By: Kirsti Laasio | HappyOrNot
5 Factors That Improve Customer Retention
Today is October 1st – the yearly international Customer Experience Day. While CX Day will come and go, keeping your customers happy year round is the pillar of customer retention and supporting that your CX efforts are successful.
Your best customer is the one who keeps coming back to you. It’s hardly a new concept, but is something worth remembering. No business can efficiently grow without retaining its customers. The most common pitfall for businesses is when they 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, your customers are likely to leave, and head on over to the competition who deliver on their CX promise!
Therefore, it is imperative that companies develop and retain a loyal customer base.
What is retention? A definition of it:
Customer retention refers to the actions companies and organizations take to reduce the number of customers leaving. The goal of customer retention activities is to help companies keep as many customers as possible, often through loyalty program initiatives. It is important to remember that customer retention begins with the first contact 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 five to 25 times more expensive than retaining an existing one.” However, many companies still concentrate and invest heavily on acquiring new customers through sales and marketing, yet pay little attention to their actual customer retention strategies. It is like throwing money down the drain.
So, how can a company improve customer retention rates and turn first-timers into loyal customers? I reveal 5 key tips that will have an impact on retention and help to keep your customers
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 for which you would not need a manual, training, or proper onboarding. Customers may stop using a product or service because they simply do not know how the service works, and so can’t realize the value it can deliver to solving their problems and needs.
Onboarding is a process, not a one-and-done action. It goes beyond the handshake to not only repeatedly prove your value, but also to 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 when your customers understand the outcome that improves their life – and exceeds their experience expectations.
2. Set realistic expectations
A simple and crucial key to retaining your customer base is to understand your customers’ goals and identify their friction points. As you walk potential clients through your products or services, set realistic expectations for both yourself, the customer, and your business. It is important that the promise made to customers is attainable, as it’s a very bad idea for customers to do business with you and not receive the promised benefits.
Customers can become upset if they expect that your business can deliver X results immediately (as you market and sell), when the reality is that those results could take several months to reach. By clearly setting expectations, customers understand exactly what they sign up for, and it is easier for your business to meet or exceed the set expectations.
One mistake that can befall companies is to not be proactive in keeping the customer informed about the progress of goals and objectives that have been determined together. 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’. Be sure to communicate regularly with current customers and take a proactive approach. Check in to see how they enjoyed the product or service they purchased, ensure the relevancy for them, and share any upcoming deals or opportunities to try new items (upsell!).
Utilize an effective system for tracking and reporting customer metrics so you can be in consistent communication whenever customers need it, and can help them to reach the goals they had when they initially purchased your product or service. Additionally, implement anticipatory service so that you can eliminate problems before they occur.
4. Give your customer something to come back for
In a world filled with competing products and commodities, customer centric companies need to embrace a culture of giving value to their potential customers first, but, far more importantly, to ensure the existing customer feels they get the value they signed up for. Go the extra mile for them, because going above and beyond what your customers’ expectations are will build strong relationships and long-term loyalty through being attentive to their needs and issues.
Plan each customer relationship and sale smartly, like offering special discounts on their second purchase to entice them to come back. Offer them added value 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. Set up an effective feedback system
Providing great customer experience by listening to feedback doesn’t just make your customers happier, it also makes them less likely to churn. It’s not only about responding to customer feedback – you have to react to it, too. If customers see that their suggestions for improvement are heard and implemented into your services, you’ll strengthen their trust, loyalty and overall satisfaction with your brand.
Dig into their feedback for common patterns and identify when and where your customers are not happy, especially for those who did not really get the value of your service and left your brand. Uncovering the pain points in your customer journey before customers are ready to leave helps you understand what aspects of your service you can do better to avoid losing additional customers for the same issues.
Bonus tip! Focus on the right customers
This might not be the easiest tip to follow, as it might be tempting to close the sale because the customer wants to buy. 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. Be transparent and completely honest. If you can’t do something for them, tell them. This might mean you have to send someone away, because a dissatisfied customer may become much more expensive that a lost sale (think: social media). By understanding the customers’ objectives and managing expectations, you’ll be deserving of trust in your brand and long-term customer loyalty.
So, with all this being said, the secret lies in ensuring your customers are happy, because even a 5% increase in customer retention can increase profits by 25% to 95% (which will make your bottom line happy!).