One of the major differences between successful and unsuccessful businesses is customer retention. Businesses that retain their existing customer base are on a path to growth. Businesses that acquire customers in a ‘burst’, but then lose them are poised for failure, even if it isn’t apparent at first.
Before we get too far ahead, let’s define customer retention. Customer retention means that a business maintains its customers who use services and pay for them. The great thing about retaining your current customers is that they pay for your services, but you don’t have to make the effort of ‘acquiring’ them as new customers. Hence, they’re simply more cost-efficient for businesses.
How can businesses increase their customer retention rate? Well, it obviously starts with having A-grade products or services, but there really is more to it than that. Here are specific tips and strategies to improve your business’s customer retention rate.
1. Setup Systems that Detect Signs of Customer Churn
The best way to retain a customer is to know in advance if they’re going to leave, and then target them with offers. But in order for that process to work, you need to have a system set up in advance that detect if a customer is planning to leave.
For every business, warning signals for customer churn will be different. For example, for an eCommerce company this could be a customer not purchasing anything for a given period of time, or negative feedback.
In this case, the eCommerce company would be advised to create a list of customers who haven’t bought anything in a given period of time, and then send them targeted offers that bring them back to the business.
2. Send Customers Personalized Offers
Personalization is the name of the game today. You can’t manage all of your customer base with the same offers. Going with our eCommerce example, if a customer has a history of purchasing baby care products, it would make little sense to send them an offer of about 50% off car shampoo.
Thus, businesses should invest in systems that study their customer base and segment it based on past behaviours. An eCommerce business should routinely send personalized sale offers based on an individual customer’s buying history.
This shows the customer that the company cares about them at an individual level. When it comes time for a customer to renew their membership, send them a well-designed subscription renewal letter, perhaps with great personalized offers as well. Give them good reasons to renew their membership.
3. Take Care of Your VIP Customers
Customers that are the most profitable for your business should be your VIPs. For a ride-hailing company, this would simply mean the customers who routinely use their services. To show these VIP customers that the company appreciates their business, it could give them special rewards for booking a certain number of rides.
Or it could simply send them a package offer that gives them a special discount for a certain number of rides. The customer would feel appreciated and continue using the services. This way, you don’t have to spend money on acquiring new customers, while ensuring that existing customers rely on your services more than ever.
A business should deliver on what it promises to its customers. That’s a standard baseline. But to truly win your customers over, offer them bonuses or flash discounts so they keep coming back for more.
Depending on your business, you could also anticipate a customer’s needs proactively and address them right when they feel a need for it.
5. Reward Loyalty
Give your customers a reason to choose you over competitors, by offering them something for their continued business. This could simply mean offering them a loyalty card which can be redeemed for gifts when customers rack up a certain number of points.
For subscription-based services, it could also mean a temporary upgrade in membership level. These are just rough examples, and businesses should look at their services and come up with loyalty offers accordingly.
6. Be Visible
Ever notice that your inbox is filled with newsletters from companies whose service you signed up a long time ago? Even if you aren’t reading their newsletters, you’re looking at their brand name almost every day.
Companies do this consciously to stay on top of your mind. For retaining existing customers, this is an excellent strategy. The more your customers know about your company and its latest offers or updates, the more involved they’ll feel.
7. Announce New Features
So you just developed a flashy new feature for your product or service? The worst thing you can do is not to market that feature to your existing customers. You might be asking, why would existing customers want to know about a new feature?
After all, they’ve already purchased the product. The reason behind this is value. By adding new features and asking existing customers to ‘check it out’ by sending an email, you’re communicating that they’re valuable and their feedback matters.
8. Have Excellent Customer Service
A business’s job isn’t done once they acquire a new customer. They have to maintain that customer by sending them offers, discounts, content and most importantly, by giving them excellent customer service.
Just know that things will go wrong, and when your customer runs into a problem you’ll be the first one they contact. Your company should always be there for the customer, whether or not the error was caused by them.
9. Improve Your Products and Services
It’s a fatal mistake for any business to not update their product or services. Just because your customers choose you over the competition, doesn’t mean they’ll hesitate to leave you for a competitor with better features.
Even if the competition hasn’t caught up, businesses should focus on improving their products and services in order to provide value to existing customers.