While many companies are striving to attract new customers, customer retention is also critical in growing a sustainable business. How well a company keeps existing customers coming back on a long-term basis indicates how satisfied customers are with the business. It is all about the preservation of customers.
Compared to customer acquisition, customer retention is easier and rewarding. It costs a business six to seven fewer touchpoints, and existing customers are “50% more likely to try new products and spend 31% more” than new customers. In terms of cost-efficiency, keeping a customer is five to 25 times less expensive than acquiring one. Surprisingly, a 5% increase in customer retention rate can boost revenue by 25% to 95%, according to Harvard Business School.
So how can you improve customer retention for your business? While a great product or service is fundamental, you should primarily focus on creating a seamless customer experience.
- Design highly targeted marketing campaigns through customer segmentation. Address customers’ needs by delving into data to better understand their demographics, psychographics, behavioral patterns, and intent.
- If appropriate, use personalization to get more connected with customers.
- Customers’ feedback helps you identify at-risk customers and innovate competitively. Sources of relevant information include surveys, product reviews, follow-up emails, A/B testing, and user-generated content on social media.
- Make sure your business is convenient and accessible. This can refer to business location, mobile-friendly purchase, delivery, customer support, etc.
- Reflection on your marketing strategies allows you to see potential problems that may conflict with your customers’ interests, and you can come up with solutions in advance.
Additionally, tactics that optimize your business can result in a higher retention rate.
- Social proof works better than self-promotion. Demonstrate the quality of your products or services through word of mouth, customer testimonials, referrals, and external advocacy for the brand.
- Retained customers do not necessarily suggest loyalty, but an effective loyalty program can increase retention rate.
- Tap into the power of philanthropy. Tell customers your business is doing good for society to emotionally appeal to them.
- Offer subscription so that customers are more likely to stay over a period of time.
Moreover, the way you communicate with existing customers makes a difference.
- You should not only listen to customers but also be responsive. Don’t forget to give a personal touch when talking to them.
- Leave customers a positive impression by showing kindness and expressing gratitude in your communication.
- Reach out to customers on a regular basis to maintain engagement. You can send them coupons, exclusive offers, incentives, and gift cards that bring them back for another purchase.
- Reclaim at-risk customers. For example, remind those who have left items in online shopping cart to complete the purchase.
While paying attention to business growth, you also need to avoid decline. This makes customer retention a key component of continuous development. It seems to be complicated but occurs naturally when you make the right move. With these helpful tactics, you are off to a tremendous start.
Located in Columbus, Ohio, Creative Spot has helped organizations with strategic marketing for over 20 years. If you would like to learn more about customer retention or have questions about Creative Spot’s capabilities, please contact us.