Customer retention is something that you’ll want to aim a lot of attention towards if you want your business to succeed in the long term. Once you get customer lifetime loyalty, you have hit the jackpot. Failure to work on your customer loyalty and improve customer retention plans will mean that your business is on a treadmill, trying to constantly win new customers.
Losing so many existing clients can become quite expensive. After all, it costs 5 times more to acquire a new customer than it does to keep your existing customer base. In this post, we’re going to take a look at what you can do to improve brand loyalty and customer retention within your business.
We’ll look at how you can use data from previous customers to improve customer retention in the future, but also what you can ask your existing customer base. This way, you will be able to grow your customer relationships, improve customer lifetime, and inspire repeat purchases and brand loyalty.
Why should you care about existing customers?
Every business needs new customers. Yet, the easiest and most predictable source of new revenue is right under your nose: it comes from the existing customers who already know your company and have already bought from you. Here are 5 reasons why you should care about existing customers:
- Better conversion rates: Existing customers have already bought from you, so unless they had a disappointing experience, they will buy from you again. You’ve already established trust, inspired confidence in your product, and even know something about them, which makes it easier to identify their needs and predict their moves.
- Less marketing: You’ll spend less time and effort finding new customers and convincing them that you are the one they should buy from, which means – less expenses. To build a long-term business relationship with a new customer costs 16 times more, than to maintain an existing customer.
- Room for improvement: You have a golden opportunity to improve your offering and customer satisfaction rates just by listening to your customers’ feedback. Was your customer service good enough? Did your product meet their expectations? Was it a good value for money? Just ask, listen and improve.
- Higher profits: Selling to existing customers is less focused on price, as opposed to selling to new customers. And since your existing customers trust you already, it gets easier to convince them to become interested in even more of your products or services through up-selling and cross-selling. In fact, Gartner Group statistics tell us that 80% of your company’s future revenue will come from just 20% of your existing customers.
- Lower costs: It’s going to save you a lot of money! According to Bain and Company, attracting new customers will cost your company 5-25 times more than keeping an existing customer; while, a mere 5% increase in customer retention can increase a company’s profitability by 75%!
Different Ways to Boost Your Customer Retention Rate
The following ways to boost customer retention are applicable for virtually any type of business, feel free to experiment with some or all of these tactics to see what your customers respond best to.
Adjust your pricing for returning customers.
You can adjust your pricing in a way that makes it easy for current customers to return and conduct more business with you. For example, maybe you offer customers discounts via email for their next purchases upon receive e-receipts for their most-recent orders. Or, free shipping and returns as well as additional price-related perks for frequent shoppers (Madewell does this well with their Madewell Insider program). Lastly, you could offer a cost-effective subscription for your service (which is a tactic we’ll touch on below).
Implement cross-selling and upselling strategies.
Ensure every customer checks out with something extra in their cart by using cross-selling and upselling strategies throughout your website and all communications.
Upselling to shoppers in a physical store is simple — you can place related products next to each other or use other merchandising techniques to draw attention and drive impulse purchases. However, online shoppers often begin their journey in search of a particular item, which is why you must be strategic when cross-selling and upselling. A good place to start your strategy is by looking for patterns throughout your sales data, ask yourself the following questions:
- Are there two or more items that customers often buy together?
- Which of our items complement each other naturally and are even more useful when paired?
- Which items have upgradeable versions worth mentioning?
These tactics can also be implemented on a more basic level; for example, offer free shipping when customers reach a specific shopping cart total.
Create a customer loyalty program.
Implementing a program to reward your most loyal customers is an easy way to build on existing relationships and offer regular incentives for them to return to your business.
For example, you might email your top 10% of customers a special offer each month. You can test which of your offers resonate with specific customers and then fine-tune your rewards over time. Rewards can range from a thank you note to free shipping to 10% off.
You’ll eventually know which customer demographics, actions, and preferences predict a successful conversion after an offer. You can also expand your loyalty program by adding a points system, which allows customers to earn points for actions like sharing your content on social media or referring a person within their network who makes a purchase. The most important thing to remember when implementing a customer loyalty program is to keep it simple. Make it easy for customers to understand the steps they need to take to earn rewards as well as use apply rewards.
Personalize the buyer’s journey
Another way to recognize your shoppers is by personalizing their experience — this can make their lives easier while on your site as well as make them feel valued. For example, encourage your visitors to sign up (for things like coupons, inside information, notifications about sales, blog content, etc.) via smart form.
