The main priority for salespeople, regardless of the type of business or industry, is to constantly find new and effective ways of increasing revenue. At first glance, the most straightforward approach is to sell more, which, in many cases, means getting new clients. As a consequence, salespeople often find themselves focusing too much on gaining new clients and completely neglecting to address the need to retain the ones they already have.
However, it’s well-known that it’s much cheaper for companies to keep their existing clients than acquire new ones. Statistically speaking, selling to existing customers has a 60 to 70% success rate. Selling to a new customer, on the other hand, is only around 5 to 20%. Also, The Harvard Business Review shows that improving customer retention rates by as little as 5% will increase business profits by 20 to 95%. These figures beg the question of why so many businesses focus so much time, energy, and resources on getting new customers at the expense of neglecting current customers.
Customer Retention vs. Customer Acquisition
The most common misconception among organizations is that if they create a great product or service, customer retention will be a given. And while the quality of the product or service does impact customer satisfaction and retention, it’s only a short-term solution. It’s not uncommon that, sooner or later, clients may leave, feeling that you no longer care about them.
In the end, customer loyalty is not something that, once given, can never be taken away. It’s something that companies need to earn on a continuous basis. For this, they require an effective customer retention strategy that gives them the ability to identify, track, and sell more to those clients who are likely to become long-term sources of revenue.
Why are Customers Leaving, in the First Place?
Customers will stop buying from a particular business for a wide range of personal and unique reasons. That said, many of these reasons can be summed up into several categories. When it comes to customer churn, three main areas seem to drive customers away. These include the following:
- Customer Experience – One of the major factors that significantly influence customer churn is the experience clients have when interacting with the organization. A bad customer experience, especially if it falls well beneath the customer expectations, will greatly increase the chances that the client will leave. Similarly, limited access to customer support can also cause clients to become angry and frustrated.
- Incentives – While price is an essential factor that influences customer attrition, people are willing to remain if they receive fair treatment. However, if a competitor promises various incentives in the form of a better experience at a lower price point, they are able to acquire new customers.
- Human Services – Whenever customers have an issue with the company, they want to speak with a natural person. Looking for answers on a website or interacting with a bot often fails to address the client’s unique needs. As a result, they begin feeling unlistened to or offer solutions that don’t solve their problems.
The bottom line is that regardless of the price clients initially paid when they signed up, they will leave for the competition if their overall customer experience lacks incentives or a more personal relationship in the form of human touch.
Proven Customer Retention Strategies
At its core, customer retention refers to any actions undertaken by the company to build and maintain strong customer relationships. Put somewhat differently, retention is the science of making sure that clients are satisfied and will return to spend more money on its products or services. Below is a list of customer retention tips, programs, and strategies that can help ensure happy customers.
The Onboarding Process
An onboarding process aims to aid with customer success by teaching them how to use your product or service. Rather than learning everything by themselves, users are guided by a customer representative who offers a personalized experience according to individual needs. In doing so, customers will save time and understand how the product can help them achieve their goals faster and more effectively.
Onboarding is often seen as a successful customer retention tool because it limits the churn rate of new customers. During the initial phases of learning how to use a new product, people can become easily frustrated if they don’t understand how to use it. The onboarding process ensures that customers know how to utilize the product so they can achieve their goals as fast as possible.
The Customer Feedback Loop
Business owners will find it incredibly difficult to improve their companies if they don’t know how their customers feel. For this reason, they need to find effective ways of obtaining customer feedback and share that data with the rest of the organization. The customer feedback loop provides a system for collecting, analyzing, and distributing customer reviews and surveys.
Customer surveys are one of the most common ways of collecting feedback. User testing and focus groups are also tools used in this strategy. By using these methods regularly, your team should be able to gather enough relevant customer feedback. Once collected, the survey results should be analyzed and used to understand and anticipate trends in customer behavior and determine areas to enhance the experience, more in line with customer expectations.
The Customer Loyalty Program
As the case with sales staff focusing too much on customer acquisition, another potential pitfall is about focusing too much on customers at risk of churn. Companies should ignore their loyal customers at their own peril. A customer loyalty program will reward premium customers for their continued loyalty. The more they spend and interact with the brand throughout their customer lifecycle, the more they’re rewarded. It keeps customers happy because they’re getting additional incentives aside from just the product or service.
The Communication Calendar
Even if you’re dealing with inactive customers, communication is always vital. Even if clients haven’t interacted with the brand for a while, businesses should still look to re-establish a connection and reaffirm their relationship. A communication calendar will come in handy as it helps manage customer engagements and create upselling and cross-selling opportunities.
A communication calendar is a chart that keeps track of all customer communications. It informs about the last time clients have reached out and alerts teams about when existing customers haven’t interacted with a brand. There are many uses for this calendar, such as launching various promotional offers or taking a more proactive approach to customer service. For example, if a user’s subscription is about to expire, companies can send out an email letting them know they need to renew their account. This helps remove this particular roadblock before the client gets there, helping improve the customer service experience.
The Customer Advisory Board
Aside from being among the biggest spenders throughout the customer lifetime, loyal clients also provide critical information to the organization. They let them know what they like about the company and make suggestions on how to improve it. By putting together a panel of loyal customers that can help fine-tune products and services. Besides, they can be encouraged to become brand advocates by sharing their reviews. Social proof in the form of customer reviews and testimonials is an effective tool in building rapport when attracting and engaging with prospective customers.
The Social Responsibility Program
Due to the proliferation of social media and the digital environment, as a whole, today’s consumers are more involved and informed than ever. Therefore, brands need to get involved with their clients beyond just their products. A corporate Social Responsibility program pursues a moral goal aligned with the customer base’s core values. Lego, for example, has been making significant investments into making its products more environmentally friendly. While not all companies need to have such ambitious projects, they can still get involved in their customer base’s community and demonstrate a commitment to their needs and values.
Different customer retention strategies can be used together to create an exceptional customer experience that can cultivate loyalty and make clients more willing to make purchases. Through customer retention, brands can derive more value from their product, encourage satisfied customers to become brand advocates and influence others to become new customers.
When it comes to improving customer retention rates and developing the right strategies for making it happen, brands need to rely on detailed business analysis and know which metrics they need to follow and how to calculate them. Consero Global offers a financial solution (including expert support and intuitive systems) that can help you better understand your business from every angle and achieve the desired results in a fraction of the time.