What’s better than acquiring a new customer?
It may seem like a trick question, but the answer is fairly straightforward – Retaining an existing customer.
In his book, The Loyalty Effect, marketing guru, Fred Reichheld states that “a 5% improvement in customer retention rates yield between 25 to 100 times increase in profits across a wide range of industries.”
Entrepreneurs swear by this and it’s time you should too! It is also a well-proven fact that keeping customers is far less expensive than acquiring a new customer.
While there’s certainly an allure which comes with acquiring new customers, but it is customer retention which will continually result in a greater ROI. Most importantly – it costs 20-25 times less too!
Before we delve any further into the best practices, let’s acquire a better understanding of what is exactly, customer retention.
What is meant by customer retention?
Customer retention is a bunch of activities a business leverages to increase the number of repeat customers, and consequently, increase the profitability of each existing user.
You must ensure the customers you spent so much marketing and sales cost to acquire stay with you and continue to get value from your products. Thus, customer retention strategies empower you to both provide and extract more value from your existing customer base.
In short, the acquisition creates a basic foundation of customers while your retention strategy helps build customer relationships and most importantly maximize revenue for each one.
But how do you create a customer retention strategy that keeps your current customers engaged and happy?
We’ve broken down twelve customer retention strategies that the biggest tech goliaths and brands are currently utilized to inspire loyalty. From prioritizing personalization to leveraging convenience, below are some simplistic elements which any customer success team and marketer can take and test today.
Listed below are some of the best customer retention strategies which can help your business.
1. Workflow automation & follow-up emails.
2. Clues for customer reviews.
3. Encourage customers to promote their purchase (loyalty program).
4. Product Recommendations.
5. Personalizations & Automation.
6. Personalize email campaign & push notifications.
7. Refer a friend- offer incentives for shares
8. Segmentation: know your customer’s mind
9. Measure customer lifetime value
10. Abandoned cart notification (email & push).
11. Empower customers with convenience
12. AI enabled pop-up (you can give offers, encourage customers for reviews, loyalty, product recommendations, new arrivals).
Workflow automation & follow-up emails.
Email marketing is undoubtedly one of the best ways to drive repeat purchases. It is estimated that people check their emails more than 15 times per day and unlike social media and search engines, they aren’t governed by some fickle algorithms. Hence, your email is certain to be viewed by the customer instead of getting buried by some algorithm. But, it is easier said than done – An average customer receives at most 200 promotional emails every day. So, how do you differentiate yours from the competition?
The trick lies in personalization. BUT DON’T SPAM.
How often you should hit your customers with deals, offers, and updates is hotly debated. Although two and four times per month seems to be the “sweet spot” for most industries (five for eCommerce).
Although, if a customer has just purchased, don’t hesitate in following up regarding their recent purchase. There’s nothing spammy about following up.
The major highlight of email follow-ups is that you can automate them. There are numerous email automation tools out there. In particular, post-purchase emails and autoresponders are an awesome way to bring dormant customers back into the fold.
For instance, wait a week after the initial purchase before following up with an incentive for your customers to leave feedback on site.
It doesn’t matter how you re-engage but make sure you’re keeping your brand on the top of mind for your customer list. The best part – You can easily automate this.
Read Customer Reviews
It is critical for retaining customers to constantly reiterate your product to meet the customers’ requirement. What better way to know what customers want than asking them in the first place!
To figure out how to grab the attention of customers in the future, look no further than your existing customer feedback. Your customers will give you tips about what’s great about your product and what is something that requires change.
That’s why many companies employ ratings and reviews software to derive insights about their prod
For instance, PowerReviews, provide brands and retailers with the detailed information through review content analysis. Similarly, another tool Product Pulse enlists the top-performing products, but also find the terms and commonly used adjectives in the customer reviews to figure out what’s actually working and causing returns.
Consumers today support brands as a part of their own identity.
Sometimes a brand inspires loyalty not through marketing tactics and systems, but through what they stand for.
