Let me tell you: The Truth About Breaking Up.

Getting kicked to the curb (by a customer) is one of the worst things that can happen to your business. Every time you lose a customer, you not only lose their current business. You also lose your future growth with them and the profit you would make from them. To make matters worse, you also bear the expense of replacing those customers.

Here’s an opinion: If you think you’re good at what you do, i.e., if people need your product/service and you’re helping them in every way possible, then you should take this kind of breakup personally. I’m talking about taking it on a “pint of ice cream in front of the TV” level personally. This is because whenever a customer leaves, they basically are saying that you’re not that good and that they’ve found a better match. And I’m not quite sure about you, but if I owned a business, that would hurt!

Although, it is not possible to save a customer or fix the problem when your customers do not tell you the right reasons as to why they’re canceling. So, no matter what reason they tell you, it is important to dig and get to the real reason. That said, the best strategy would be to make sure they don’t cancel in the first place.

So what is the secret to staying together?

Dynamic customer retention strategies!

In reality, it all comes down to three things:

• Creating a strong and unique customer relationship.

• Providing a customer experience that goes above and beyond expectations.

• Customer retention strategies that are upgraded constantly.

In this guide, we will learn about customer retention, how to measure it, why it is important, how to align them with the latest trends, and how to foster it with every new customer you attract.

• What is Customer Retention?

• Why is Customer Retention Important?

• Why Do Customers Leave?

• Quantify Your Customer Retention Strategies

• Eight Customer Retention Strategies and Examples

• Putting in the Effort

What is Customer Retention?

Customer retention simply refers to a brand’s ability to make customers stick to their services. Customer retention strategies are the ones that an organization implements to keep their customers loyal to them. These strategies include everything from the time the customer first interacts with your brand to when they face issues.

Customer retention is different from customer acquisition.

Retention caters to customers who have already signed up for your services/products. Customer retention is more than just transactions. It gets as personal as you can think. Studies show that customers view their relationships with brands as similar to their relationships with friends. Customers would only stick to your brand for the long term if your services are reliable and authentic.

Businesses that understand the importance of effective customer retention invest in customer retention plans because they see it as the biggest revenue driver.

KPMG

A good retention strategy would be when your existing customers have the option to switch brands, and they choose to stay! With this loyal customer base, your brand will be more likely to weather volatile markets.

Why is Customer Retention Important?

Let’s get straight to the reasons:

1. Customer Retention is More Cost-effective

More than you can imagine!

The probability of converting an existing customer is 60 to 70 percent. The probability of converting a new prospect, on the other hand, is only 5 percent to 20 percent.

Marketing Metrics

Fun Fact:

Did you know that acquiring a new customer is more expensive than holding on to an existing one? Wondering why? Well, the answer is simple:

• You will not need to spend big on marketing, advertising, or sales outreach.

• Plus, your customers already trust your brand and support reps. They do not need more convincing from your end.

2. Word-of-mouth Publicity

Loyal customers won’t just provide repeat business. They’re more likely to communicate free recommendations to their colleagues, friends, and family. This works wonders for any brand looking to create a cycle of retained customers. Your companies can adopt this buzz marketing and cultivate customer loyalty for long-term success.

3. Keeps You Aware of The Red Flags!

Red flags are alarming. Mindful customer retention strategies will help you understand how loyal and satisfied your customers are. It’ll also help you find out if there are any red flags that may turn off potential customers. You can identify these loopholes and actively work on them.

4. Increased AOV (Average Order Value)

Sometimes customers are also willing to spend more. Studies show that loyal customers are 23% more likely to spend on your brand than the average customer.

Data shows that increasing customer retention by 5% can increase your profits from 25% to 95%. On average, the existing customers provide 65% of a company’s business.

Why Do Customers Leave?

Here, we’re going to find out what those red flags are. What makes a customer trigger? What makes them leave?

I’m just going to put these self-explanatory stats here:

Another (and more recent) report from CallMiner states three key reasons that drive customers away:

• Poor/Unfair treatment of customers

• The price Vs. experience bias

• Empathetic services

What did you take away from these stats?

In the internet era, it is now very simple for customers to communicate with businesses and other customers. This makes keeping your customers even more important today. If they feel ill-treated, they will not only leave you but also tell people else about it.

Theodore Levitt

German-American Economist

Sounds terrifying, right?

