In a global economy where every customer makes an impact on your business, it’s important to have a customer retention strategy. No matter what type of business you run, you’re likely to be facing ever-increasing competition in your industry. Thanks to the global marketplace of the internet, customers are no longer limited by location to get the best deal or highest quality goods and services they’re after.
This can be great news for your company. Like all the other businesses out there, you have a chance to reach an audience all around the world and communicate on a scale like never before. But on the other hand, you’ve got to do some serious work to keep those customers loyal to your brand.
Why customer retention strategies matter
Why is customer loyalty important? Here are a few of the key points every business owner needs to know:
- Keeping a current customer costs less money and requires less effort than gaining a new customer
- The longer a customer is loyal to your brand, the more frequently they’ll shop with your business, and the more money they’ll spend on each purchase
- Customer retention means you’ll also gain more word of mouth referrals and get free advertising from your brand loyalists
- Long-time customers are willing to provide feedback and forgive your brand for mistakes and mishaps
Even if a business only improves its customer retention rate by a few percentage points, that could deliver exponential company growth in just a few years time.
For example, a company that retains 90% of its customer base and gains 20% in new customers every year will have 10% growth in one year and 50% growth in just five years. But a company that retains 80% of its customer base and gains 20% in new customers every year will have zero growth in the same amount of time.
Clearly, customer retention is something all businesses should be working hard to improve. So how is customer retention achieved? Here are seven customer retention strategies and techniques every growing business should try:
1) Collect and analyze data
No matter how small your company, there is powerful data (and the tools to analyze it) out there that you can utilize to help it grow. Today’s data collection and analysis services offer an incredible opportunity to learn about what your company is doing well and where you can improve.
Many third-party companies provide services like customer surveys, analysis of customer demographics, and statistics on how your customers behave on your website. But your systems of analysis don’t necessarily have to be complex or expensive — even a simple monthly report of online reviews can be incredibly eye-opening. Here, the key is to really analyze the information and look for common patterns. These patterns will tell you where your company needs to make changes.
Some of the important things your business can learn from customer data include:
- The demographic your brand appeals to
- Where your website falls short in converting customers
- Ideas on how to expand your product offerings or increase purchase amounts
- How to improve the customer experience
- Which advertisements are effectively bringing in new customers
- How to appeal to each individual customer based on their personal tastes and preferences
If you’re not already collecting and analyzing customer data, start small. Send out a customer survey, review your social media reports, and use Google Analytics to learn more about how customers are using your website. Even just start by calculating your customer churn rate.
2) Provide open communication channels between you and the customer
In the internet and social media age, there is no excuse for not listening to and responding to your customers. As we discussed in the last section, listening to what your customers have to say can provide valuable information on how to improve your business. It also improves customer retention and creates brand loyalists.
When you listen to your customers and respond with genuine empathy, those customers will feel like they have a real-life relationship with your company rather than seeing it as a humanless interaction. Capitalize on this opportunity by following these crucial guidelines:
- Make it easy for your customers to get in touch. List your company’s customer service phone number and email address in a prominent spot on your website and social media outlets.
- Always give personalized responses to customer reviews. Even the positive reviews deserve acknowledgment and gratitude.
- Humanize your brand by avoiding hard-to-understand industry terms and jargon. Speak the way your customers would speak to you. (But keep it professional.)
- Remember, the customer’s experiences are always valid and deserve to be addressed.
- Ask your customers how they want you to communicate with them. Allow options such as text messages, emails, voicemails, and good, old-fashioned snail mail.
3) Deliver stand-out customer service
If there’s one thing that will keep your customers coming back year after year, it’s incredible customer service. Even if your goods or services are identical to a competitor company, your customer service is what will make customers choose you over the other guys. Because the payback is so exponential, customer service should be at the core focus of every company.
- Focus on customer experience. You’ll be ahead of the customer service game if you put the needs of your customer ahead of all else.
- Make apologies as needed. You’ll be surprised how forgiving your customers are when you are willing to admit mistakes and correct wrongdoings (that are bound to happen at some point).
- Remember the one. Though it can be easy to focus on the big picture and overall customer statistics, it’s important to never minimize the needs of your minority customer base. Just one unhappy customer could blow up your problems into a PR nightmare.
- Be prompt. No one wants to wait on hold for hours or spend days waiting for an email reply. Surprise your customers with how quickly you get back to them, and they’ll be telling all their friends.
- Be human. The most important principle to stress to your customer service team is to be friendly and relatable. Though you may need to use scripts as guidelines for employees, customers will be delighted when you reveal that a real person is on the other end of the conversation.
