How to Boost Your Customer Retention Rate
Customers are the lifeblood of any successful company: Maintain a steady stream of them, and you’re in good shape. Lose too many, and your business could be at risk. For this reason, it’s vital that you take every opportunity you have to grow your customer base and to retain it.
What is customer retention? Inc. defines it as “the percentage of customer relationships that, once established, a business is able to maintain on a long-term basis.” The idea behind customer retention is simple: Keep customers happy, and they’ll continue to come back for more; alienate them in any way, and they’ll take their business elsewhere. This second scenario is also known as customer churn and is to be avoided at all costs.
In this blog post, we’ll take an in-depth look at the benefits of customer retention and offer expert advice on how to increase your customer retention rate.
Customer Retention by the Numbers
To convey the importance of customer retention, let’s look at a few statistics:
As you can see, customer retention has the power to reduce costs, build stronger, longer lasting customer relationships, grow your existing customer base, and boost your bottom line.
And, if you aren’t totally convinced, here’s one final stat for you: Customer loyalty is often the end result of a positive customer experience. According to Forrester, a 1-point improvement in CX Index score — that is, Forrester’s analytics-based benchmark of customer experience quality — could net businesses anywhere from $5 million to $879 million in total revenue, depending on industry.
Customer Satisfaction Score
A customer satisfaction score (CSAT) is the most straightforward and efficient way to determine how satisfied your customers are with an interaction, a purchase, or your company as a whole. The best way to gauge CSAT is to survey your customers and ask them to rank how satisfied they were with their experience; though 1–5 is the most common scale, with 1 being “Not at All Satisfied” and 5 being “Very Satisfied,” you could also opt for a 1–3 or 1–10 scale. If you want to get even more granular, you might consider providing an open response section where customers can share detailed feedback about their experience.
Net Promoter Score
Created by loyalty marketing expert Fred Reichheld and first published in the Harvard Business Review, NPS evaluates the overall customer experience, customer loyalty, and the potential for business growth.
The NPS survey asks customers to rank brands on a 0–10 scale based on how likely they would be to recommend that brand to a friend or colleague, with a 0 being “Not at all likely” and a 10 being “Extremely likely.” Those who offer a score of 9 or 10 are considered “Promoters,” that is, loyal enthusiasts likely to fuel growth. Those who score a 7 or 8 are considered “Passives” (satisfied, but unenthusiastic and more likely to leave), and those who score between 0 and 6 are considered “Detractors” (unhappy customers likely to impede growth).
- Understand why customers leave. Before you can begin strategizing on how to make customers stay, you must first figure out what makes them want to leave. There are any number of ways to do this — monitoring metrics like those shown above, conducting regular customer service surveys, and reviewing customer complaints can all provide you with valuable insight into why customers might decide to take their business elsewhere. Once you’ve tracked down the source of the problem, you can start to take actionable steps to remedy it and boost customer retention.
- Create alignment between business units. The best approach to customer retention is a collaborative one. You can create alignment between business units by understanding counter-dependencies between people, processes, and automation, as well as KPIs and workflows in a closed-loop process.
- Identify who is at risk of churning. The less engaged a customer is with your brand, the more likely they are to churn. Determining which customers are “at risk” can be tricky but, fortunately, predictive analytics makes it easier. Using behavioral data, you can develop predictive models that identify which customers are most likely to churn. Armed with that information, you can take additional steps to re-engage customers — ask them for feedback, engage in personalized outreach, present them with a special offer, and so on — in order to promote retention. Fortunately, predictive analytics, along with artificial intelligence and machine learning, make it easier to identify and reengage at-risk customers now than ever before.Discover New Opportunities to Increase Customer Engagement >>
- Target the right customers. In order to do so, you need to start by figuring out who your target audience is. Is it college students? Young professionals? Stay-at-home parents? Retirees? Narrowing down your target audience enables you to refocus your marketing efforts. From there, you can send special offers tailored to your target audience’s interests — for example, if you’re a big box retailer looking to target first-time home buyers, you might send them special discounts on furniture and other home basics.
