As a business owner, you work hard to attract customers through a combination of marketing, social media, and brand strategies. However, earning your customers’ trust requires investing a lot of time, effort, and even money. Therefore, it makes sense that you want to retain them.
This is where a strong focus on customer retention is beneficial. However, to improve it, you have to look at the entirety of customer experiences, including how they think and feel towards your brand. In this article, we’ll talk about the basics of customer retention and customer retention strategies that can benefit your business in the long run.
What is Customer Retention?
First, let us begin with an important question, what is customer retention? It refers to a company’s ability to convert existing customers into repeat buyers, increase profitability, and prevent them from switching to a competitor. It determines whether your product or service, along with its quality, satisfies your existing customers.
In addition to this, customer retention is not the same as‘ customer acquisition’ or ‘lead generation.’ It differs as it focuses on customers who have already purchased a product or signed up for a service from your business.
Customer retention strategies allow you to both provide and extract increased value from your existing customer base. Through these strategies, you can continue ensuring that a retaining customer stays by consistently giving them a great customer experience and that they can continue to receive value from your product or service.
In summary, you should focus on buyer relationships with existing customers to boost their brand loyalty. By doing so, these retained customers will repeatedly choose your brand even when presented with other options. In addition, a loyal customer base means that your brand will more likely be able to tolerate volatile markets.
What is the Importance of Customer Retention?
Next, let’s talk about why customer retention is important overall. Keeping your current customers happy is more cost-effective than acquiring first-time customers. According to the Harvard Business Review, attaining a new customer can be 5 to 25 times more expensive than holding on to a retaining customer.
You do not need to spend excessively on marketing, advertising, or sales outreach. Why? It is easier to turn existing customers into repeat ones because of the trust they gained from previous purchases. On the other hand, new customers require more effort to be convinced.
Your business does not only benefit from repeat purchases because of customer loyalty. Local customers are more likely to recommend your brand to their colleagues, friends, and family. Creating that cycle of retained customers and buzz marketing is a way your business can cultivate customer loyalty for long-term success.
What are the Benefits of Customer Retention?
- Cost-effectiveness. Customer retention is more cost-effective than new customer acquisition.
- Positive word-of-mouth marketing. Loyal customers are more likely to tell individuals in their lives about your brand.
- A better bottom line. According to a report by Bain & Company, increasing retention rates by a minimum of 5% can increase revenue by 25% to 95%.
10 Customer Retention Strategies
Now that you understand the basics of customer retention, let’s talk about how to retain customers. There are so many strategies that you can utilize in your business depending on the circumstances, but we have compiled a list of 10 customer retention strategies that could be useful to any business. In addition to this, we’ve added some examples of business to explain each customer retention strategy better.
1. Use customer service tools.
If you’re an SMB (small and medium-sized business), you may have a small support team. However, as you continue to grow your customer base, service demand could spike and require you to expand your support team’s bandwidth. As hiring individuals can be expensive, many businesses turn to technology to support their customer service needs.
Santa Cruz bicycles adopted this customer retention strategy when there was a realization that its current approach to customer support was not sustainable. The standard became more difficult to meet as more customers purchased their bikes because of their commitment to providing excellent customer service and customer retention. As a result, they adopted customer service tools to keep the support team organized via customer interaction recordings and support ticket creation while creating a delightful customer experience.
Another good example of this strategy is Strikingly. The company has a responsive chat support system that utilizes live chat and ticket support.
Image taken from Strikingly product
2. Own up to your mistakes.
No matter how hard you try to avoid mistakes, they will happen in business. Regardless of whether that mistake is a data breach, a billing error, or something else, a mistake can put you at risk of failing to obtain retained customers if not handled properly.
In cases of company error, HubSpot Research discovered that 96% of survey respondents would continue buying from a company they’ve made repeated purchases with if the company apologized and resolved the situation. This means that you need to develop a plan for the inevitability of a mistake and another for resolving it immediately, apologizing honestly, and moving forward to keep customer retention.
3. Inspire with a mission.
Sometimes a brand attains loyalty not through tactics and systems but through what it stands for.
For example, TOMS has built its entire business model around making the world a better place with its “One for One” policy, which means that a pair is donated to those in need for every purchased pair of shoes.