If you’ve haven’t watched Simon Sinek’s TED talk “Start with Why,” you should. In case you already know a thing or two about the importance of having a mission then you must work hard to implement it.
Everyone wishes to be a part of something bigger than themselves. Thus, framing your product or business as representing a sort of community is a smart move for establishing a stronger sense of brand loyalty.
There couldn’t be a better example to understand brand loyalty than Apple. The tech giant has uniquely positioned itself to create an ever-increasing customer base, by associating themselves to a vision, vis-à-vis, “Challenging the status quo.” In addition, they’ve complemented this loyalty by establishing their own ecosystem, and it is hard to get out of it.
Referral systems can also be an effective way for customer retention when done well. The key is to focus on strong incentives to get people invested in your brand. Besides, don’t forget to empower and encourage your customers to become flag-bearers for your brand in the process.
Product recommendations accounts for 1/3rd of ecommerce sales.
Upselling is real and helps increases customers lifetime value. Never miss out on it.
If you want your customers to purchase from your site again, offer a suggestion to make that happen. Amazon’s recommendation engine is a wonderful example of how you can drive repeat purchases based on customers buying patterns.
You can also include product recommendations as part of your follow-up email campaigns.
Important Note: Upselling is a great way to increase revenue and you don’t necessarily need a full-blown recommendation engine to suggest products. Instead what you can do is simply suggest customers check out your latest offers and frame them as recommendations.
Personalization & Automation
Personalizing outgoing emails can go a long way in connecting with your customer and retaining the already existing ones. Sometimes, the greatest form of advertising isn’t your own. In fact, customers are more likely to value opinions coming from friends, family, and other consumers more than ads or branded content.
This newer category of advertising is what is termed as social proof advertising. Utilizing testimonials and customer stories from renowned consumers can go a long way to show prospective customers the value of your product.
Give your buyers a VIP treatment. You can devise an exclusive promotional campaign targeting your past buyers. Making your past customers feel special by “only for you” offers and deals will make them feel special and valuable. You’ll be surprised how a little favoritism can go a long way in customer retention.
For example, “for your eyes, only” email deals make being part of your list even more valuable while also encouraging another purchase.
According to a recent Statista Report, more than 60% of customers trust online reviews and witnessing popular individuals and brands use your product actually makes others want to do it more – thus, FOMO is a really good marketing and retention tactic.
Push notifications help in registering the product in the mind of your consumer. According to Jeff Weiner (co-founder LinkedIn), a customer needs to see your product at least seven times in order to create an impression.
Hence, push notifications are a great tool of reminding customers about your brand, new deals, offers, product updates, price drop, etc. They don’t cost much to implement and are normally easy to integrate with your platform. Thus, utilizing it to drive repeat purchases is something you should include in your customer retention strategy.
Another great customer retention strategy that has gained tremendous popularity in recent years is the referral programs. Our focus here is on creating a clever referral program where customers are encouraged from the moment, they purchase to refer a friend. This can be achieved only when the rewards are worth it. Thus, you need to come up with a clever referral program which not only incentivizes customers to refer your product but at the same time maintains the bottom-line of your business.
When done well, referral systems can be really effective for retention. The key is to focus on strong incentives to get people invested.
One study concluded that customers acquired by word-of-mouth referrals spend approximately 200% more than the average customer. Another critical aspect to keep in mind is that, once you have a consumer, you don’t want to pay to acquire that customer again as if they were brand new.
People crave to have personal connections with the brands they buy from.
There is no “right” way to create that connection, but one way is through supporting a cause. Your specific retention strategy should focus on the needs of your shoppers. Once you’ve figured out that aspect you should please them with campaigns you know they’ll love.
For example, Bombas, an up-and-coming apparel startup designs luxury socks, and for every pair bought of their website, they donate one pair to the homeless. It might seem like a lot for a startup, but last year Bombas surpassed $50 Million in revenue.
Thus, getting inside the mind of your ideal customer persona is crucial to scale up your venture and to retain customers.
