Last week’s October 5th was the annual international Customer Experience Day. While CX Day will come and go, keeping your customers happy year round is the pillar of customer retention and supports that your CX efforts will be successful.
Your best customer is the one who keeps coming back to you. It’s hardly a new concept, but is worth remembering. No company can efficiently grow without retaining its customers. The most common pitfall is when companies think that if they have a great brand, product or service, customer retention will follow. While this might be true in some cases, the reality is that it’s a short-term strategy that will not last. An even harsher truth is that, sooner or later, customers will likely leave and head on over to the competition who deliver on their CX promise.
What is customer retention?
Customer retention refers to the actions companies take to reduce the number of customers leaving, with the goal of keeping as many existing customers as possible. It is important to remember that customer retention begins with the first interaction a customer has with a company and continues throughout the entire lifetime of the relationship.
It’s very likely that you’ve heard of the metric “acquiring a new customer is anywhere from 5 to 25 times more expensive than retaining an existing one.” Still, many companies concentrate and invest heavily on acquiring new customers through sales and marketing while paying little attention to their customer retention strategies. Essentially, it’s like throwing money down the drain.
How can a company improve customer retention and turn first-timers into loyal customers? Let’s explore 5 key tips that have an impact on retention and help to keep your customers with you for the long run.
1. Ensure frictionless onboarding and deliver a WOW moment
Provide your customers faster time-to-value through a convenient onboarding process. There are almost no “easy-to-use” products where you wouldn’t need a manual, training, or proper onboarding. Customers may immediately discontinue using a product or service if they simply don’t know how it works, meaning they will never get to realize the value it could bring in solving their problems or needs.
Onboarding is a process, not a one-and-done action. It goes beyond the the initial transaction with the purpose to create and sustain a meaningful, mutually beneficial relationship. Empower your customers to get the most out of your product or service by helping them reach initial success. The ultimate goal is to turn this into the first WOW moment where they understand the outcome and their expectations are exceeded.
2. Set realistic expectations
A simple and crucial key to retaining your customer base is to understand their goals and identify their pain points. As you walk potential customers through your products or services, set realistic expectations for your business and your customers. It’s important to make sure that whatever you promise, you are confident you can deliver. By clearly setting expectations, customers understand what they’re getting and it’s easier for you to meet or exceed their expectations.
One mistake that can befall companies is to not be proactive in keeping the customer informed about the progress of goals and objectives. Maintaining full transparency between you and the customer is key, especially when issues arise that may hinder the success of the relationship. Best practice is to face matters promptly and head on – not to hide and hope for the best.
3. Communicate regularly and proactively
This tip could also be named as ‘do not leave the customer alone’. Communicate regularly with existing customers. Check in to see how they are enjoying the product or service they purchased from you (remember to ensure relevancy) and share any upcoming promotions or opportunities to try new items.
Use an effective system for tracking and reporting customer metrics so you can maintain consistent communication or on-demand communication when customers need it. Additionally, implement proactive (or anticipatory) communication services so that you can avoid problems before they occur.
4. Give customers a reason to return
In a world filled with competing products and commodities, customer centric companies need to embrace a culture of demonstrating and delivering value not only to potential customers, but equally (and arguably more importantly) existing customers. Go the extra mile for those already with you, because going above and beyond what they expect will build strong relationships and form customer loyalty.
Plan each customer relationship and sale smartly, like offering special discounts on their second purchase to entice them to return or make a repeat purchase. Offer them added value tips & tricks, workshops, or other incentives that make them feel special. Also, send them relevant emails or give them a call to increase your chances of retention.
5. Use customer feedback to your advantage
Aiming to provide a great customer experience doesn’t just make your customers happier, it also makes them less likely to churn. Customer feedback is an excellent way to know how they feel about the service experience you deliver. It gives you the ability to learn when and where to improve by uncovering any pain points in your customer journey so that you can correct issues before they are ready to leave.
Customer feedback also gives you the opportunity to re-engage with your customers by communicating your improvement actions and results. When customers see that their feedback is heard and acted on, it strengthens their trust, loyalty and overall satisfaction with your brand.
Bonus tip! Focus on the right customers
On the surface this may seem counterintuitive, however, if you do not understand what motivates a customer to come to your business and what their true needs are, you may end up selling something that is not right for them which can put into motion a chain of reactions towards a bad customer experience.
Be transparent and completely honest. If you can’t do something for them, tell them. This might mean you have to send someone away, but politely and knowledgeably explaining the reasoning will help make sure they don’t walk away as an angry customer – which could be a much more expensive loss than a lost sale (think: social media venting). By understanding the customers’ objectives and managing expectations, you’ll be deserving of trust in your brand and long-term customer loyalty.
With all this being said, the secret in keeping customers is ensuring they are happy at every stage of their journey with you. Remember: even a 5% increase in customer retention can increase profits by 25% to 95% (which will make your bottom line happy, too!).