperOffice<\/span><\/i><\/a><\/p>\n

You\u2019ll benefit from good reviews<\/span><\/h3>\n

Positive word-of-mouth is the most cost-effective advertising out there. And that only comes from loyal, happy customers. Customers are willing to share if they\u2019ve received great service or bought an excellent product. Similarly, they\u2019re also ready to tell their friends and family if they\u2019ve received poor customer service or a bad product; this has the potential to be more damaging to your bottom line.\u00a0<\/span><\/p>\n

\"Customer<\/p>\n

What are the best customer retention strategies?<\/span><\/h2>\n

Now that we\u2019ve established that keeping customers coming back is more valuable than getting new ones, how exactly do you create a customer retention strategy to keep your current customers engaged and delighted?\u00a0<\/span><\/p>\n

There\u2019s more to a customer retention strategy than answering their questions and providing onboarding. It\u2019s about fostering communication, trust, and mutual growth from the very beginning. Here are four customer retention strategies to get you started.<\/span><\/p>\n

1. Adopt the right tools<\/span><\/h3>\n

If you can track customer data and their sales history, you can detect if they\u2019re about to churn. Identify and analyse key variables such as purchase patterns, sales volume and value, history of purchase, and more.\u00a0\u00a0<\/span><\/p>\n

This is possible with the help of <\/span>inventory management software<\/span><\/a> like Unleashed. Unleashed has a <\/span>business intelligence tool<\/span><\/a> that helps you dive deeper into your sales and customers to help you look out for the early warning signs.\u00a0<\/span><\/p>\n

2. Communicate with your customers\u00a0<\/span><\/h3>\n

This is a strategy that\u2019s particularly useful for B2B businesses who have long-term, contractual relationships with their clients. Communicate with your customers, whether it\u2019s through a phone call or an online survey. Your clients get to highlight what you\u2019re doing well and share what you\u2019re lacking. This strengthens your relationship and gives you the insights needed to make better business decisions and retain clients.<\/span><\/p>\n

3. Encourage convenience\u00a0<\/span><\/h3>\n

Make it easier for your customers to purchase from you or to get support. Consider creating an app they can use on the go or even setting up live chat support so they can quickly get the answers they\u2019re looking for. Identify your customers\u2019 behaviours and what they want so you can implement tools and systems that empower them.<\/span><\/p>\n

4. Personalise\u00a0<\/span><\/h3>\n

Do you know to which channels your customers respond best? Whether it\u2019s email, social media, or direct mail, reach out directly to your customers on their preferred channels \u2014 both during and after the buying experience. Don\u2019t forget to make your responses sound <\/span>human<\/span><\/i>.\u00a0<\/span><\/p>\n

Read this article for more innovative customer retention strategies<\/span><\/a>.<\/span><\/p>\n

\"Customer<\/p>\n

What is a customer retention program?<\/span><\/h2>\n

Hubspot<\/span><\/a> defines a customer retention program as a specific initiative or set of initiatives that increase customer value, encourages them to be a repeat customer, and advocate for a company. Customer retention programs can be company-led, like an onboarding process, or customer-led, such as downloading and using a mobile app to make purchases.\u00a0<\/span><\/p>\n

Here are four commonly used customer retention programs to set you in the right direction.\u00a0<\/span><\/p>\n

1. Onboarding program<\/span><\/h3>\n

Teach new customers how to use your product or service with an onboarding program. Instead of self-studying, customers receive personalised training according to their needs so they can save time and understand how your product or service can directly help them meet their needs.<\/span><\/p>\n

Onboarding is an effective tool because it helps new customers who are first starting out with your product and prevents frustration.<\/span><\/p>\n

2. Customer feedback loop<\/span><\/h3>\n

To improve your <\/span>customer experience<\/span><\/a>, you need to know how your customers feel about your business. Get customer feedback and share it with the rest of the business using a customer feedback loop \u2014 a system for collecting, analysing, and distributing customer reviews and surveys.\u00a0<\/span><\/p>\n

Most businesses use a survey to capture Net Promoter Score, while others have focus groups. No matter which method you pick, share the information to the appropriate departments so the business can address criticism, enhance customer experience<\/a>, and improve retention rates.<\/span><\/p>\n

Learn more about how the Net Promoter Score and why it\u2019s so important to customer satisfaction.<\/span><\/a><\/p>\n

3. Reward system<\/span><\/h3>\n

Customer loyalty<\/span><\/a> looks a little different now. Most customer loyalty schemes have evolved to meet digitally empowered consumer expectations. Implement a customer loyalty program to reward the customers who make frequent purchases or refer a friend. This can be in the form of stamp cards, referral discounts or credit, loyalty tiers, and more. The trick is to give them a <\/span>head start<\/span><\/a>.<\/span><\/p>\n

4. Education platform<\/span><\/h3>\n

Creating an education<\/a> platform means providing self-service tools like a knowledge base and a community forum so that your customers can better understand your product or service. This program is great for businesses that have a complex product which requires training before it can be used, or even a product that is constantly being updated with new features.<\/span><\/p>\n

Depending on your customers\u2019 needs, you can deliver a variety of educational content in the form of:<\/span><\/p>\n