Simple interactions do a lot better than you likely think.
Take for instance, how many businesses post a shoutout for their customers, which for most, might seem entirely random or even without a direct mention to a brand.
Measure Customers lifetime value
If you don’t realize it till now, then let me make myself very clear – Your customers are your biggest asset.
Customer Lifetime Value is one of the key indicators that depict the worth of your customers over a period.
CLV is especially critical for business which is subscription-based. For instance, if you sell online courses and charge a monthly fee, you’re not really concerned about new customers, but the lifetime value of each customer who purchases from you today.
It takes a lot of resources to get a customer and as an entrepreneur, you’ll likely be curious to know the value each of your customers is bringing to your business. This is called the customer’s equity. Some of your customers might add more value than others. Some always come around to buy. These repeated buyers should be your focus group or VIP customers.
These VIP customers are the same group who will refer others to your business through word of mouth.
The value you place on your customers helps you predict revenue and determine your budget for providing engaging content.
There are numerous tools online that can come in handy to estimate CLV. Utilize them for your benefit.
Abandoned Cart Notification
In this day and age, where three-fourths of all shoppers abandon their carts, a quick email reminder can provide the much-needed push. In terms of customer retention strategies, cart abandonment notification can have the most considerable impact amongst all the customer retention strategies. Introduce creative and innovative techniques to deliver these notifications such as the one implemented by MeUndies. On their platform, if a friend adds a product to the cart but hasn’t yet completed checkout, you can send an email reminder to remind your friend about it. MeUndies has found an innovative and creative way to utilize their current customer base to reduce cart abandonment, also including social proof in the process.
The key is to focus on providing strong incentives to keep people invested. Besides, don’t forget to empower and encourage your customers to become promoters for your brand in the process.
Empower customers with convenience
Great businesses are built on the foundation of ‘convenience.’ Take, for example, the eCommerce goliath Amazon – The business is practically founded on the principles of convenience.
Another great example is Starbucks, In the early days, Starbucks founders Jerry Baldwin, Zev Siegel, and Gordon Bowker focused on sounds and the smells to entice customers into their shops which proved to be a successful initiative.
In their bid to expand further, they decided to further innovate. One of their most innovative customer retention moves was the ‘Mobile Order & Pay feature.’ Thanks to this new feature, busy customers can order their coffee even before they arrive at the shop.
The simplest lesson to learn here is – Make your products and services as accessible as possible. Recognize the needs and behaviors of your regulars and create tools and systems to empower them. Whether that be an app or other traditional methods, it’s up to you.
Don’t underestimate the power of a simple, ‘Thank You’
Every business or organization around the world is working to satisfy their customers. But only a handful are focused on delighting them. The contemporary customer today doesn’t want to be ‘satisfied,’ he needs to feel ‘delighted’ by your product.
Companies like Zappos, Nordstrom, and Wufoo does a great job of going the extra mile to delight their consumers. They are known for acknowledging their customers via a handwritten snail mail. They have long ago understood that old-school, handwritten thank-you notes are a low-cost, high-impact customer retention strategy.
These small gestures may not cost significant overhead but will greatly benefit your bottom-line. Handwritten notes are still a rare throwback to old-fashioned, personal customer service which used to be quite common in the twentieth century. Bring them back out of their grave as they stand out as a delightful gesture which makes customers feel special and cared for.
The relationship-building is undoubtedly well worth the relatively minimal investment.
Customer retention may not be easy. There are numerous tactics – but no shortcuts. One simply cannot ‘hack’ building relationships. Identical to relationships, businesses should also be nurtured with care and affection. It takes time to build a lasting bond with your customers but once you’ve hit the sweet spot it will be smooth sailing ahead.
The tactics above hopefully gave you some fresh ideas for approaching retention, but, keep in mind, they’re not a cure-all.
Your product and your service will do most of the heavy lifting in keeping customers faithful to your brand. There are simply no shortcuts for that.