How to improve customer retention
Many businesses are starting to notice that converting existing customers is far more economical than investing in prospective buyers. That’s because current customers already know about the brand and need what they offer, compared to new buyers who may need more convincing. In fact, converting an existing client is 60-70% likely to succeed, compared to only 5-20% for newly acquired sales leads.
There are several proactive strategies that businesses can implement to keep their clientele happy, giving them a reason to remain loyal. The goal is to increase customer satisfaction, leading to a much healthier retention rate.
What is customer retention?
In a nutshell, customer retention is a measure of how many customers choose to stay with a brand. It can be measured over any period and can be calculated for any sized business. Retention rates are a crucial metric to keep track of because it shows how well a business is performing, particularly in terms of Customer Experience (CX).
How to calculate customer retention
To find out your brand’s retention rate, you need to record how many customers are acquired within a particular timeframe (CN). Once you know that number, the total number of customers at the beginning (CS), and the total number of customers at the end (CE), you can use the following formula:
((CE-CS)/CN) x 100 = ___%
The higher the percentage, the better your retention is. For example, if your brand has 100 customers at the beginning of the month, 130 at the end, and acquired 40 new customers during that time, your retention rate is 75%. In this case, 10 existing clients abandoned the brand and 90 remained loyal.
Who is responsible for improving customer retention?
While it would be simpler to assign customer retention to one particular team, it’s actually a company-wide responsibility. Retention is determined by the entire Customer Experience, including service, sales, products, marketing, and support. That means that any interaction a person has with your brand can dramatically influence their decision to stay invested, even if it is only a brief exchange.
Sales teams, for instance, are often perceived as exclusively responsible for the acquisition of new customers, when in reality, they have a significant role to play in retaining current clients too. That’s because it’s no longer possible to divide the buyer’s journey into separate phases and it’s critical to provide cohesive service throughout. The easier it is for customers to get what they need from a brand, the more likely they are to stick around.
Top customer retention tips
Fortunately for you, there are some effective ways to improve customer retention and satisfaction. These strategies must be actively implemented by all employees, especially those who interact with buyers directly but doing so will improve customer experience.
Streamline your buyer’s experience
We’ve said it before and we’ll say it again, making customers’ lives easier increases retention. The best way to do that is to set up your team with automation and tools that optimise the buyer’s journey. Most consumers won’t tolerate delays and inconsistencies so if your brand feels disjointed, they won’t be inclined to reinvest. Customer service tools and an integrated Customer Relationship Management platform (CRM) are a great way to improve the Customer Experience because they ensure everything is seamless. If you’re not sure where to start, a Customer Effort Score (CES) survey will help to highlight the main sticking points in your Customer Experience so that you can target those first.
If your customers are abandoning your brand for a competitor, it may be worth offering them a compelling reason to reconsider. Many companies have launched incentivising strategies like loyalty programs, discounts, giveaways, and other tempting deals, to discourage clients from switching. If they have to sacrifice these benefits, they’ll often think twice about leaving.
The key thing to remember when providing incentives is to do your research first. Each customer base is different and while one brand may offer a membership reward program, another brand may be more successful by including a free gift in product delivery. So to provide an incentive that your audience can’t pass up, tap into customer feedback and devise a solution for their most pressing needs.
Empower your employees
Your employees are an invaluable asset when it comes to customer retention because they determine how successful each encounter is. That’s why it’s of the utmost importance to equip them with the right resources so they can work efficiently and reliably. For example, when client-facing teams use a fully integrated CRM, all necessary data is readily available whenever they need it which dramatically reduces frustrating wait times.
It’s also worth including employees in the feedback loop so that they know what customers want, how they feel, and how to best serve them. This keeps employees engaged, drives better work performance, and gives them autonomy over their work output.
Personalise your communication
If a brand takes the time to personalise each interaction, 80% of customers are more likely to return for another purchase. Communication is a core pillar of Customer Experience and with automation and CRMs, users expect it to be tailored to them. In fact, 42% of consumers admit to feeling annoyed when the content they receive isn’t individual to them.
To make your audience feel appreciated and understood, you need to customise your communication to be relevant and engaging. A popular way to do this is using a CRM to automatically input customers' names into content, such as in an email newsletter. These small tweaks make the world of difference for consumers because they demonstrate how valued they are by the brand.
Consult your customers
Perhaps the most vital tip for improving customer retention is to pay attention to customer feedback. Your audience knows what they want better than anyone and if you listen to them, you have the best chance of convincing them to stay.
Eliminating the guesswork with surveys and measurable metrics makes it easier to resolve issues in your Customer Experience, find out what they expect, and deliver outstanding service.
With Review Tui, you can track Customer Satisfaction (CSAT) and Customer Effort Scores (CES), monitor common trends in the data, gather more insightful responses, and improve your brand’s reputation. In doing this, you’ll increase your retention rate and keep your users satisfied for longer.
Check out our comprehensive Guide to Implementing a Customer Feedback Strategy for more practical advice or sign up for updates. Our new software is launching soon, so join us to be the first to see it.