Customer retention, right now, is more critical for your brand’s survival than ever before. Maybe you think retention isn’t your job.
But you’d be wrong. Everyone plays a part!
It’s crucial to keep customers coming back. On the other hand, how can you achieve that in an era where consumers have countless options? Let’s get right into it!
The Importance of Customer Retention
Above all, customer retention isn’t merely a buzzword. It’s a lifeline for any business seeking to flourish in our modern market.
Did you know, attracting a new customer can cost five times more than retaining an existing one? Moreover, the probability of selling to an existing customer is 60-70% compared to a mere 5-20% for a new customer.
The implications are clear: customer retention is essential.
The Basics of Customer Retention
At its core, customer retention is about maintaining a strong relationship with your customers. You’re probably saying, “Duh, Brooke.”
However, when you think about how retention is about excellent customer service and ensuring customer satisfaction, you may start to see where brands are falling short.
The same Salesforce report says the following …
Nearly 90% Of Buyers Say Experience a Company Provides Matters as Much as Products or Services.
You’d be surprised at just how many companies don’t have a focus on retention. Or, how little they know about it!
Below is a list of the most-asked questions I get when working on retention with our customer care clients.
Customer Retention FAQs
- What is customer retention? Customer retention refers to the strategies and tactics businesses use to keep their existing customers and encourage repeat business.
- Why is personalization important in customer retention? Personalization is crucial as it leads to tailored customer experiences, increasing satisfaction and thus retention rates.
- What are some innovative customer retention tactics? Innovative tactics include personalization, building community, rewarding loyalty, utilizing data for insights, and ensuring omnichannel engagement (more on that later).
- Which metrics are used to measure customer retention? Key metrics include churn rate, customer lifetime value (CLV), and repeat purchase ratio.
- How’s customer retention evolving? The future of customer retention lies in innovation and personalization. Businesses need to continually adapt to meet evolving customer expectations.
I’ll dive more deeply into these below.
Beyond Basic Customer Retention
Customer retention has evolved.
You must go beyond basic services to retain customers effectively. Similarly, your business needs to incorporate innovative tactics to stay ahead of the game.
5 Innovative Retention Tactics to Try
So, what are these innovative tactics? I’ve got a few up my sleeve…
1) Personalization: Tailoring Customer Experiences
Gone are the days when one-size-fits-all marketing strategies worked. Today’s customers crave personalized experiences.
By leveraging data analytics, businesses can tailor experiences to individual customers, leading to higher satisfaction and retention rates including hyper-personalization.
Hyper-personalization leverages a combination of vast real-time data, artificial intelligence, machine learning, and predictive analytics to glean in-depth insights about your audience on an individual level. This method not only improves the understanding of each audience member’s unique needs but also enables a more effective and appropriate response to those needs.
Ultimately, hyper-personalization empowers businesses to enhance customer experience through personalized interactions and offerings.
2) Building Community: Cultivating Brand Advocates
Businesses are no longer faceless entities. Or at least they can’t afford to be.
To clarify, here’s a quick snippet from our Lost to Loyal newsletter where I talk in depth about why being a faceless brand is a losing battle.
The smart ones are building communities and cultivating brand advocates who not only stay loyal but also attract other customers.
For example, aren’t you more likely to trust a friend’s recommendation over a random ad?
3) Rewarding Loyalty: More Than Just Points
Traditional loyalty programs are becoming passé. Today’s businesses are getting creative with their loyalty rewards, offering unique experiences or exclusive access instead of just points.
A few months ago, I put a poll out on LinkedIn about Loyalty Programs. Overwhelmingly, people chose cash-back as the most enticing choice.
However, one program I didn’t have listed was a subscription-based loyalty program. For example, Panera Bread has seen major success with MyPanera, its $8.99/month unlimited coffee subscription.
- They have 45 million subscribers
- The program increased member store visits from an average of 4 to 10 per month.
So, my question to you is, what do you think about this growing trend of subscription-based loyalty programs? Have you considered one?
Rewards should not just say “thank you for your purchase,” but rather “thank you for being with us” and “let us show you why you should stick with us.”
4) Utilizing Data: Leveraging Customer Insights
What better way to understand your customers than by leveraging the data they provide?
By analyzing customer data, also known as voice of customer data, businesses can predict patterns, anticipate needs, and provide the right solutions at the right time.
For example, here’s a social listening search on the keyword “Indigenous Peoples Day” and the volume of conversation around that term. As you can see, Twitter (X) and YouTube will likely get the most impressions if content on this keyword is posted there.
