Believe in the customer-first approach? You will definitely love the idea of customer retention. Customer retention happens when your business retains customers over a time period.
A number of factors determine the customer retention rate. These factors include the number of customers acquired, the number of customers canceling their subscription, the number of customers not returning, and so on.
In this article, you will get to know how using customer retention leads to more profitability. Not only will you be able to calculate the customer retention rate but you also will find it easier to come up with your own customer retention strategy.
What is Customer Retention?
Are you encouraging your customers to come back? Making them come back remains at the heart of customer retention. And that’s why it is different from a lead generation or even user acquisition for that matter.
Once you sell a product to your customer, it is time to put customer retention strategies in place so they keep coming back. Customer retention denotes the ability of your company to retain existing customers over a set period of time.
Customer Retention Rate = {(Number of Customers at the End – Number of Customers Acquired)/ Number of Customers at the Beginning} x 100
Why Do You Need Customer Retention and Development Strategies?
Customer retention marketing is of utmost importance because of the significant role it plays in increasing profit in any business. A number of studies show that customer retention increases profits because of these reasons:
Reduced Customer Acquisition Cost
According to an article published by Amy Gallo in Harvard Business Review, it costs at least 5 to 25 times more to acquire a new customer than retaining an existing customer. However, this depends on the kind of business you are in. This is why businesses across the world are putting resources in improving customer experience and retaining present customers.
Increased Customer Loyalty
As you continue to serve repeat customers, chances are high that you will be reducing your operating cost to serve them. According to Bain & Company, a mere 5% increase in customer retention can help you to have profit increased by 25-95%.
Enjoy Being Referred
As you build a relationship with your customers, they will be referring you to their friends and family members. Referred customers usually have a higher lifetime value compared to the ones you acquire through different channels. And, that’s you need to master SaaS customer retention techniques.
7 Customer Retention Strategies to Implement
1) Improve Customer Experience With Customer Onboarding
Educating your customers is of the utmost importance. And that’s what customer onboarding is all about.
The customer onboarding process is designed to educate new customers about how to use your product or service. Customer onboarding is effective because it helps your customers to be acquainted with how to utilize your product or service in the best possible manner.
With a smooth onboarding process, you reduce customer acquisition costs while boosting conversions. According to Gartner, a company can generate 80% of its future revenue from 20% of its existing customers.
2) Reward Your Customers With Customer Loyalty Program
While it is perfectly fine to take initiatives to reduce churn rate, you should always take care of your loyal customers as well.
A strong customer loyalty program should contain elements of surprise and delight as well. This will show how much you appreciate your loyal customers.
Did you know 10% of your customers spend 3 times more than other customers of yours? You can keep these loyal customers satisfied with your customer loyalty program.
3) Retain Customers With Company Newsletter
Newsletter is a crucial part of any customer retention program irrespective of the domain of your business. The best way to use the company newsletter is to use email marketing automation and create a journey well ahead of time.
Being one of the cost-effective ways of retaining customers, company newsletters help your brand to create a top of mind awareness. What is crucial in email marketing for small businesses is segmentation and personalization.
To make the most out of it, your dialogue marketing should contain customized information that will answer questions of your customers.
4) Capture Customer Feedback With A Survey
Want to know how customers feel as they use your product? Your customer retention project should have a customer feedback program to capture all the feedback in one place.
With a Net Promoter Score Survey, you will be able to collect and analyze customer feedback. The customer satisfaction benchmark of NPS or Net promoter score helps you to have a comprehensive understanding of whether your customers are likely to recommend your product or service to others.
As you gain insights into customer behavior, you will be able to enrich user experience. Some of the best products today have learnt to a great extent from feedback given by their customers.
Customer feedback can be captured with a landing page as well. Here are some of the best practices that can help you to design an effective landing page in no time.
5) Use A Communication Calendar To Stay In Touch
It is crucial that you leverage a communication calendar to stay in touch with your customers. In this way, you will be engaging with them during different phases i.e. pre-sales, sales, and post-sales. With this activity, you will be able to initiate cross-sell/ up-sell activities as well.
A communication calendar is one of the most important customer retention tools. It helps you to keep an eye on whether your customers are interacting with you or not.
With such tools in place, it will be much easier for you to offer superior customer service. If you don’t have a CRM in place already, here are 6 ways to leverage a CRM.
6) Invest In Your Customer With Customer Education Program
Retaining customers becomes easier when you have a branded customer education program like HubSpot Academy. When there is a customer education program in your customer retention process, you will be able to run a community forum along with creating a knowledge base.
With such kind of tool in place, your customers will be able to solve half of their problems even before reaching your customer support executives. Not only will you portray yourself as trustworthy but it also will garner increased customer loyalty.
7) Portray Your Core Values Via Corporate Social Responsibility
With a robust Corporate Social Responsibility (CSR) program, you attract customers who share the same values as yours. Some of the most pressing customer retention challenges can be solved with a CSR program that has a moral goal.
No matter what kind of CSR program you are involved in, you should attempt to get involved with your customers and their personal goals as well.
Final Thoughts
Addressing customer retention problems becomes easy when you have clear customer retention programs like Integrated Sales and Marketing platform to work on. With such programs, you will be able to not only set customer expectations but also become the trusted advisor of your customers.
As you foster your relationship with your customer, you will need to take resort to tools such as customer retention email marketing. And at the end, you must personalize your message based on the customer persona you are trying to reach out to.