Customer retention can be the key to growing your revenue because existing customers are known to spend more than new customers, and convincing customers to stick around tends to cost less than acquiring new customers.
Holding onto existing customers is easier said than done, though—especially because most modern consumers are happy to hop from one brand to the next. Let’s look at five strategies that can help you convince customers to stay loyal to your brand.
Before you can devise the right strategies to retain your customers, you have to know who your customers are and what they want. So start by getting to know your customers through data.
Keep in mind that not all data is equally helpful. You want to get to the bottom of what makes your customers tick. Tracking the right data is also important so you aren’t overwhelmed with a huge database full of a messy mixture of both relevant and irrelevant data points.
Focus on tracking and leveraging the most pertinent data points to help you understand your customer base. You may find this includes, for example, customers’ ages, genders, locations, and buying histories.
Just by focusing on the right data, you can gain new insights that empower more informed customer retention strategies. For example, Kate Spade was able to grow its brand and revenue above and beyond its goals by collecting and leveraging better data.
Especially if you’re struggling with customer retention, it’s critical that you seize (and create) opportunities to hear from your customers. Find out what’s working and what’s not so you can improve the customer experience and avoid churn.
You can’t wait for customers to come to you. About half of customers today write product reviews, so you can count on some of your customers to freely offer feedback on your products and services. However, you want to ask all your customers for their feedback, including those who may not think to write a review.
You should also ask about their customer experience overall—not just specific products or services. When it comes to retention, it’s critical that you ask customers who churn why they’re leaving so you can troubleshoot and improve your customer retention strategies.
Keep in mind that customers are busy, and they may not be inclined to write down their thoughts even if they have valuable insights to contribute. Consider offering some type of incentive, such as a free item or discount, in exchange for filling out surveys, reviews, or feedback forms.
As you look for new customer retention strategies, don’t forget the importance of good old-fashioned customer service. A whopping 90 percent of customers say customer service is important to their choice of and loyalty to a brand. Providing consistently excellent customer service goes a long way toward solidifying your brand’s positive reputation and instilling loyalty in your customers.
Customers want to be able to reach a customer representative easily and get a quick answer to their question or resolution to their problem. Customers want to feel heard and cared for by every member of your company they interact with. To that end, you should also make sure you respond to feedback so customers know you’re listening. In some cases, this could even convince a dissatisfied customer to give you a second chance, translating directly into improved retention rates.
Personalization is key to making sure customers feel a close connection with your brand, so avoid generic messaging whenever you can. Instead, put your data to use to customize messaging and offers for each customer.
One study showed that personalized calls to action (CTAs), for example, perform more than twice as well as generic CTAs. Brands that place an emphasis on personalization see real results when it comes to customer retention.
An example is Spotify, the music streaming platform that has leveraged personalization to continue growing its customer retention despite more competitors entering the market. For Spotify, personalization looks like generating unique playlists and recommendations based on users’ past listening. For your company, it may look like product recommendations based on past purchases or interests.
Customer loyalty programs can be an excellent means of encouraging customer retention. However, not all loyalty programs are actually engaging. Some customers may download your app or sign up for member emails for an initial reward only to lose interest when they’re unimpressed with future offers.
Consider whether it’s time to revamp your customer loyalty program. Or, if you don’t have a customer loyalty program, consider creating one to engage your employees. The key is to offer customers rewards they will actually love. This could be:
Pay attention to important loyalty program metrics such as reward redemption rate to see how effective your program is and whether you need to try a new strategy.
Customer retention can be a challenge, but improving your customer retention even just a little can give your business a major boost. Want to learn more about improving customer retention through a quality customer loyalty program? Download our free eBook, How to Build a Customer Loyalty Program That Works!