Learn How Customer Retention Grow your Business Revenue and Loyalty

Learn How Customer Retention Grow your Business Revenue and Loyalty

Sometimes, companies will promote themselves as experts in customer retention, but what does this mean? Customer retention is the main aspect of a business’ growth strategy. It involves an ongoing commitment to retaining current customers, as well as attracting new ones. By taking an honest assessment of your customer retention practices, you can improve your business’ customer retention rate. This should be done through ongoing monitoring of your current practices, but also by taking actions to improve your strategies and processes.

The following blog post discusses the benefits of customer retention. The importance of keeping your customers even after they have left you. Some insights on how to be more proactive before they leave, using time triggers, and the top reasons why it is so important!

Why is Customer Retention Important?

Customer Retention is the amount of time that consumers spend with your business. If an individual will not come back for your product or service, you will have a problem reaching your goals related to profitability and revenue.

Customer Retention is the practice of keeping customers coming back to your store or service. There are a lot of Customer Retention practices to help keep customers coming back. Even though it’s not always easy, it has been proven that being able to retain your customers will allow you to increase profits.

  • Increasing customer retention rates by just 5% increase profits by 25% to 95%, according to a study by Bain Company. 
  • 82% of companies agree that retaining customers is cheaper than acquiring them, according to an eConsultancy study.
  • Attracting a new customer is 6-7 times more expensive than retaining a current one. – Kolksy 

How to Measure Customer Retention?

Companies measure customer retention using three methods: lifetime value, customer acquisition cost, and net promoter score.

  • The lifetime value of a customer is usually based on the purchase an individual customer makes throughout their time with the company.
  • Acquisition cost depends on the pricing or exclusivity deal a company has made with its customers.
  • Net promoter score reflects how satisfied an individual or group of customers are with a company’s service.

Biggest Reasons to Gain and Retain Customers:

The most important aspect of the business is continuously seeking new opportunities.

This includes finding new customers while keeping the ones you already have. When a consumer doesn’t experience value in your product/service, they will ultimately leave. This can lead to lost industry revenues and a rapidly soaring price tag for the amount of money you spend on marketing.

There are many ways to gain customers by offering special deals and discounts, providing complimentary offers, upselling them similar items, or going through the trouble to create amazing personalized experiences with your service or product.

Many studies indicate that absenteeism and attrition rates were two of the top factors for companies ultimately closing.

Another significant factor is poor customer satisfaction. To reduce the likelihood of these issues, businesses need to quantify their customer service experience as well as their customer loyalty.

To gain and retain customers, you should focus on generating customer happiness with your customer service, and of course product quality.

Customers want the right thing at the right offer at the right price, and they want to experience good service even when they’re in a hurry.

  • 52% of consumers say they have made an additional purchase from a company after a positive customer service experience.
  • Dimensional Research.
  • About one in three people (30%) say the most important aspect of customer service is speaking with a knowledgeable and friendly agent- Microsoft 
  • 91% of customers who are unhappy with a brand will just leave without complaining.- Kolksy 

Keeping your existing customers’ happy means that you will be able to sell them more stuff in the future and help with online marketing efforts as well. There are many ways that you can help retain your customers, but most companies do some form of customer recognition program based on what the customer has bought from them or a specific period like one year or month.

Business Revenue, Loyalty and Profitability Gains from Customer Retention Initiatives:

Most companies focus internally on their bottom line but cannot ignore the business revenue that comes from customer retention initiatives.

Every customer who walks in the door is one less you have to find externally. Keeping those customers happy ultimately leads to higher sales and profits, which creates a robust ROI. Businesses often try to bring more people into the fold, to grow revenue.

However, without engagement from customers, returns will likely be spread thin and revenues will go down by attrition. This means you need to focus on your quality of customer service so you can maintain satisfaction and loyalty levels.

Here we will look at a few strategies that can help you to keep your customers from abandoning you.

Customer Retention Metrics Show Your Value-Add:

When it comes to customer retention, one of the best ways to keep a client is by implementing metrics that either directly or indirectly show value-add. If you can demonstrate that your product or service has influenced your customer’s lead generation (MQLs), sales pipeline (SQLs), and customer lifetime value, it will be much more difficult for a client to say goodbye.

When gathering data, you’ll want to capture both your product and market metrics.

What does that mean?

Well, in general terms product metrics are the numbers related directly to your app or solution such as installs, lifetime revenue, etc.

Market metrics relate to how well your product meets the needs of the customer and is best captured by surveys and feedback calls/conversations to understand what they liked, what they didn’t like, and where they see opportunities for improvement.

Use Feedback to Lock Customers Into Your Business:

When your beach umbrella is broken, letting the wind take control of it isn’t going to help fix anything. You need to act quickly and tie a new string around it to allow you to take control over each gust of wind that comes your way.

In terms of customer retention, it may look like a simple task but you need to remember that not all customers leave for the same reason or with similar signals so before you can decide on how best to act you need context.

This means regularly surveying your whole customer team – including decision-makers – via emails or phone calls asking specific questions about what they like or dislike about your service. The process will be worth it in the end as you’ll get a clear insight into what drives customers away and therefore plan ways to stop them from leaving.

Customer feedback is an effective tool for customer retention, so use it well!

Create a Loyalty Program for Your Customers:

To build loyalty and retention, ensure that you are providing additional value beyond what your product or service offers. To do this properly you need to contact customers who aren’t already loyal before adding them to the system. Part of the point of any reward program is to encourage customer loyalty.

It’s important to have an army of brand advocates behind any brand, and they can be had by keeping your customers happy. Appreciation goes a long way with customers: user-generated content, rewards for referrals, loyalty bonuses are all good ways to keep them happy.

Capture documents and all past communication:

A customer relationship management system, or CRM, is a database used to keep track of interactions between clients and companies.

A newly adopted CRM can help you to store information such as what was said during meetings, even times where a client has praise for your team members, and other details about customer life cycles. These details from previous conversations or meetings may be used later to better communicate with clients in a way that’s more natural and genuine, thereby improving customer retention.

Connect Customers & Companies with Consistent CX:

You must build trust with your customers. They need to trust that the company will continue to provide them with what they want or something better than what they’ve already used before.

Without this, it’s hard to build a reliable relationship with certain clients because they can’t count on you too much without knowing how far you’ll go and how reliable your team will be.

The best way to get new customers is by converting the ones that are already there.

With each customer, a company must pay special attention to not just the products they’re purchasing, but assignments of rights as well as liabilities. Onboarding your customers into your business and all its intricacies shows them great appreciation and will continue to make them loyal fans of your brand or service!

In Summary:

The key to business growth is to maintain a level of customer loyalty and satisfaction. By finding out what your customers want, you can ensure that you keep them around, which will translate into greater profits and a larger customer base. We hope that this article has helped you learn how to keep your customers coming back for more!

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Author Profile

Varuna Raghav
Varuna Raghav
As a CX and marketing specialist, Varuna Raghav has more than 15+ years of experience to her name. Her enriching input has been valuable to the brands and organizations she's worked with.

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