You’ve got a great business and new customers are signing up all the time. Boom! You’re in the money and things are looking good for the long run.
Not so fast…
While of course new customer acquisition is important, keeping your existing customers happy is the key to long-term success.
There are two main reasons for this.
First, customer acquisition is an expensive process. Indeed, some commentators have even called it a “startup killer”, as a lot of fledgling companies fail to develop a sound business model, with the CAC (cost to acquire customers) out of balance with the ability to monetize those customers. In other words, the CAC outweighs customer LTV (lifetime value).
The second reason is that customer retention is the only meaningful way to support long-term growth.
Think about it. You’ve got two companies, both acquiring 100 new customers a month. However, Company A is retaining 80% of its customers, while Company B is only retaining 50%. Which one has more by the end of the year?
I’ll tell you. Company A has retained 960 customers, while Company B has only managed 600. If both companies were competing directly with one another, it’s safe to say that it won’t take long for Company A to effectively put Company B out of business.
What’s more, returning customers drive more revenues. Indeed, according to a KPMG survey of US retail executives, when asked what they considered to be the most significant revenue drivers, it was customer retention that came out on top.
Ok, so we know that customer retention is important. The question is – how do we go about it?
Below we’ve got five strategies to help you retain customers, keep your business growing and your revenues high.
5 Strategies to Help You Retain Customers
1. Deliver ongoing personalization
Personalization is one of the most effective strategies to deploy at any stage of the buyer’s journey, and has some very particular benefits at the post-purchase customer retention stage.
This is the point where you need to be trying to build and nurture the relationship with the customer. It will involve creating some kind of frequent communications calendar, where you make a point of reaching out to your customers regularly.
It could be courtesy calls and/or emails, it could be special offers, it could be invites to live events – whatever it is, make sure that you are addressing your customers by their first name in all correspondence, and that any offers that you make are germane to the original purchase that the customer made.
For instance, if your customer has been buying toothbrushes and toothpaste from your ecommerce site, it doesn’t make sense to offer them a discount on sugary drinks that will rot their teeth, as this gives the impression that you don’t care about them, only making additional sales.
Make use of CRM and marketing automation software to keep track of who your customers are and what they like.
2. Keep delivering social proof
At any point, your customers could decide to jump ship and go and spend their money with a rival company. And so, you need to keep reminding them that they are already using the best company in the category and provide the social proof to back it up.
Case studies, too, can be really effective for this purpose. Create great ones filled with great research and examples of great results, and slap it all together in a funky downloadable PDF that you send out personally to all of your valued customers, and provide the proof that there is huge value in continuing to do business with you.
3. Reward your most valuable customers
Your CRM software will be able to identify exactly who these guys are. If you keep the data regularly updated, it will very handily reveal which of your customers are responsible for driving the most revenue – now you need to reward them.
If you’ve got a subscription service, offer a discount over the next six or twelve months to say thank you for their continued loyalty. If it’s goods that you’re selling, a discount coupon will have the same effect, or perhaps a list of reward incentives that they can choose from.
It’s all about making those customers feel as special as they truly are.
4. Listen, and be speedy with your replies
In many ways, great customer retention comes as a result of great customer service. This means that you must be dedicated to not only listening to your customers if they happen to make a complaint or a suggestion, but actively seeking out their feedback on your goods and services.
This can be achieved through email surveys or via social media. It really doesn’t matter which way you go about it, just so long as you do. Regularly.
And once the feedback is gathered, you need to act on it. Any complaints must be compensated, and any suggestions for improvements must be discussed internally with the outcomes shared with your customers. This is particularly good for app and SaaS companies, which can release updates accompanied with an announcement that “We’ve been listening to our valued customers and are pleased to announce the following updates…”
5. Special rewards for special dates
One sure fire way to make your customers feel extra special is to remember them on special dates. Birthdays, of course, provide the perfect opportunity to send a personalized gift – or at the very least an email – to your most valued customers.
But other dates such as subscription anniversaries should not be missed. In this way, you are showing your customers that you are committed to going above and beyond what they might expect from a company, and begin to build some serious long-term loyalty.
Over to You
Customer retention is all about being prepared for the fact that competitors will be almost continuously vying for your customers’ attention, if not actively knocking on their door. Develop a strategy that serves to reward your customers so that when that time comes, nothing can persuade them to stray.
Got any more great customer retention strategies? Tell us about them in the comments below. Thanks all!