Collect their name, email address, and birthday, along with anything else you think would allow you to improve their experience. Then, the next time they return to your site, you can display “Welcome back, [Name]” on a web page or automatically display the correct shipping details based on the contact information your form allowed you to obtain (which might also be saved in your CRM).
Offer a recurring subscription.
Offering a subscription is a simple way to boost retention, this caters to shoppers’ desire for convenience and flexibility (as you can offer monthly, quarterly, or annual subscriptions). Even if you don’t have the type of products that can easily be sold using a subscription model (such as art), consider selling add-ons such as on-retainer customer support or insurance.
Meet your customers where they are.
When you truly understand your customers meaning, you know who they are, what they need from you, what their challenges are, and where they spend their time- you’ll be able to meet them where they are. You’ll be able to create the type of content (e.g. blog, video, social media) they want and need, and then share it wherever they are (e.g. various websites, media channels, social platforms, etc.). In doing so, you’ll remain top-of-mind, offer support even when they may not realize they need it, and show your customers how much you understand and value them.
Reward your most profitable (VIP) customers
Information gathered in the CRM software can tell you which of your accounts are your most profitable. These are the customers you really don’t want to let go of, your key accounts. For this purpose, let’s call them the VIPs. Knowing who brings you most revenue allows you to allocate your time and resources efficiently, as well as increase your chances of cross-selling or up-selling.
Example: Let’s say you have a number of incentives to give away. Use them to reward your VIPs to further increase their loyalty. It’s easy, just create a list of your VIP customers in your CRM software. Now, you can start to follow up and let them know about the rewards and incentives in order to make them feel special, so they continue to be your most profitable customers, which, if you consider the 80/20 rule, this investment is bound to pay off!
Notice churning signs in advance
The most obvious way to ensure customer retention is to prevent a customer from leaving. If you really pay attention, you can always detect the signals of your customer’s impending departure. To capture these “warning” signals, you need to identify the key variables of customer behaviour, such as purchase patterns, product usage and history of customer service enquiries.
Then, you’ll need to analyse these signals and take action to stop your customers before they churn. All this is possible with a CRM system.
Let’s say you want to know how many of your customers didn’t purchase anything in the last 6 months, which might be a sign of them considering quitting your services and taking their money to your competitors. First, create a list of all of your customers, and then create a list of all sales made within the last six months using your CRM software. By comparing these lists, you end up with a list of customers who haven’t purchased from you in more than half a year. You can now send follow up emails to these customers and find out the reasons why they are not purchasing and prevent them from leaving your business.
Target customers in advance
The more you know about your customers, the better you can tailor your approach to each individual. CRM software lets you view a customer’s purchase history, so that you can determine what kind of offer will be the most appealing to each individual and increase relevancy, which will keep your brand on your customers’ minds.
What you need right now is identify ways to revive their interest and convert it into an actual purchase! You can do it by offering them special discounts or some additional value for your product. Let’s say you want to follow up on the customers who showed active interest in your product but haven’t bought anything from for quite some time.
Using your CRM software, you can create a list of all customers who haven’t bought anything for a longer period of time and compare it with a list of all contacts who subscribed to your newsletter. The result is a list of contacts that are actively interested in your product, but who, have not shown any signs of life for a while. Send them a special offer deal or a discount on a new products and make them feel that you care and haven’t forgotten about them.
Keep your follow-up promises
Keeping your promises is the ultimate sign of professionalism in business. The scheduling features in a CRM software allow you to schedule follow-up calls or emails in advance or assign follow-up tasks to members of your team. By doing this, you’ll be able to keep track of your appointments, as well as complete any tasks that you said you’d do when you said you’d do them.
Let’s say you have a list of customers that you need to catch up with and possibly update their information. Time flies and now it’s time to do it! But you check your schedule and you see that you won’t be able to keep your promises to customers on time. In this case, you can always assign some of your colleagues to follow up on these customers and, with just a few clicks, create follow-ups in their diaries.
Obtaining new customers for your business is a lot harder than keeping existing ones locked in with brand loyalty. In this post, we’ve taken a look at the steps that you need to take if you want to keep your existing customers fixed up with repeat purchases.
Your customer retention rate matters and is worth investing in your customer loyalty program rather than constantly pouring your efforts into nailing down new customers. We’ve placed a focus on how you can find out why previously loyal customers are leaving but also what can be done with the information that you have unearthed to fix your customer retention rate and keep those customers for a lifetime.
Act on these tips and use them to improve customer retention rates in your business. There’s a good chance that you’ll be able to see some positive results by doing so and that you will see a boost in brand loyalty, word-of-mouth advertising, social media marketing, and better customer relationships in general. What have you found to work best when it comes to improving customer retention?