Doing good has become more important to consumers because individuals have begun to focus on the environmental effects of their buying habits beyond consumption. However, this does mean that you should build your marketing strategy around an altruistic message for the sake of customer retention. It’s more about finding something that people care about so you can position your brand around it.
4. Empower your customers with convenience.
A prime example of a company that has always been innovative with its marketing and customer retention is Starbucks.
For example, they developed a very innovative customer retention program, better known as the Mobile Order & Pay feature within the app. This feature allows customers to order their coffee before they arrive at the shop.
The takeaway from this is that you should ensure the accessibility of your products and services. First, identify the wants and customer behavior, then develop tools or systems that empower them.
5. Leverage personalization.
Tesco has a strong presence in its country of origin (UK) and globally with over 4000 stores worldwide.
For large brands similar to Tesco, coming across as authentic and human can be challenging. Although online grocery shopping and self-service scanners are convenient, individuals still enjoy dealing with other individuals.
Customer service is still required, and the people at Tesco have chosen to use Twitter to execute this with a human touch. How? By using a customer retention strategy that adds personality to their customer interactions, check out this recent exchange:
Image taken from Twitter
If you want to apply this customer retention approach, you need to identify your audiences’ personalities and interact with them on their preferred channels. It doesn’t matter whether it’s email or a social media platform. What matters is that their attention is there. Always remember to ensure that whatever you’re communicating sounds like it’s coming from a human.
6. Communicate with your customers.
We’ve discussed several examples of B2C, now let’s take a look at B2B. R&G Technologies is an IT support firm that has developed a solid and long-term relationship with its clients.
The biggest takeaway from this example is their use of customer satisfaction surveys. Customer satisfaction surveys allow R&G Technologies clients to have an outlet to express what works well and what doesn’t. Asking the right questions that help the company gain insight that is beneficial to both the overall marketing and customer retention.
Do not underestimate the power of one-on-one conversations with clients, especially if you’re in e-commerce. If you’re seeking a website builder that allows you to implement this customer retention strategy in your business, then look no further. Strikingly allows you to do so with features such as a contact form, custom form, and many more.
Image taken from Strikingly product
7. Use referral programs.
Implementing a referral program to your business makes for excellent customer retention. Customers are encouraged from the moment they purchase to refer a friend for rewards. For example, an individual can get $20 for every friend they refer, and their friend gets 20% off their first purchase. When done well, referral systems can be an effective customer retention strategy. The key is to focus on strong incentives to get individuals invested.
8. Create a distinction between you and your competitors.
A good example is Apple’s strategy demonstrated through their “Mac vs. PC” ad campaign. Besides generating a lot of dispute, it also divided the market and set Apple apart from its competitors by identifying the kind of consumers who should purchase Apple products.
Sticking true to your brand shows integrity and makes it easier to keep retained customers who might become your brand’s strongest advocates. Don’t be afraid to be bold in your business’s marketing to get the most out of it in customer retention.
9. Use subscriptions to reinforce customer experience.
It is not out of the ordinary for a commodity-based organization to implement a subscription service into its business model.
For example, Amazon introduced the Prime subscription, which the company developed to bring consumers faster delivery. If you want to implement a similar concept to your business, you can sign up for a Pro account on Strikingly and use the Membership feature offered for paid plan users.
Image taken from Strikingly product
To gain customer loyalty, you don’t need to charge a fee for your subscription model. Instead, a lower-cost way to leverage this customer retention strategy is to provide benefits in exclusive content and events.
However, if you’re going to follow Amazon’s playbook, make sure your business offers something individuals want.
10. Use experiences to evoke positive feelings.
Creating positive sentiments with customers through experiential marketing has been used for a long time by brands. For example, Coca-Cola continuously applies this approach to its campaign ads, such as their 70-day 2012 Summer Olympics campaign. In this campaign, the company brought music, sports, and the Coca-Cola brand altogether.
The takeaway from this approach is to create positive emotions in the form of new experiences outside of your main products, services, and value propositions. By executing this strategy well, it can be beneficial for customer retention.
Image taken from Strikingly
Now that you understand the fundamentals of customer retention, you can apply this knowledge to your current or future business. For example, if you’re looking to create a business website but have no technical skills, Strikingly is the website builder for you!
This website builder offers many features (even if the free version) you’d find helpful in your business such as e-commerce integration, mobile-responsive website templates, and many more. So what are you waiting for? Sign up for a Strikingly account and create a website for your business today.