OTOH, there lies the possibility of communicating quickly and efficiently with your customers by offering them some extra attention. This can lead to them becoming loyal ambassadors of your brand.

As a brand, you must continuously keep trying and making efforts to earn customers’ loyalty. Having effective customer retention strategies will give you the ability to identify, track, and sell to customers and make them your long-term sources of revenue.

Are you Empowered Enough?

Consciously invest in customer retention with the right tools and strategies. The right helpdesk can help you implement the right strategies. Strive for the better!

TAKE A FREE TRIAL AND FIND OUT

Quantify Your Customer Retention Strategies

How To Measure Customer Retention Rate?

Customer retention rate is the percentage of customers who came to your brand and stayed loyal over a period of time. It is simple to calculate customer retention rates.

Define a time period across which you need to calculate the customer retention rates. Here are some other parameters you’ll need:

• No. of customers at the beginning of the given time period (S)

• No. of customers at the end of the given time period (E)

• No. of new customers added over the duration of the given time period (N)

Here’s your customer retention rate (X) formula:

Customer Lifetime Value

Customer lifetime value equals the total revenue you can expect from a customer throughout the customer’s lifetime. It helps a business discover its best and most loyal customers.

What About Customer churn rate

Churn rate refers to the percentage of customers lost during a given period of time. Brands that struggle with customer retention usually have a higher churn rate.

Low retention rates and/or higher churn rates are a bad sign for your business. This signals that something about your customer experience is not going well. But, there are several changes you can make to turn the churn around. This brings me to our next and our primary (and important) topic, i.e., Customer retention strategies and how to implement them!

Eight Customer Retention Strategies and Examples

1. Serve, Don’t Sell. Practice Active Listening

The most basic churn problems can be tackled by actively listening to what customers are saying about their experience. Unfortunately, this creates a massive gap between companies that provide stellar customer experience Vs. customers actually receive that experience.

The Gap in Customer Service

One mantra to tackle this problem: Ask, listen, and improve.

Listening is an active part of customer support. Besides, you must ensure that you’re acting upon it. Even if it means that you have to go beyond limits for that. Customer retention at all cost! Let me tell you about the time when an ecommerce brand went beyond its limits to retain me (an extremely disappointed, angry, and about-to-leave customer.)

I keep trying new dog foods as my dog gets bored eating the same thing. So, I was looking for dog treats and saw this brand on Amazon. The food description seemed fine, and it was ranked first on Amazon’s list. The experience, however, turned out to be pathetic. My dog got sick and had a bad stomach for a week. I was pissed at Amazon for ranking the absolutely horrible and life-endangering product. So I talked to their customer support team, and well, I got a refund. I asked them to report the issue at large and take it forward as there were many similar complaints in the review section of that product. They assured me that they would.

Three months hence, the product is still ranking at the first position, and the negative reviews keep adding. *Sigh*

Guess who’s never buying essentials from Amazon anymore!

They did try to retain me (as a customer) by [providing a full refund. But, some things are above money. Some things are purely about the experience, after-effect, and the brand’s response towards that problem.

So, what do we learn from this?

• Listen to your customers! And ACT upon it.

• It’s not about the money; sometimes bad customer service can be life endangering.

2. Build Retention Hooks

Another example from Amazon. This time, it is about Amazon Prime:

The subscription fee (Amazon Prime) was never about seventy-nine dollars. It was really about changing people’s mentality so they wouldn’t shop anywhere else.

Vijay Ravindran

Ex-Director, Amazon Ordering Systems

Amazon Prime is an amazing example of building retention worldwide. Their idea was to achieve break-even within a year, but it did the trick in just three months.

Did you know:

Amazon Prime has a retention rate of 93% after the users have signed up for one year and 98% after the customers have been Amazon Prime members for two years.

Building a retention hook is an important part of the customer retention strategy. It is about finding a way to make the user habitual with great experiences. It is about providing them with offers such that they get comfortable with it. This needs a lot of brainstorming on your part. Think about creating similar retention hooks for your business.

It also has everything to do with which channel you use to communicate with your customers. Two of the most popular channels for this purpose are – push notifications and emails. Notifications may or may not work. People get an onslaught of notifications every day. So they may end up ignoring them. With emails, the open rate isn’t great for all types of organizations. It all narrows down to how you segregate your customers and what channels you prefer to communicate with them.

