The benefits of retaining a customer are not lost on customer-centric organizations. According to research, retaining customers results in greater ROI and costs 5-25X less. If you're wondering about what a customer retention strategy entails, let's draw you a suitable analogy.
Let's say you bought a laptop five years ago. You've been using it since. You have all your work saved on it. and the system feels second-nature by now. One fine day, the laptop starts giving you trouble. At this point, would you buy a new laptop altogether or fix the issue and continue with the familiar, old one?
If you're opting for the latter, you've got a customer retention-focused mindset. One of the many benefits of retaining customers is that it boosts your customer's lifetime value with the brand.
Plus, it encourages customers to become self-confessed brand advocates due to consistent and seamless CX. Finally, it encourages repeat business and is good for the bottom line.
Retaining a customer is better than luring a new one from a financial as well as a strategic point of view.
At this point, you might be wondering: "When should I, as an entrepreneur, be concerned about it?"
To start with, firstly, gauge where your brand lies in its growth life cycle and take steps accordingly (as outlined below):
Let's move onto the next burning question at hand: "How customer retention differs from business to business?"
Like with every other customer retention strategy worth its salt, there's no "one-size-fits-all" approach that can be embraced when it comes to customer retention. Here's an example of how your customer retention strategies will differ depending on what you're selling:
Here's the long and short of it: Brands who frequently enjoy high-value purchases from customers (think: Apple, etc.) are typically the ones who have the highest customer values.
As a thumb rule, remember that as you drift towards the right in the matrix, you should keep ramping up your CX retention efforts, while working on acquiring new customers at the same time. A healthy combination of both will do wonders for your brand.
Fun fact: Here's a list of the top-10 brands in the world (2020)
Here's the final piece of the CX retention puzzle: "How to calculate Customer Retention Rate (CRR)?"
There's no doubt that customer loyalty and retention rates are closely linked together. But how do you measure loyalty? One effective way to do this is by calculating your CRR. This metric indicates the percentage of customers who remained loyal over a specific period of time:
Here are the top-5 tips to increase your CRR organically and sustainably:
Everyone loves surprises, your customers even more so. One of the best ways to delight - and retain - customers is by giving away freebies or personalized gifts to them on special occasions such as the customer's birthday, milestone celebrations of the brand, among others.
Take inspiration from Jawbone's hand-written letters that literally shows the customers how much the brand values their association and makes them feel special:
Key takeaway: It always pays off to go the extra mile and appreciate as well as thank customers for their continued love and support. This strategy works even well when customers are not expecting it.
Sometimes, customers value freely available learning assets more than 'things.' Confused? Take the case of HubSpot Academy, for instance. The brand offers a completely free knowledge base which includes marketing, sales, and customer service training videos as well as certifications.
This kind of offering is ideal for customers who wish to continuously learn, up-skill, and grow. The best part is that a few special features are exclusively available to only HubSpot customers and partners, which can boost engagement and brand loyalty:
Key takeaway: Customers today want brands to actively engage with them and educate them on current trends and topics. This is where creating a knowledge base like this can help. Plus, it deepens your brand's engagement and empowers customers to self-serve in times of need.
Loyalty program is a time-tested strategy to motivate customers to purchase time-and-again from a brand to boost points. This strategy works as a win-win for all as you get repeat business, and the customers leverage maximum value from each purchase:
Key takeaway: The central idea is to reward customer's points with each purchase so that they are motivated to come back for more. You can also use loyalty apps to reward customers as Sephora's Beauty Insider Program does:
It wouldn't be an exaggeration to say that Amazon's one-day delivery and easy returns have left the customers spoilt for convenience and choice. In today's competitive landscape, customers want brands to offer complimentary returns and speedy delivery.
The furniture brand, Interior Define offers a 60-day return policy (which is unheard of) and a huge hit among the customers as it prioritizes their convenience above all else:
Key takeaway: When it comes to customer retention efforts, more often than not, it's the smaller things that can make a huge impact - easy returns, free and instant delivery, coupons, you get the drift, right?
Customer support tools are a boon for smaller businesses that tend to operate with fewer resources at hand. As your business scales, there will come a time when you'll need to supplement your CX efforts with seamless automation as Santa Cruz bicycles did.
Here's what the brand's Support Lead had to say about the existing bottlenecks the brand was facing day-in-day-out:
Here's how the brand maximized its CX efforts by automating routine processes and streamlining it from start to finish:
Key takeaway: In the CX world, they say that if you can automate the task, go for it - especially when it comes to the repetitive, routine tasks. Moreover, you should look at redirecting your agent's time to work on issues that require human effort and intelligence.
"15 percent of online shoppers have signed up for one or more subscriptions to receive products on a recurring basis.” - McKinsey
Contrary to popular opinion, Subscription models are all the rage now. And why not? Most models offer better cost-value to customers; they're convenient to use and offer unparalleled customer service.
Ideally, try rolling out a subscription plan for products that require constant use and replenishment (such as flower arrangements, fresh juice boxes, etc.). Here's an example of a brand called Bean Box which offers varied plans for the coffee lovers:
Key takeaway: First and foremost, it is important to remember that customers will only go for an ongoing subscription if your product is worth it. In other words, make sure to offer your customers a unique product/service that they won't be able to say no to.
It's not enough to just keep on rolling out surveys and gathering customer feedback. You need to act on the feedback if it makes sense for your brand and aligns with your company's core principles. Timely and effective feedback resolution can boost the overall customer experience and leave customers feeling satisfied, and more importantly, heard.
Let's look at Starbucks' "My Starbucks Idea" for example:
"My Starbucks Idea" is a crowd-sourcing initiative for boosting customer satisfaction and innovation. The brand built a dedicated website for users to submit their suggestions so that the brand can understand what their users want (from the horse's mouth) and implement the same.
Key takeaway: Clearly, creating a feedback loop like this makes customers feel more connected - and invested - to the brand. It also reinforces greater trust and transparency between the brand and the users.
When it comes to retaining customers, there's no hard-and-fast rule; nor is there a set formula. More often, CX leaders tend to go with the research they amass over their ideal customers and trust their gut. As long as your idea is fresh, consistent, creative, and truly useful; your customer retention strategies are bound to work. Share your experiences below. We're all ears.
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