What is Customer Retention?
For a business to stay up and running, it is necessary they have one thing – one crucial thing – and that is a customer, even more importantly, a high rate of customer retention. Without customers, there is no business. Leading a customer to your business is a job in and of itself. Once that step is checked off the to-do list, the focus becomes keeping that person as a customer.
Customer retention is the ability of a business to create customer and brand loyalty in order to retain customers. It is the measure of customer loyalty and capacity of business to keep customers satisfied with good service and quality products. It begins with the first contact a customer has with a company and continues throughout the lifetime of the relationship. Although reaching and maintaining a solid customer retention rate is no easy task, it comes with many benefits.
Benefits of Improving Customer Retention
Seeing an increase in profit is an exciting time when you are first open for business, but keeping up the same stamina throughout the lifetime of a business is important. It’s not easy work, but keeping customers returning is well worth it. Here are five benefits of improving customer retention.
1. It is cheaper than acquisition.
A returning customer is cheaper for business. It serves as a more cost-effective way to keep a loyal consumer around rather than bringing in a new one. There is less spending on advertising or inducements, like price-cutting and giveaways, because they are already hooked. Research shows retention to be more economically favored than acquisition. Even though it may not be the easier of the two, it is most definitely the cheaper and more worthwhile.
2. Loyal customers are more profitable.
A loyal customer spends 60% more per transaction and is 5 times more likely to indicate that it is the only brand they would purchase from in the future. That said, on average, they deliver 23% more revenue and profitability over the everyday customer. It’s important to keep in mind that the end goal is lifetime revenue, not just daily revenue.
3. Your brand will stand out.
How many brands do you interact with that genuinely and visibly value your patronage? You can probably name less than a handful. Most companies only focus on acquiring their customer. When a company dually focuses on acquisition and retention, they will stand out even more. The best brands have unique retention propositions.
4. You will earn more word of mouth business.
People are most strongly influenced by referrals from family and friends, according to the heavily researched principle of social proof. Guess how many marketing dollars it will cost you to create a “word of mouth” marketing campaign? Zero! Your loyal customers are your greatest walking advertisements. Don’t forget about millennials and the power of social networks. 90% will share their brand preferences online.
5. Customers will be more open to your marketing.
Let’s be honest, there really is no better feeling than receiving a special offer because of your continued involvement with a brand. Consumers greatly appreciate when a brand that they are loyal to reaches out, and 7 times more likely to respond to that brand’s promotional offers.
How Do You Improve Customer Retention?
Building a strong relationship with a customer is important, and a cornerstone of a strong relationship is longevity. With good customer service, education, and engagement, you will be doing more than just the right thing; you will be doing good business.
Customer Retention Strategies
Customer retention strategies work as a great foundation for creating a successful business relationship. Keep in mind they may take more work than first hooking a customer in through acquisition, but it is well worth the time and investment.
Product And Service Integrity
Consistency is key when it comes to what you say, do, and the experience you provide to your customer. They want to be confident and comfortable with the way you carry out business and know that you take care of them in the most genuine way, regardless of whether it is a large or small act. Practice what you preach, because if you don’t, they will up and leave to find a company that will treat them well enough to keep them coming back.
Create value that you and your customer can share. Having a similar outlook will entice your customer to be loyal to you since they will innately trust your opinions. The Corporate Executive Board found that 64% of 7,000 U.S. consumers surveyed shared that the primary reason behind having a strong relationship with a brand was similarity in values. Stand for something.
Awaken The Ego
Customers remain loyal to a brand that they find have commonalities with them on a personal level. When researching your target audience, doing so to the finest details will be favorable for you in the long run. Knowing what goes on in the brain of your ideal customer will help you in creation and execution. Marketing to teenagers who attend school during the Fall and Winter months is not ideal if your target market is retirees who live in warm climates during those months. Get deep into your customer’s ego.
Position Around The Before And After
Imagine you have a daily challenge you can’t imagine will be solved. You find an advertisement for the product of your dreams that shows exactly how it will rid you of your daily challenge. Of course, you are going to follow through and give it a try. That is exactly what you want to do with your customers.Position the problem or challenge your business aims to solve in a way that bridges your customer’s life before and after working with you. Convincing your customer that your product or service will help them live their best life is a sure way to have them coming back.
Make Use Of Surprise Reciprocity
Research shows that surprise reciprocity works extremely well, even though reciprocity on its own is a powerful tool. An expected gesture is not as memorable as an unexpected one. A kind gesture is more likely to leave a lasting impression when it arrives out of the blue.
Don’t Underestimate The Power Of ‘Thank You’
It seems like common sense to say thank in return for something kind, whether through kind words or a kind gesture. We sometimes forget that something so simple can mean so much, especially in creating and maintaining a relationship. Customers like Nordstrom and Zappos are known for thanking their customers via good old Snail Mail. They know how to add that personal touch of value to a genuine act of kindness. To a company so large, it is such a small investment of both their time and money. But to a customer, it could mean the difference between staying loyal and moving their business to a different company altogether.
Remembering to show thanks is not always an immediate reaction, especially in today’s world where we are always onto the next thing before finishing the current one. There are many ways to tell someone you are thankful, and Thnks makes it easy and efficient. Keep business rolling and customers coming back with the click of a button and personal note.
“As a sales rep that covers a vast territory, you guys saved me when I forgot my to acknowledge one of my largest customers bdays. Thankfully I was able to send her a sweet treat which she loved! Will def share with my colleagues!”
“Sent out three coffees to three different clients…all have been opened and redeemed and so far ⅔ have written me back saying thnks. Awesome!”
Click here to learn about how Point of Reference successfully used Thnks to increase their customer retention. Interested in learning more? Sign up for a demo, or click here to learn more about using gratitude and customer engagement!