Retaining Customers – Are You Doing All You Can?

One of the secrets to running a successful business is having a constant influx of new customers while retaining existing ones. Everyone who runs a company will tell you the same thing — the best clients are those who keep returning to you.

People who return to your brand and buy more products are the ones that boost the revenue and the client’s lifetime value. Moreover, working on customer retention will help you strengthen the relationship with the customers.

But, what does customer retention mean? What are the best strategies to help you achieve it?

In this article, we’ll discuss the concept in more detail and suggest specific strategies that have worked for other companies.

What Is Customer Retention?

Customer retention is a company’s or brand’s ability to turn clients into constant purchasers. The concept also implies preventing customers from going to your competitor. Customer retention is different from lead generation or customer acquisition as it focuses on people that have already purchased a product or signed up for a service you provide.

As a metric, customer retention will demonstrate how the customers respond to your product and whether it meets their expectations. Moreover, if you’re running a subscription-based company, retaining customers should be your primary goal.

But, before you start thinking about strategies to boost sales, you need to understand that customer retention is so much more than purchases and transactions — it’s all about building a long-lasting relationship with people that interact with your brand. They are far more likely to return to a reliable and original brand that cares for its clients.

So, working on these relationships will increase their brand loyalty, meaning they will always go with your company, even when they’re offered other options.

Why Is Customer Retention Important?

Before we dig into the importance of customer retention, let’s look at some facts:

  • Customer acquisition costs five times more than customer retention.
  • Boosting customer retention by as little as 5% can increase revenue from 25% to 95%.
  • The probability of selling to a returning customer is 60-70%, while the success rate of trying to sell to a new client is 5-20%.
  • People who have already bought your products are 50% more likely to purchase new ones and spend 31% more.

As you can see, retaining customers costs less and can significantly increase your profits. That way, if you focus on keeping existing clients, you’ll save money on marketing strategies. You’ll also get free word-of-mouth marketing. People satisfied with your products and the way you conduct business will recommend you to their friends, relatives, etc., which will drive new traffic to your website.

Additionally, existing customers will provide you with insightful feedback, point out potential weaknesses, and comment on the things they enjoy. You can later use that data to improve the user experience.

Finally, returning customers are less price-conscious than new ones, meaning they are willing to pay full price for your product or service

How to Calculate Customer Retention Rate?

The customer retention rate is the percentage of people who have remained loyal to your brand over a certain period. If you wish to calculate it, you need to pick a period and establish the following:

  • Number of clients at the beginning of the chosen period. (A)
  • Number of clients at the end of that cycle. (B)
  • Number of new customers that appeared during that time. (C)

Here’s the formula you can use to calculate it:

((B – C)/ A) * 100 = customer retention rate.

It’s a simple formula that can help you identify your company’s customer retention rate. If the result shows a low percentage, you need to re-think your marketing strategy, customer relations, and overall way of doing business.

Best Customer Retention Strategies That Work

Hopefully, you now understand why customer retention is essential. The main question now is — how to achieve the desired customer retention rate?

Before giving you examples of impactful strategies, we’d like to point out that all of them revolve around your business goals. So first, think about what you wish to accomplish with the company. Once you have a clear idea, you can develop particular strategies that will help you out.

Here are some useful strategies you’ll want to try out:

  • Introduce discounts and gifts

People enjoy feeling appreciated and cared for — it’s in our nature. One fun and popular way to show your customers you appreciate them is to surprise them with discounts and gifts. For example, if they often buy certain products, offer them a deal, or give them a gift every time they purchase two or more products from the collection.

  • Provide excellent customer support

While this one is quite obvious, we still feel like we need to emphasize how vital customer support is. Clients who don’t receive adequate help through your website are far more likely to visit a competitor’s platform and shop there.

  • Create customer surveys

As mentioned, customer feedback can help you identify the pain points and show you how to minimize them. Send the surveys out every six months or once a year and watch the responses.

  • Keep the clients informed

Every time you introduce a new product, start a new partnership, or even hit a milestone, you should inform the customers about it. It will make them feel like they are a part of the team, which can only positively influence their user experience.

  • Perform consumer onboarding

Help people get started with your brand — introduce them to products and tell them more about the company. That way, customers won’t feel ignored, and it will help them better understand how you conduct business.

  • Don’t be afraid to get personal

Use the data you’ve collected to create a personalized experience for each client. By meeting their needs and expectations, you’ll show them that you genuinely care for them and not just the money they bring.

Final Thoughts

Like customer acquisition, retaining clients doesn’t happen in one day. You need to conduct research and dedicate time and resources to boost the customer retention rate.

So, get to know your clients — learn what they like and what they don’t, and find out what they believe your brand’s weaknesses are. Once you’ve gathered all the data, you can make an informed decision, create a path you want to follow, and make the relationship with your customers stronger.