What is customer retention? Simply put, customer retention refers to the strategies and tactics businesses use to encourage repeat purchases and ongoing loyalty from their existing customer base. Getting it right can be a game-changer for businesses large and small.
According to recent research, as many as 68% of customers will turn to a competitor when they feel a company doesn’t value their business. And the average customer spends 67% more money during their third year as a customer (when compared with their first year.)
That’s why customer retention is so vital for businesses of every stripe. Keeping existing customers happy and loyal costs your business less money and delivers much higher returns than acquiring a new customer. Too many businesses, however, don’t invest in customer retention. In fact, less than one-third of business executives say customer retention is a priority. That means there’s a big opportunity for those who do invest in retention strategy.
Here are 4 ways you can do just that:
1. Get to Know Your Customers Inside and Out
It’s hard to keep your customers happy and loyal if you don’t know anything about them. 56% of consumers say they’re more loyal to business who “get them.”
What does that mean? Their habits and preferences, where they live, what they value… your business needs a clear picture of all these and more in order to best serve your customers. Consumers want to do business with brands that understand them. Those are the brands that can deliver the right kind of value and make customers’ lives better.
Create In-Depth Buyer Personas
Step one in getting to know your customers is to draw up in-depth customer personas. Depending on your business, you may have one persona or twelve. Buyer personas draw on representative information about your customers from real market research and data on your existing customers.
Defined and detailed personas help you and your team get a better picture—beyond the numbers and statistics—of who your customers really are and what they care about. That kind of information becomes invaluable to every team within your business, from marketing to support to product engineering.
When you’re ready to pull together high-impact buyer personas, check out Grasshopper’s guide to creating and applying buyer personas to drive sales.
Build a Customer Feedback Loop
When it comes to getting to know your customers, there’s no substitute for simply talking to them. In order to keep customers around, it’s vital that you listen to their concerns and pain points—in their own words—so you can build a solution that keeps them coming back for more.
Customer feedback should help drive your product development, including adding new features and improving the customer experience. Different businesses may have more luck with one method of collecting customer feedback than another, but the basic idea is that you just have to ask.
- Automate an email campaign to go out on a specified number of days or a week after a purchase
- Send out a survey to all existing customers
- Keep track of support interactions and where you can improve to cut down customer frustration
- Solicit reviews from happy customers
- Contact anyone who leaves a negative review so you can get more detail and make the situation right
As with any initiative, the most important part of gathering customer feedback is using it. Customers want to feel heard and understood, so the last thing you want is to let their feedback fall on deaf ears.
2. Deliver Top Notch Customer Support
Speaking of support interactions… customer support is one of the most effective tools you have for boosting customer retention and loyalty. Support interactions are inevitable—you can’t build a product that every person intuitively knows how to use perfectly every time. That’s why it’s so important that your support team is focused on solving customer problems and creating effortless customer experiences.
Customers care about the experience your support provides. In fact, nearly 34% of churn happens because customers are unhappy with the quality of a company’s customer service. That’s a big chunk of customers you can retain just by offering high-quality, empathetic support.
What does that look like? For starters, top notch customer support means customers interact with your business on their terms—whether that’s on the phone, on Twitter, or an extensive knowledge base. Offer the support channels your customers actually want.
A+ customer support doesn’t just happen either. You have to invest in talented customer support professionals, then secure the tools your team needs (like ticketing systems and help desk software) to create effortless customer experiences.
3. Set Your Business Apart from Competitors
Consumers, especially modern ones, are fickle. If your competitors offer better prices or more value, they’ll defect to another brand. That’s why boosting customer retention is all about differentiating your products and your brand from other businesses in the industry.
The first two retention strategies we mentioned are about creating a good experience for your customers. This one takes that idea a step further by building a fundamentally unique experience that customers can’t get from your competitors.
Create High-Quality Products
It’s never a good idea for businesses to compete on price alone. Any other business can come into the market and undercut your price, even if they take a loss in the short-term while slashing your market share. Building products of superior quality is a better way to compete and build sustainable business growth.
With 66% of consumers noting that features, design, and product quality are the number one factor that determines their brand loyalty, high-quality offerings can go a long way in boosting your customer retention—even without any of the other strategies we discuss here.
Stand Behind a Social Mission
One of the hardest things for competitors to emulate is a strong social brand. When your values line up with those of your customers—and you’re committed to a social mission—it’s much harder for a competitor to win over those customers.
In today’s market especially, consumers want to know their dollar is going farther than your bank account. They want to make a difference with their spending. By standing behind a social mission to truly drive change (on a global scale or in your own community), you can build a deeper connection between customers and your brand.
Offer a Worthwhile Loyalty Program
Customers are loyal to brands for all kinds of reasons. Whatever the motive behind their loyalty, your business benefits substantially when customers stick around. That’s why it can be so meaningful to demonstrate to customers what their loyalty means to you.
A worthwhile loyalty program encourages customers to spend more with your brand. It incentivizes customer retention and rewards their loyalty. In turn, successful loyalty programs drive even more sales for you. In fact, members of loyalty programs were found to spend 12-18% more annually than non-members.
4. Transform Customers Into Brand Advocates
Your most loyal and brand-loving customers hold the key to something that can make a huge difference for your business: other people like them. Your best customers have friends, family, and acquaintances who, like them, are well-suited to become your loyal customers.
A study done by the Harvard Business Review found that referred customers were 18% more loyal and generated 16% higher profits. The trick lies in getting those customers to recommend your business to their networks—turning them into advocates for your brand.
Build an Effortless Referral Program
The best way to get customers referring your business to other people is to build and automate a program that encourages and rewards their referrals. While satisfied customers are ripe to brag about your business, it often takes a little push to make a referral happen. After all, your industry may not always arise naturally in conversations with their friends.
Set a program that rewards customers when someone they refer makes a purchase. Then automate that system so it runs effortlessly on both your end and the customers’. You can also build up your brand’s social proof by rewarding customers for posting reviews, testimonials, tutorials, etc. online.
Turn Customer Retention Into Your Competitive Advantage
Businesses with high customer retention rates are healthier overall. They spend less time and money on customer acquisition and drive higher revenue. Put those two things together and you have the makings of a rock-solid competitive advantage that you can take straight to the bank.
Now that’s worth investing in!