How to Increase Customer Retention:
According to Bain and Company Research, a 5% increase in customer retention can increase revenue 25-95%. Considering the cost of acquiring a new customer has a minimum cost of 5X that of keeping the ones that you have, it’s vital to hold onto the ones you have and focus on increasing lifetime value. So, here are 5 tips that will help you increase customer retention.
1. Set Expectations Early and Often
Be crystal clear about what results your product or service delivers because this is all the customer is really buying.
2. Consistent Customer Experiences
Mapping out the customer experience helps build trust and positions you as a trusted authority. People are very risk averse so it’s great to have a plan. Lets them know what to expect from you which means no surprises. In business, most people don’t want surprises.
3. Ask For Feedback
Ask for feedback and use the data to guide your future execution. A great place to start is by reading your reviews to learn about what your customers like and dislike and also responding to both positive and negative reviews.
4. Find a Way to Over Deliver
Reciprocity is a very powerful psychological bias that comes into play after you have gone above and beyond “The Norm” for somebody. So, this could be sending you customers some form or thank you follow up, some swag, tickets to the event, or just any type of appreciation is great. The act is really the important part. If you know your clients well and can get personal all the better. These little things are invaluable to your business.
Recently, a company really over-delivered on service with me on a product at the start of this relationship, but then they made a couple of mistakes that were very inconvenient. Because the relationship started off so great I was much more patient and lenient with them when they made a mistake. If they had delivered average service from the get-go, I would likely never go back to this company and been fairly frustrated with the entire deal. Having empathy, showing appreciation for your customers builds a little margin of error cushion so to speak in the event your company ever makes a mistake. Which, likely is inevitable, were humans.
Also, if you think some of this stuff is expensive, just remember how much it costs to acquire a new customer vs the cost of keeping the ones you have.
5. Regular Communication
It’s interesting to hear companies say they do not want to use certain channels too often to communicate with their customers because they might annoy them. Well, with the state of the internet and social media these days it’s very difficult to be in front of your customers too much. As a matter of fact, it’s hard enough to let them know you even exist with all the noise.
Customers are more likely to continue to purchase from your when you stay on their radar. Using a great CRM and tracking system can help you stay on top of your communication with your customers.
How to Calculate Customer Retention Example:
(Customers at the End of Period) – (New Customers))/(Customers at the start of period) X 100
Customers at the end of March 2018( End of Period): 143
Customers at the end of March 2017 (Start of Period):120
New Customers Past Year: 36
(143-36)/(120)) x 100 %
Your customer retention rate in this example would be 89.16%.
Email Marketing is a great way to stay in front of your customers. Learn more here.
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