Pro Tip:

Try a different approach. Use WhatsApp as the channel and experiment with it. Make various user categories based on multiple parameters (age, generation, gender, tech-savviness, etc.)

Consolidate Everything, Adopt Omnichannel

You can only experiment with multiple channels if you have it all sorted at your support end. Consolidate everything in one interface and streamline your processes. Check out DeskXpand’s omnichannel solution.

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3. Customer Retention Through Website UX/UI

UI and UX must be a huge part of your customer retention strategy. Your website UI refers to the elements (like images, typography) that a user engages with on a website. UX refers to a user’s experience while accessing and navigating your website.

You might be wondering how UI and UX, and customer retention are related.

Optimizing the UI and UX of your website can lower your bounce rates. It guarantees better conversion rates even with existing customers. These customers have bought from you before, and there are high chances that they’ll buy from you again.

Hence, better UI and UX = better conversion rates. This also includes the UI and UX of your knowledge base. If you make it easier for customers to find what they’re looking for, they’ll encourage this smooth experience.

Benefits of UI/UX

Let’s look at ways to increase customer retention through website UI and UX:

• Clarify navigation

• Simplify your main menu

• Define clear structures

• Define categories and sub-categories

• Show related content

• Create high-quality and interactive content

• Make sure your website is mobile responsive

• Make sure you remove elements that slow down your page speed

• No broken links!

4. Live Chat and Customer Retention

Live chat is a great way to improve customer retention rates because you’re responding to customer concerns in real-time. Your customers come for a live chat because they could not find the answer to their query on their own. Here’s how you can implement live chat and improve retention:

I. Easy Access To Customer Support

It’s all about accessibility. And live chat would be the most convenient option for the customers to interact with a brand. Imagine:

• Customers are never put on hold with live chat.

• And they receive immediate responses. Sometimes, immediate resolutions too.

All these aspects team up to help you create an exceptional customer experience. And user experience is what matters the most. Live chat will help you to do that effectively, and economically.

II. Availability

Customers want businesses that are available 24*7. One of the main reasons why live chat is a great customer retention strategy is because it makes you available for your customers round the clock.

III. Responsiveness

We live in a fast-paced world where everyone expects answers in the blink of an eye. Customers too expect to get answers as soon as they pose their question or register a complaint. If you fail to do so, you’ll lose them to your competitors.

With a live chat system in place, you can respond to your customers in real-time. This makes them feel extremely important. This emotion triggers them to become loyal customers. If you’re seeking a customer retention silver bullet, live chat is the closest you will get to.

5. Customer Feedback For The Win

Customer feedback is a valuable feature that must be a part of your customer retention strategy. It works wonders in reducing the churn rates too. If you want to find out what is and isn’t working for your customers, it’ll help if you hear it straight from their mouths.

Conduct more surveys and give your customers a voice. It is as simple as asking for ratings on a scale or a simple thumbs up or down. Also, ask more specific questions, like:

• How helpful did you find your experience with our services?

• What is not working for you, and why?

• What channels do you prefer using for customer support?

• What challenges did you face, if any?

Your team members are closest to the customers, and they can identify common complaints and general preferences. Your customers’ commitment to your brand will be firm when the trust increases. So, when you build and grow trust, your customers will gladly advocate for your brand.

Example: Lexus Sweden

Lexus Sweden has trust-building as a part of its customer retention strategy. They communicate with the reviews instead of using traditional methods for support. They believe that authentic customer commentary is more trustworthy and put it at their absolute top priority.

In 2011, they noticed that people who visited the company’s website engaged with reviews, which led to 35% more page views as compared to those who did not. These customers spent 122% more time on their website. Yeep, it can get this serious!

Example: Expedia

Expedia’s Feedback With Automation

Expedia uses automation features to collect customer feedback once their trip has ended. This helps feedback become a consistent and informative part of your business practices.

6. Educate and Help Customers: Make a Pool of Knowledge Available to Them

In order to form a deep bond with a brand, customers need more than just good products/services. They need to know that the brand truly cares about them and makes efforts to help them. As a brand, you can offer this type of support by creating and sharing evergreen content that helps and educates customers and helps them grow.

If a knowledge base is not a part of your customer retention strategy, you need to pace up! Look what others are doing! Look where they’re at. Look at Canva’s design school project.

Canva Design School

The Article is Originally Published On:

https://www.deskxpand.com/blog/customer-retention-strategies/