Often, companies view customer retention as a metric, losing sight of what’s important: their customers.
Keeping current customers can indeed affect your revenue positively—research shows that improving customer retention rates by just 5% can increase profits by up to 95%.
However, at its core, customer retention is all about building stronger relationships with your current customers that make them feel appreciated. This requires companies to think of their customers as people instead of a percentage, ticket, conversion, or sale.
Building customer relationships that last through uncertainty and prosperity starts with executing strategies to reduce customer churn rates and improve customer loyalty.
Why is it Important to Keep Current Customers?
Besides the fact that it’s more costly to gain new customers than to keep current customers, there are many other reasons why keeping new customers is essential.
Repeat customers are 50% more likely to buy from you than new customers, and they’ll spend 31% more. Thus, not only is it less costly to keep your current customers, but it’s also more profitable in the long run.
Also, retained customers can help your company reduce its marketing costs. Yes, delighted customers are returning customers, but they also tell their colleagues, family, and friends about your brand. As a result, word-of-mouth marketing generates more sales than paid marketing, nearly 5X more.
The trust you get from delighted customers can drive more sales, reduce your marketing costs, and save you money. You don’t want to be a one-hit-wonder. You want organic growth that guarantees future revenue.
1. Set Realistic Expectations
Setting realistic expectations is crucial if you’re looking to improve your customer retention rate—it can have a significant impact on your company’s ability to keep new customers.
For instance, think about shipping. Unfortunately, most online businesses can’t compete with successful companies such as Amazon regarding shipping times. However, they can strive to keep their customers informed instead.
Suppose you have a customer who orders a blouse from your online store and then has to wait several weeks for it to show up. It can happen in two ways:
- They don’t know how long shipping will take, and they become more frustrated every day their order doesn’t arrive.
- They knew from the start that it’d take some time, so the one-week wait aligns with their expectations, so there’s no issue at all.
And there are many ways to do that with simple customer retention practices. For example, have honest shipping information on your site. Send emails to customers informing them that their order was received and shipped.
Of course, setting realistic expectations goes beyond shipping. Ensure your product descriptions are accurate and ensure no surprise fees appear at checkout. Setting clear expectations is a massive step in the right direction, which comes in handy when retaining new customers.
2. Stand For Something
Few customers feel they have solid relationships with the companies they purchase from. A study that included 7,000 consumers from across the United States found that only 23% of customers have a relationship with a business. Interestingly, 64% of customers who said they have a relationship with a company said shared values were the basis of that relationship.
Most consumers prefer companies and products that resemble them in a way. This cognitive bias is known as implicit egotism, and it’s crucial.
Consumers are more likely to abandon your company if it doesn’t stand for anything. So if you want to build a pool of loyal customers, you must create genuine connections with new customers by letting them know your values.
What does your brand stand for? Defining your values and highlighting them as part of your brand will make it easier to retain customers who share those values.
3. Deliver Value
Creating value for your customers involves delivering valuable products and services that they consider worthy of their energy, time, and money. For customers to derive value from a product or service, its perceived benefits must outweigh its cost. Thus, delivering value for customers means maximizing the benefits within a realistic price point.
Cost and benefits are two fundamental factors of customer value. Benefits include things such as popularity, quality, accessibility, longevity, and convenience. Thus, increasing the benefits of your products without increasing cost can deliver more value to your customers.
Delivering value is crucial because it can improve your brand’s reputation, revenue, and long-term success. Offering valuable products and services improves your customers’ trust and confidence in what your company offers. Customers who feel they’ve made a worthwhile purchase are more likely to do business with you and share their positive experiences with their friends, family, and colleagues. Taking your time to determine what your customers value can help you deliver better products and services, increase sales, improve customer loyalty, and ultimately boost customer retention rates.
4. Get to Know Them
Whether you’re a freelancer, a small business owner, or even the CEO of a multinational corporation, getting to know your customers is crucial. By knowing who your customers are, you’ll be in a better place to anticipate their needs and provide them with valuable products or services—which means they’re more likely to purchase from you in the future.
Knowing your customers is crucial because 91% of today’s customers, especially the digital natives, are more likely to buy from companies that offer relevant recommendations and offers.
To know your customers, collect analytics and data across touchpoints. Typically, customer insights and metrics are the gold dust for companies looking to understand their customer base better. However, by leveraging a mix of mobile data platforms, Google Analytics, and social media analytics tools, you can gather in-depth insights across your primary touchpoints. This will enable you to build customer profiles or personas that can help you improve your marketing messaging exponentially, ultimately improving your customer retention rates.
5. Meet Them Where They Are
Chad Horenfeldt notes meeting the customer where they are and not how you want to connect with them is essential for companies to succeed. To maximize customer satisfaction and ultimately improve customer retention, you must be ready to meet your customers where they’re.
To meet your customers where they are, offer ongoing customer support. For example, if a customer has a query or requires some information, how easy is it to access that information? If they call in, will they get helpful answers to their questions? If they visit your site, will they find accurate product descriptions? Can they get responses via email? For support queries, some customers might prefer social media. Can your customers contact your brand through social media?
So, to improve customer satisfaction, make it your top priority to know your customers well enough to figure out what mediums of communication your company should offer. A multifaceted approach is also crucial because providing more options is the key to improving customer satisfaction and ultimately retaining the customers you already have.
6. Educate Them
The last thing you want is to leave your customers to fend for themselves after they’ve purchased your products or signed up for the services you offer. Thus, it’s critical to provide resources that make it easier for new customers to learn how to use your products.
There are many ways to train new customers on how to use your products:
- Offer in-product onboarding with tutorials and tips to help new customers get started.
- Send a series of lifecycle emails that can guide new customers through learning how to use the product they purchased.
- Create an online academy with extensive training resources for new customers who prefer self-service training.
- Create a community of product specialists that new and long-term customers can turn to for help.
- Offer one-on-one training sessions with sales, customer support, or onboarding teams.
7. Create Loyalty
Customer loyalty involves customers’ decisions to continue purchasing from a particular brand because they believe it offers the best products, customer experience, and price within its category. High customer loyalty will prevent new customers from abandoning a company based on simple factors like a better price or better marketing.
Creating customer loyalty is crucial for every business. Essentially, generating higher customer loyalty results in higher customer retention rates, which is more profitable because it’s more cost-effective to rely on current customers than new acquisitions. In addition, creating customer loyalty with higher retention rates requires companies to define their brand value, reward loyal customers, and pursue lost customers.
Retain New Customers in 2022
Many business owners and digital marketers focus on gaining new customers, and while companies need new customers, it’s just as crucial to nurture your existing customer base.
So instead of spending all your marketing budget on attracting new customers, put more effort and money into getting to know your customers, delivering value, and building lasting relationships with current customers. These customers already know your company and will appreciate that you still care about them even after they’ve made a purchase. The seven customer retention strategies discussed above will help you keep your customers coming back for more, improving your revenues.
Zight (formerly CloudApp) is a powerful customer support tool that can help you respond faster to customer support questions and requests with high-quality content that offers detailed answers. With this software, you can eliminate back-and-forth conversations over emails with lengthy explanations that make room for confusion. For instance, Zight (formerly CloudApp) helps Help Scout’s VP of sales save over 110 hours while creating engaging and personalized content for customers.