4) Reactivate lost customers
One of the best ways to improve customer retention is by bringing back old customers you’ve lost in the past. This may take a little more effort than keeping those customers around in the first place, but it’s more worthwhile than seeking out completely new customers. In fact, studies show that re-establishing old relationships with customers results in a 20-40% success rate, rather than the slim 5-20% success rate with new customers. Other reports state that it’s 6-7 times more expensive to acquire a new customer than to keep an existing one, including inactive customers.
These customers will have various reasons they’ve stopped supporting your business, but it’s highly likely that you could bring them back into active customer status if you spend some time rekindling your relationship.
Learn why the customer left
You can first analyze the reason you lost this customer by reviewing customer data to look for patterns and habits. What clues can you find about why they left? Could it be because of raised prices? Change in products? Feeling bombarded by marketing? If the data is unclear, try sending the customer a survey and simply ask them why they didn’t stick around.
It’s best to focus on customers who have left your business within the past year. The more recently a customer has gone inactive, the higher the likelihood they’ll come back to make a purchase. Consider these methods to reactivate those customers:
- Send direct mail to appeal specifically to the lost customer. This messaging should include phrases about missing the customer and recognizing their inactivity.
- Offer a special deal to entice them back into making a purchase.
- Invite an inactive customer to change their email preferences. This will appeal to them and may jerk them back into activity if they’ve been ignoring previous emails.
- Send reminders about items sitting in their shopping cart.
- Contact customers through alternative methods. Try reaching them over the phone or with snail mail if they’re unresponsive to emails.
Above all, you should make it easy for a customer to come back into activity with your brand. This means making it easy to log into your website, easy to recover passwords, easy to contact customer service, etc. Thinking about how the customer navigates your website and ordering process will go a long way to bring a customer back into activity.
5) Take complaints seriously
We’ve heard it said that a customer complaint is a gift to your business, and we think it’s a great principle to live by. Though no business likely wants to hear their customers say negative things about them, it’s a sure-fire way to know where you need to improve.
Since many companies pay top dollar to find out what their customers think about them, you should be grateful when a customer gives their feedback without solicitation. An unhappy customer who takes the time to voice their opinion is rare — 96% of dissatisfied customers simply walk away from your business without saying a word.
Since negative reviews are often more powerful and spread faster than positive ones, it’s important that you take these complaints seriously. After all, a resolved complaint can lead to even greater loyalty and an improved relationship with your previously unhappy customer.
Use these expert tips to effectively resolve customer complaints:
- Listen closely. Once a customer has had a chance to vent their complaint, they’re already on their way to feeling better about the situation. Don’t interrupt while they’re talking, and train your employees to ask for more information as a follow-up.
- Repeat the scenario back to the customer. This will ensure you understand the problem.
- Don’t pass the customer from person to person. This will only increase their irritation and make them feel unimportant.
- Avoid correcting the customer. Don’t make excuses or place blame on anyone else.
- Apologize. This is one of the most powerful tools in resolving any complaint.
- Ask the customer what they’d like to happen. This will give the customer a feeling of power and help you avoid over-compensating. You may be surprised how little a customer needs for restitution.
- Resolve the issue quickly. Then, do your best to meet the request of the customer.
6) Reward loyalty
Every behavioral expert agrees that reinforcing positive behavior is one of the most effective means to an end. By rewarding customers who are loyal to your brand, you’ll produce even more loyalty on an even grander scale. You can always rely on a customer loyalty program, but there are more nuanced ways to show gratitude for customers who keep coming back around. Here are a few ideas:
- Highlight customers on social media or in email newsletters. This will personalize your brand and create a long-lasting impression on the featured customer. (It’s also inexpensive!)
- Offer early-access to sales and discounts. This doesn’t require additional discounts or freebies, but still makes the customer feel special.
- Invite loyal customers to a special event, whether online or in person.
- Offer custom rewards based on customer data. If you don’t have data, just ask the customer what they’d like to receive!
7) Keep in touch
Keeping in touch with the customer is a surefire way to build loyalty. While you don’t want to overkill with spammy emails or annoying pop-ups, it’s important to stay on your customer’s mind as much as possible. This can be a fine line to tread, so make sure you communicate in a tasteful fashion. Use these suggestions to get started:
- Gather information about your customer. Recognize important moments in their lives, like birthdays and anniversaries.
- Send non-promotional newsletters. Let your customers see the behind-the-scenes of your company.
- Send out surveys to get valuable customer feedback.
- Send a small gift to get their attention.
- Switch up your form of communication — try texting, snail mail, social media, or even a phone call
- Offer valuable information about things your customer cares about. This doesn’t have to directly relate to sales, but should have something to do with your industry.
By following these retention strategies for customers, you’ll be well on your way to growing your business at an exponential rate. You’ll never regret the investment in your customers, because they’ll pay you back by bringing their friends, spending more money, and sticking around for years to come.
To learn more about effective customer retention strategies, contact ROI Call Center Solutions. We offer free consultations to help any business reduce costs and improve customer relationships.