Businesses often need to invest five to twenty times more resources to acquire a new customer than it takes to keep an existing customer. This is despite the fact that customer retention is often overlooked in favor of plans that are only geared toward new customers. Although it is great to cast a broad net for fishing, a company cannot rely on one-time clients to keep them from going under the water. This article will share 10 key customer retention strategies that will be effective in 2022.
What is Customer Retention?
Customer retention refers to customers who deliberately pay more than once for your products or services over a time period. One loyal customer who makes multiple purchases in a year is more influential than many shoppers who buy one time and never again. Retained customers are more reliable than new ones. If you give priority to the happiness and loyalty of your current customers.
Why Customer Retention Is Important
You are likely to find a product made by a prominent brand, which is a company at the forefront of its field if you take a look around your office or desk. It’s unlikely that the company was able to achieve such a high status by only relying on passing customers. Recurring customers are 67% more likely to spend over time than new customers.
Retention of customers is a sign that you have exceeded or met your expectations to an extraordinary degree. Customer retention is important because it provides the foundation for ever-increasing profits and allows you to increase brand recognition and industry authority. These concepts are crucial for creating strategies that will keep your company in the game.
Understanding Your Customer Retention Rate (CRR)
Knowing your customer retention rate (or CRR) is an essential component of developing sound strategies. Your CRR is the percentage of customers that your company retains during a given window.
The formula CRR = [(E–N)/S] x 100 can be used to calculate your customer retention rate. S stands for your customers at the beginning, while E represents the number of customers that you have at the end. While “S” refers to your starting customers, and “E” represents the number of customers you have at the end of the period. Meanwhile, N stands for the number of new customers that you have gained during this period.
For example, if a company had 80 customers at the beginning of the year, then added 20 customers and ended up with 60 customers at the end, the calculation would be [(60-20)/80] x 100. The CRR rate would be 50%. Businesses of smaller sizes aim to have a minimum 20% CRR rate. A major media or insurance company would expect its CRR rate to remain above 79%.
It is easier to develop long-term strategies for increasing customer retention rates once you have a good idea of it.
10 Customer Retention Strategies That Work
We discuss different approaches that businesses can use to increase customer retention.
1. Building Customer Loyalty Through Shared Values
Are you eco-friendly in your business? Are you donating a percentage of your earnings to charity? Does it have a connection to wealth, affluence, youth, and TikTok? Your company should have its own values. However, you should also share these values with your customers. Customers will feel more connected and identify with your values if they can relate to them.
2. Frequently Ask for Feedback
Ask your customers what they think of you, even if it isn’t as positive as you might like. Negative feedback is often more valuable than positive feedback. Customers who are unhappy with a business won’t buy again. These dissatisfied customers are asked questions about their decision to leave a business before they do so. Their answers will help improve customer service and make it easier to keep them coming back.
Avoid having one survey or poll that is repeated over and over again. The times change and shoppers’ needs and wants do too. Ask questions frequently and compare the latest results with previous feedback requests.
3. Get Customers Excited About a Change–Or the Decision Not To
Changes can help you revive your customer base if your repeat customers drop due to boredom with your brand. You can simply give your website or store a facelift. Customers can feel like they’re in a new store even if the brand hasn’t changed beyond its appearance. You should not change too quickly or too often, as you may lose customers.
Even decades later, the story of New Coke’s failure is still a hot topic. Coca-Cola wanted to excite customers enough to purchase the new product. However, the attempted flavor change caused a massive backlash and appeals to not change the original recipe.
Although Coca-Cola’s new product was ultimately unsuccessful, the publicity generated from the event was a huge success. This situation showed that sometimes, the best way for customers to be excited about change is to not change anything.
McDonald’s allows the McRib sandwich to remain a popular choice by changing its menu occasionally to make it available again for a limited period. While these limited-time offerings can be a bit scary, bringing back a favorite product can guarantee to return customers who are eager to try it again.
4. Treat Customers As Humans, Not Data
Customers aren’t fans of AI chatbots. One common complaint is that they don’t understand customers. AI is more interested in specific situations and keywords than the personalized human experience. AI cannot provide the empathy that customers may need and can only be obtained by talking to a person. It is important to keep in mind that customers are people and not data.
While the analysis may be useful in understanding things hypothetically, direct and empathic interactions with customers will give you the best insight into their happiness and discontent. Customers want to feel connected to them and heard. It is possible to treat customers as people, not just numbers on a computer screen. This will encourage them to return for more.
5. Be Easy To Understand
Although it is easy to believe that the best product in the marketplace will guarantee dominance, this is not always true. Your business may be outsold by a competitor company that sells a lower product. Customers find the explanations and marketing materials more understandable. The bottom line is that customers will decide faster if they want you to sell their business than if you are more accessible.
Shoppers may be turned off by a complicated explanation. Those who are clear about the purpose of your business will be more likely to buy from you again and again.
6. Offer Quick Delivery Options
Although many customers wait several weeks before receiving a product, others may need it as soon as possible. Customers may be motivated to return to the possibility of receiving something within days or weeks. They know that they can get products faster from your company than they could from your competitors.
7. Make Returns and Refunds Easy and Reasonable
Although mistakes can happen, it is possible to ensure that a customer will never purchase from you again by refusing to accept returns. Customer service includes the return and refund process. It is important to make the process easy and affordable.
Customers will be more likely to trust you in the future if they know they can count upon you to treat them fairly after they have purchased your product.
8. Foster Word-of Mouth Support
It’s easy to see how word-of-mouth advertising can help you gain new customers. It is important to remember that word-of-mouth customer advertising can also be used to retain customers. Good word-of-mouth discussion about your products and services can build consumer confidence.
Encourage word-of-mouth support wherever possible. Encourage customers to share positive feedback on Twitter and encourage them to use TikTok or Instagram. Your loyal customers will be more likely to use their online and offline channels to share their impressions of your company the more they feel acknowledged and visible.
9. Your customers will feel good about being associated with you
Although it may not be openly acknowledged, there are brands that the public might want to associate with, while others could cause them embarrassment. A good strategy to retain customers is to share your values and make them feel comfortable about being associated with you.
Imagine that shoppers are aware that a portion will be donated to fighting childhood cancer and rebuilding the Amazon rainforest. It can be a motivator for future purchases because it provides a long-lasting feeling of goodwill.
10. Create a Customer Profile
Instead of focusing on new customers and creating a profile that is based on existing customers, you can focus on attracting customers who are more likely than others to be part of your dedicated customer base. Take a look at the commonalities that all your customers share. Find out what makes them different from one-time customers.
information such as income, gender, and lifestyle can be crucial to market more effectively to the people most likely to purchase from your company again.
Conclusion — Top Customer Retention Strategies
There are different approaches that work well depending on what type of business you have. For example, an online store might be more successful than a brick-and-mortar location. It is crucial to develop the best customer retention strategies for your business.
These steps will help you improve customer experience, whether you create a profile, gamify, or overhaul your customer service. Satisfied customers come back; dissatisfied customers do not.