Customer retention is a business's ability to turn customers into one-time buyers, and it is an important aspect to consider because products and pricing alone are not enough to make your customers happy. The question to ask is
How do you keep people coming back after that first exposure? The answer lies in implementing a customer-focused strategy. If you set customer retention as a priority, your business can find increased business profits.
What is customer retention?
Retaining customers is just about making your customers happy enough to stay with your company and not ship to your competitors. Your business can attract new customers, but if they are ready to leave immediately after being introduced, that is a big deal.
Retention of loyal customers involves providing the perfect shopping experience and quality products or services. You need to build relationships with your customers the way you want to be connected in your personal life by building trust, active listening and communication.
The ultimate goal of retention is to strengthen a vibrant and long-lasting relationship that requires you to actively guarantee the needs of your customers.
What are the benefits of retaining a small business?
Many businesses may not be aware that increasing their customer retention rate (CRR) by even 5% can greatly increase profits. In financial services, for example, a 5% increase in customer retention generates a 25% increase in profits, according to research conducted by Bain & Company. 1
Depending on the industry you are in, it can cost your business five to 25 times as much to attract new customers as it does to existing customers. 2
Developing a customer retention game plan is a business strategy that is often overlooked, no matter how profitable it is. According to the latest data from Investment Consulting, only 18% of businesses focus on savings, while 44% of businesses admit to spending extra time, energy and money on customer acquisition efforts. 3
How do you calculate customer retention?
Calculating the CRR of your business is simple, the customer retention rate formula is ([EN] / S) x 100 = CRR. Record and collect these indicators to run the calculation:
Number of customers at the end of period (e)
Number of customers received during (N)
Number of customers at the beginning of the season (S)
Subtract the number of new customers received (n) during a given period from the total number of customers at the end of the period (e). Divide that total by the number of customers at the beginning of the period (s). Multiply by 100 and that is your current CRR. 4
While the goal is to retain 100% customers, a good CRR measurement depends on your industry. No matter what industry you are in, if your CRR is around the 15% range, it is time to start implementing a customer retention strategy, according to Softwell. 5
How does a business increase customer retention?
Improving your business CRR is closely linked to customer relationship management (CRM) - a combination of technologies and techniques that companies use to strengthen their relationships with customers. To build and maintain relationships with your customers, use these six customer retention strategies.
Facilitate the purchase process
It is important to consider the emotions you want customers to experience during the first visit to your brand and while considering shopping with you. If it is primarily confusing or frustrating, you may not be retaining customers. If it is a relief or a satisfaction, you are on the right track. One in three consumers (32%) admitted that they left their favorite brand after only one bad experience, according to PWC 2018 report. 6
Focusing on customer experience (CH) and user design (UC) from start to finish of your customer journey is essential to increase customer retention.
Ensure that customers get what they want quickly, without a headache, and they will come back. The PWC report notes that customers are willing to spend more money on a business in exchange for a "welcoming experience." 6
Focus on employee satisfaction first
The best advocates and marketers for your business are the ones who already work for you: your employees. Unfortunately, according to Gallup's 18-year study, only 34% of American employees are actively involved in their work. According to estimates, Gallup does not create employee loyalty, is a loss of growth opportunities for many businesses, and costs the US economy about $ 450 to $ 550 billion a year.
By focusing on your employees' satisfaction through incentives and benefits that are not monetary or low cost, as well as communicating, you can increase customer satisfaction and the CRR of your business. 78
Create the perfect customer service experience
You can earn the trust of customers by showing care and initiative and do something like follow and listen to their opinions. Do not wait for them to take the next step - show appreciation for loyalty, whether through social media, campaigns or when they come to your own store. The most important thing to solve
Solve problems with your service or product quickly and thoroughly, because speed and efficiency are key to getting customers back. By doing more for your customers, you can earn higher CRR rewards.
Providing exceptional service to your customers increases the chances that they will publish positive reviews or recommendations from your company. Those recommendations will be more valuable and reach your business with innate trust and direct investment rather than advertising.
Consumer power and influencer marketing
Oral marketing (WOMM) from employees and customers can increase purchases and retain customer numbers.
Influencer marketing has become an integral part of WOMM in recent years, according to the 2021 benchmark report from the Influencer Marketing Hub. Just look at the figures:
Influential market industry is projected to reach $ 13.8 billion by 2021
Almost half of businesses have a special budget for influencer marketing
90% of survey respondents said they believe that influential marketing is an effective form of marketing
Instagram is the Most Popular Social Networking Network for 9 Influencers
Email marketing, social media and referral marketing are other effective ways to increase customer retention. They can be useful tools for keeping your customers engaged and informed about what is happening to your business and also helping you get direct feedback on how to improve your business.
Reward customer loyalty
Promote brand loyalty to new and old customers by rewarding them for continuing to choose your business. According to a 2017 report, 54% of consumers expect to receive a personal discount from a business within 24 hours of identifying themselves as a brand. 10
Consider offering an email voucher after purchasing or visiting the website to thank them for choosing your business and encouraging future interactions by offering discounts, offers for referrals, rewards, promotions or Beta testing after registration.
Important Tips 👀
Customer retention is the business's ability to turn new customers into loyal buyers.
Employee happiness comes first: Happy employees increase CRR, and unhappiness can lead to huge customer losses.
Make sure your customer service is responsive and accessible, as customers who are tired of the experience often leave and never return.
Think like your customers by actively participating and prioritizing feedback and rewarding them for their loyalty.
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