Most of all, you must be vigilant with collecting your customer data assets.
5) Omnichannel Engagement: Consistent Customer Interactions
In our interconnected world, customers engage with businesses across multiple channels. Be it social media, email, or in-store, ensuring a consistent experience across all channels can significantly boost customer retention.
Most importantly, stop neglecting social media as an acquisition and retention channel!
Omnichannel Engagement & Brand Consistency
Let’s dive into omnichannel engagement for a hot second. Omnichannel engagement is a strategy that recognizes our customers interact with us across a multitude of channels – online, in-store, via social media, through mobile apps, and more.
Rather than treating each of these channels as separate entities, an omnichannel approach seeks to integrate them seamlessly, ensuring a consistent and unified brand experience for your customer, on their channel of choice.
Here are some tactics brands can employ to effectively leverage an omnichannel approach:
- Unified Customer Profiles: Create a single, integrated profile for each customer that updates in real-time with interactions across all channels. This ensures that communication is always relevant and timely.
- Mobile Optimization: Ensure that all digital platforms are mobile-friendly.
- Integrated Inventory Systems: For businesses with both online and brick-and-mortar operations, it’s essential to have real-time inventory updates across all channels to meet customer expectations.
- Consistent Branding: Maintain consistent brand visuals, voice, and messaging across all channels.
- Seamless Transition: Allow customers to transition effortlessly between channels. For example, a customer should be able to start a purchase on a mobile app and complete it in-store or vice versa.
- Centralized Customer Support: Offer customer support that can access information from all channels.
- Personalized Marketing Campaigns: Use the data from various channels to develop personalized marketing strategies. If a customer often shops online but has recently browsed items in-store, they’d probably appreciate an online discount.
- Feedback Loops: Create loops where feedback from one channel can benefit others. For example, online reviews can be displayed in stores.
- Training and Education: Regularly train staff across all channels on the latest brand policies, products, and messaging to ensure consistent customer interactions.
- Data Analytics Integration: Combine data from all touchpoints to gain holistic insights into customer behavior, preferences, and potential areas of growth.
By implementing these tactics, you can better harness the power of omnichannel engagement and ensure a more consistent and satisfying experience for your customers.
Measuring Customer Retention
There are several key metrics to consider when evaluating customer retention. While I can’t go through the exhaustive list of what you should be measuring, I can give you a glimpse into what we work with our clients on measuring.
Key Metrics and KPIs
- Average Order Value (AOV): Measures the average total of every order placed with a company over a defined period.
- Customer Churn Rate (CCR): The percentage of customers who stop doing business with a company during a specified period. [See our post Customer Churn]
- Customer Engagement Score (CES): A measure of the degree and depth of customer interaction with your brand across all channels and touchpoints.
- Customer Lifetime Value (CLV): A prediction of the net profit from the entire future relationship with a customer.
- Customer Retention Rate (CRR): The percentage of customers a business keeps relative to the number it had at the start of a period.
- Customer Satisfaction Score (CSAT): A basic measure of a customer’s satisfaction with a brand’s products and/or services.
- Days Between Purchases (DBP): Assesses the average number of days between customer purchases.
- Net Promoter Score (NPS): Measures customer experience and predicts business growth by asking customers to rate on a scale of 0-10 how likely they are to recommend your company to others.
- Purchase Frequency (PF): The average number of times a customer buys from you during a specific time frame.
- Redemption Rate: A measure of how often customers use the rewards offered by your company’s loyalty program.
- Repeat Purchase Ratio (RPR): The number of customers who have shopped more than once divided by the total number of customers.
- Revenue Per User (RPU): Calculated by dividing the total revenue by the total number of customers to understand how much revenue, on average, a company receives from its customers.
- Upselling and Cross-Selling Rate: Measures the effectiveness of sales strategies in getting existing customers to spend more.
Monitoring these KPIs helps our clients understand their retention strategies’ effectiveness and make necessary adjustments.
Additionally, each of the above metrics provide valuable insights into how well your business retains customers and where there might be opportunities for improvement.
The Future of Customer Retention
The key to securing customer loyalty will hinge on savvy strategies and an extreme degree of personalization.
Consumers seek experiences tailored to their unique needs. As a result, businesses that can effectively deploy these tactics stand a greater chance of retaining their customers.
The blend of innovation and hyper-personalization will become the cornerstone of successful customer retention strategies in the future. And, with technology advancing at breakneck speed, you’ll need to adapt to keep up with customer expectations. (Whew!)
Are you ready for the future? Because you’re customers are already there.
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