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Many inexperienced entrepreneurs focus heavily on customer acquisition—the process of attracting more people to the brand and converting them into loyal customers. While this is important, its value is dwarfed by the value of customer retention.
Customer Retention
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Higher customer retention can greatly increase your business’s chances of success, and achieving it is easier than you think.
Why Customer Retention Is So Important
Before we delve into customer retention strategies, let’s talk about why customer retention is so important.
Cost and value. When looking at total costs and total value, customer retention is far more efficient than customer acquisition. You can retain a customer with far less money than it costs to attract a new one, and the lifetime value of a customer is impressive in many industries. Conversely, neglecting customer retention can be devastating for your company, resulting in excessive customer churn and major losses.
Consistency. Customer retention is also a highly consistent strategy. The customers you’re trying to keep are customers you’ve already earned. If you do things right, you can keep customer churn to an absolute minimum.
Reputation and secondary effects. Improving your customer retention can also have a number of secondary effects, including a positive boost for your reputation. Happy customers are more likely to spread word about your brand, attracting more people to your company naturally, and they’re more inclined to purchase more from your brand over time.
So how can you improve customer retention?
Put Together a Comprehensive Customer Experience (CX) Strategy
First, work to create a high-level customer experience (CX) strategy. CX refers to the complete experience a customer has with your brand; it includes a customer’s first impressions, their purchasing experience, their impressions of your customer service, and their sentiments toward your brand overall. Without a CX strategy in place, you’ll find it hard to describe your average customer journey—and even harder to perfect it.
Improve Your Products and Services
One of the most straightforward ways to boost customer retention is to improve your core products and services. If you can offer customers an objectively better experience while charging them the same amount of money, you can almost guarantee you’ll increase their satisfaction. Use R&D to figure out new modes of innovation and push your products to reach their fullest potential.
Under Promise and Over Deliver
This is common business advice, but for good reason. Customers often define their experiences based on their expectations; if their expectations are met or exceeded, they’re satisfied. If their expectations aren’t met, they may leave forever. You can control expectations and your response to those expectations simply by under-promising and over-delivering; in other words, don’t promise more than you can reasonably do, and always try to give customers more than what you promised.
Make Up for Bad Experiences
No matter what, some customers are going to have a bad experience. It could be a defective product, a delayed shipment, or even a problematic interaction with a customer service rep. When this happens, go out of your way to make up for that bad experience. Issue an apology, and do what it takes to set things right.
Thank and Reward Your Loyal Customers
Show gratitude and reward your most loyal customers with some or all of the following:
Simple thank-yous. A simple thank-you message via card or email can work wonders.
Discounts. Provide a discount to incentivize purchases and demonstrate gratitude simultaneously.
Freebies. Similarly, you could offer freebies; this is also a great way to distribute samples of your latest products.
Special events. Host special events, like customer appreciation parties, to foster more loyalty.
Customer loyalty programs. Create a customer loyalty program that grants specific rewards for continuing purchases.
Analyze Your Customer Churn
Finally, take the time to analyze your customer churn. You’ll inevitably lose some customers, but why are you losing them? And is there a way to prevent this loss?
These are some of the most common motivating factors for customer departures:
Price. If a customer finds a similar product for a lower price, they may be unable to resist the temptation to switch to a competitor.
Changing needs. Some customers leave a business because they find they no longer need your products or services.
Competitive offers. If a competitor offers something more attractive, they may win some of your business directly.
Bad experiences. Many customers simply leave due to a bad experience they had with the brand, such as a problem that never got resolved by a customer service agent.
It’s darn near impossible to achieve 100 percent customer retention, but you can get closer than ever by adopting these strategies. With higher customer retention, your business can continue to thrive—and your customers will be happier as well.
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