Imagine investing time to convince someone to buy, only to cease communication afterward. Customer retention is crucial; without reminding clients of your brand's value, they may not continue doing business with you.
Retaining customers is more cost-effective than finding new ones and having to re-invest the time and effort involved in fostering loyalty and trust.
Effective retention strategies go beyond basic assistance, promoting communication and understanding.
Let’s look deeper into customer retention's importance and steps to enhance it for your long-term success.
Customer Retention (CR) is a mix of strategies for turning customers into repeat buyers and preventing them from switching to a competitor. CR is mainly achieved through Customer Success (CS) by proactively helping clients achieve their goals using your product or service, and also by rewarding loyal customers through loyalty programs.
Customer Retention is important because it increases customer lifetime value (CLV), improves client acquisition ROI, reduces acquisition costs, and increases word-of-mouth recommendations.
Customer Retention Rate (CRR) is the percentage of customers that stay with your business in a given period of time, either by renewing subscriptions or buying repeat purchases.
To calculate customer retention rate you’ll need to follow these steps:
Formula: CRR = [(End - New) / Start] * 100
You should aim to match or exceed the benchmark for your specific industry or niche. According to statistics, all industries have about 75.5% average Client Retention Rate. The lowest customer retention percentage is in the Hospitality, Travel, and Restaurant sectors (55%), followed by Retail (63%).
1. It’s less expensive than customer acquisition - According to information from Forbes, in SaaS specifically, retaining existing customers costs 4 to 5 times less than finding new ones.
2. It promotes loyalty and favorable recommendations - A devoted audience will share their positive experiences with others, attracting more purchasers to your businesses.
3. It boosts revenue - SemRush states loyal clients spend 67% more after being with the company for 31 to 36 months than during the first six months.
4. It increases customer lifetime value (CLV) - This metric illustrates how much you expect a customer to spend on your products throughout the whole time of being your client. As you build stronger relationships with people, they become more perceptible to your cross-selling and up-selling propositions. As a result, this metric skyrockets.
5. It creates space for inventiveness - Once you’ve built a solid base of customers, you’re free to experiment with your product development and marketing tactics. Just be cautious about making too many changes. Major transformations may scare the audience away.
Now that you understand the importance of customer retention, it’s time to outline some steps to practice in the company.
While you may not predict whether the customer will be satisfied with your products or services, you can influence their first impression.
It’s your duty to ensure the customer understands the product value and gets the most out of it before the introductory period ends. That’s where you need an onboarding procedure.
What the onboarding process generally looks like:
I) Sending a welcome email - Even if you already sent an email during a free trial period, sending another one after purchasing a product is essential.
Here is the email Grammarly uses to greet its premium users:
II) Introducing new users to an application or software product during their initial use - This stage may include educational materials, guides, checklists, product tours, and app tutorials.
III) Feature promotions - Extend initial onboarding by introducing users to other features, either new or undiscovered ones. However, make sure not to overwhelm them with too many advertisements.
IV) First-week check-in - An onboarding process may include keeping in touch with clients and getting their product feedback. You can send surveys or schedule a call.
V) In-depth product use promotion - After some time, you can collect data on user preferences and suggest other features based on their interests.
Sometimes onboarding may require additional tools. Suppose you want to show an engaging, interactive, and professional presentation. You may employ tools like Storydoc to appeal to your target audience.15
HubSpot found that 93% of customers will make another purchase if they’ve experience exceptional customer service from a company.
This experience involves knowledge, empathy, active listening, and meaningful dialogues. Customers expect the business to foresee their needs and address problems before they arise no matter how small the provider. That's why it's essential for startups to have robust customer support for startups, ensuring customer queries and concerns are addressed promptly.
That’s where you may need to introduce artificial intelligence (AI).
AI-powered systems can analyze behavior, spot patterns, and predict possible issues. They send notifications to you or a client to take preventive measures.
Or you can employ chatbots on the website that will work uninterruptedly. They will collect customer requests and return possible solutions or notify a customer service team to intervene.
The way MailChimp uses its chatbot is a good example for proactive customer service:
Value-added services and solutions are a company’s offers in addition to its basic goods or services. These are often free extra commodities, such as:
Such a strategy can set you apart from the competition. Value-added services also encourage people to return to your brand, improving retention.
Another critical aspect of retaining customers is listening to them. Solicit feedback to understand their needs and issues. It will help you take action to improve your products, leading to higher customer satisfaction, retention rate, and loyalty.
For example, you can send surveys to measure a Net Promoter Score. It usually involves rating whether a client will recommend the brand from 1 to 10. Yet, encourage more detailed answers and include forms to describe feelings and desires.
If you already have devoted customers, don’t take them for granted. Instead, incentivize them to stay with you.
Incentivise client loyalty by doing the following:
Here is how Zoës Kitchen, a restaurant chain, shares information about its reward program.
Omnichannel revolves around uniting offline and online sales and customer support.
Modern consumers switch between various channels when interacting with your company. They may ask a question in a live chat pop-up, send an email, and then call a customer support team through your contact center software.
Your task is to ensure the client receives the needed attention without repeating themselves every time.
It’s about providing buyers with a seamless and personalized shopping experience across all these touchpoints.
To reach this, a business needs to closely connect its online and offline branches as well as the channels of interaction. And with a business phone service that’s up to date and well integrated, you can be ready and able to engage with customers any way they prefer.
What do you need to deploy omnichannel?
For omnichannel you’ll need:
These need to be accessible to all staff members who communicate with prospects via any touchpoint.
As a result, shoppers get their requests resolved even if they talk to different associates.
Omnichannel requires serious investments and cutting-edge technologies. So it takes time to replace the multichannel strategy.
NOTE: What is the difference between Multichannel and Omnichannel?
The multichannel approach implies having many offline and online touchpoints so that customers can opt for the most convenient ones. Unlike omnichannel, multichannel does not connect these touchpoints; they remain separate.
For instance, if a person buys online and then decides to buy online and then decides to cancel it through a customer service representative over the phone, they’re likely to fail to do so.
The ability to recognize clients across touchpoints leads us to the next way to boost retention. It includes storing client information and using it to provide relevant and personalized solutions.
Personalization ensures customers don’t feel like a number in your system. It makes them feel appreciated and seen.
According to McKinsey, 78% of consumers are more likely to refer friends and family to companies after having a personalized experience.
How to personalize your communication with clients?
I) First, you need to segment the audience.
As you accumulate data, you can spot similar patterns among certain users. They may have similar interests and responses to your campaigns. Others, for example, will require another treatment from your sales team. Use it to your advantage.
2) Second, draft content to satisfy the needs of various people.
Suppose you set up a sequence of personalized emails. Consider using variables that would be substituted with the name of the recipient.
For instance, your subject line could be: “[Name], we have a promo code for you!”
That’s where you may need dedicated tools like Zendesk Agent Workspace to pull customer information, view the conversation history, and streamline conversations.
3) You may also want to optimize using ChatGPT.
This tool can give you ideas on personalizing communication, writing a business proposal, or building your sales persona.
I supplied ChatGPT with an example sales pitch and asked it to give me tips on enhancing it. The tool even gave me an optimized variant!
Optimzide sales deck using ChatGPT:
If you’re starting out, you may postpone customer retention until you build an extensive customer base.
But once you’ve persuaded someone to buy, you can discover the potential of customer retention. Here is how you can nurture people to become loyal customers:
But in the end, it all boils down to developing strong, long-lasting relationships.
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