If you’ve been in business for a long time, you know the hard part is to find one customer. After that, it’s only about convincing them to make repeat purchases. Around 18% of the new businesses focus on consumer retention while the rest move to customer acquisition.
Research shows that increasing 5% of your customer retention gives a whopping 25-95% return rate. Building customer loyalty is the best way to grow your business. That is why we’ve put together the top 5 customer retention strategies that will keep them coming back.
Retention Marketing Strategies That Work
Communication and appreciation are key to keeping your customers happy and engaged. This can be done through various methods depending on the lifecycle stage of your business. However, keep in mind the nature of your business and customer demographics before diving into the strategies.
1. Customer loyalty programs
Almost every business embraces customer loyalty strategies. It’s one way to show your customers you care. When you reward them for every purchase they make, they are sure to keep coming back for more. Encourage customers to continue shopping with you through welcome points during sign up. Additionally, include rewards from the second purchase onwards. Doing this will make your customers happy and invest more in your business.
2. Surprise gifts and appreciation
Too much information leads to decision fatigue in the consumers. In this case, what can you do to keep the consumers loyal to your brand? One way is to follow the traditional approach to increase brand awareness.
From time to time, sending handwritten notes instead of emails is a way to show them they matter. Furthermore, calling them to drop a note of appreciation or a customer loyalty discount goes a long way in keeping them close to your business.
Appreciation motivates the customers and starts building trust in them. Once you gain their trust, they will consider your recommendations.
3. Use data to build trust
Data is a vital component to determine the success of your business. Forming good relationships with your customer leads to better ROI. When customers have a smooth experience with your product, they will stick to your brand rather than moving to your competitor.
Eliminate the risk of bad experiences and focus on customer care. Use the customer behaviour data to increase the value of your product. When the customers trust your brand, they are more likely to recommend it to others without expecting compensation. A straightforward way to gain their trust is through genuine product reviews. Additionally, use behavioural segmentation to sort customers into buyers and churners.
4. Customer feedback surveys
A general assumption is that surveys are boring, but the truth is people enjoy them. There is nothing better than hearing the good and worse directly from your customers. A study shows that email surveys had a response rate of 24.8%.
Email surveys allow you to tailor the targeting strategy and make adjustments to the existing KPIs. Be mindful of the customer pain points. Pay close attention to what’s lacking in the process. Doing this will help you fix the problem and re-engage your customers.
5. Deliver promises
Thomas J Peters rightfully said, “underpromise and overdeliver ”. When you promise to your customers, play hard to deliver more than the expectations. Dissatisfaction causes the customers to tell their friends and family about the negative experience.
Undelivered promises provoke the customers, and they are likely to fall back on their brand loyalty. Depending on the nature of your product, going a little extra to keep the customers happy is a tested path to success. For example, be there 5 minutes earlier or stick to the promise of delivering the right products.
How to Measure Customer Retention
Data is a critical aspect in businesses. You’ve done the hard work of finding and retaining customers, but how do you effectively measure them? Customer retention measurement is a process of documenting business success over time. In simpler words, it’s about how well your business supports customer needs.
Now, we’ll look at the four most valuable customer retention metrics:
1. Customer Churn Rate
Churn rate is one of the most used metrics to determine your business value. Customer churn rate is when the customers stop showing up at your business. Whether they opted out of a subscription or stopped buying your products, it’s when you have failed to retain them. That’s the biggest metric the customer retention programs aim to lower.
To calculate customer churn rate:
Monthly Churn Rate = (Number of Customers at Start of Month – Number of Customers at the End of Month) / Number of Customers at Start of Month
2. Repeat Purchase Rate
This metric is an absolute indicator of customer loyalty. The repeat purchase rate is the number of times customers come back to do business with you. If you sell products, this is a perfect metric to follow. The data allows you to focus on concentrated areas of repeat customers, and adjust marketing goals accordingly.
Calculating the Repeat purchase rate:
Repeat Purchase Ratio = Number of Returning Customers / Number of Total Customers
3. Average Order Value
After implementing customer churn and purchase rate, you move forward to calculate the average order value. The AOL is how much money a customer spends on each purchase. This metric helps you to understand the long-term value of your customers. Additionally, it allows you to customize pricing strategies.
Total revenue/number of orders placed
4. Customer Value
Customer value is the most dominant metric and shows the bigger picture of your business. It’s measured by how much a single customer contributes to your growth. A shrinking customer value metric means you’re losing customers faster than you should.
Calculating Customer value:
Customer Value = Purchase Frequency x Average Order Value
Keeping Customers for Success
It’s a fact that keeping one customer is cheaper than trying to find another. Retaining customers and customer retention programs should be your long-term goal. When your business focuses on providing value for customers, you can expect a surge in retention. Ultimately, for success, it comes down to following the metrics and providing the best customer service.