- Enhance the customer experience. According to Gartner, customer experience (CX) is the new competitive battlefield for organizations across all industries. In order to compete on the basis of CX, it’s imperative that every touchpoint — that is, every interaction throughout the customer journey — be primed to delight the customer and exceed expectations. The best way to start enhancing your CX is to get to know your customers: What interests them? What challenges are they up against? What matters to them? This will provide you with valuable insight into what your customers want and need, so you can optimize your CX accordingly.Deliver an Experience Your Customers Won’t Soon Forget >>
- Build trust to strengthen relationships. Brand trust is one of the top buying considerations for consumers across markets, ages, and incomes. According to one survey, 81% of consumers said that they need to trust a brand in order to buy from them.
There are a few simple ways to build that trust and, in the process, strengthen relationships and increase your customer retention rate:
- Solicit feedback in the form of customer surveys. Ask customers to share what’s important to them, what their opinion of your brand is, and so on; most importantly, listen to what they have to say.
- Maintain open lines of communication. Let your customers know that whatever they need, you have their back.
- Offer a consistent customer experience. Regardless whether the customer chooses to engage with your brand in-person, online, or otherwise, it’s vital that you consistently apply the same level of care, attention, and personalization across all channels.
- Be transparent. Be open and honest with your customers, own your faults, and always, always keep your promises.
- Show customers how to get the most out of your products. Customers are more likely to churn if they don’t understand how to use your product or feel as though they aren’t getting enough out of it; this is especially true for companies in the SaaS space. Fortunately, this is a relatively simple issue to anticipate and solve for: Provide your customers with video demonstrations and step-by-step instructions on how to use your product, as well as access to a customer knowledge base that they can refer to for additional guidance. If customers feel confident when using your product and that they’re getting their money’s worth, they’re far less likely to churn.
- Personalize everything. Each customer is unique and expects to be treated as such. In fact, 80% of consumers are more likely to shop with brands that offer personalized experiences, and 72% report that they only engage with personalized messaging.
When it comes to personalization, the best way to get started is to collect data at each of the various touchpoints along the journey. From customer support inquiries to survey responses to purchase history, every piece of data provides valuable insight into who your customers are and what they want. You can use this information to build out detailed customer profiles and personas to further tailor marketing campaigns, customer service, and other elements of the CX to suit individual interests.
- Offer customer service surprises. Piggybacking on the previous tip, a nice way to simultaneously personalize communications and stay top of mind is to send customers special offers related to major life milestones. For example, many companies will send customers some sort of special offer or discount to celebrate their birthday; you can apply the same practice to an anniversary, a college graduation, a new move, new parents, and so on.
- Give customers access to valuable resources. We mentioned earlier that one way to ensure that customers get the most out of your product or service is by giving them access to a customer knowledge base. Knowledge bases are an excellent resource because they give customers the option to resolve low-level issues on their own and reduce costs (and stressors) associated with traditional customer service. Best of all, customer knowledge bases are relatively easy to build. For more information on how to start building your own knowledge base, check out our blog post on the subject.
- Use automation to re-engage customers. Marketing automation enables you to schedule campaigns such as monthly newsletters, educational emails, SMS messages, and more, so you can stay top-of-mind with customers without any of the manual busy work.
- Create a customer community. Word-of-mouth marketing is one of the most powerful ways to attract and retain customers, with 74% of consumers reporting that word-of-mouth marketing is a key influencer in their purchasing decision.
Building an online customer community is one of the most effective ways to promote brand awareness and encourage word-of-mouth marketing because it gives customers a place to congregate and share their thoughts and opinions with like-minded individuals.
And word-of-mouth marketing isn’t the only way your business can benefit from a customer community — 88% of consumers say that a branded community helps enhance the customer experience, and 78% of businesses report that branded communities support new product development.
Best of all, creating a customer community doesn’t have to be a huge undertaking; it can be as simple as setting up a Facebook group or a discussion board on your company website.
- Reward your most loyal customers. Loyalty programs are a tried-and-true method for customer retention management: 52% of consumers say that loyalty programs are a key reason they choose specific retailers or brands, and 41% say loyalty programs make them feel like they’re part of an exclusive group of valued customers.
As an added bonus, companies with strong loyalty programs are also proven to grow revenues 2.5 times faster than their competition.
For tips on how to start building your customer loyalty program, we highly recommend HubSpot’s comprehensive guide.
- Streamline internal communications. Sometimes increasing your customer retention rate requires a little introspection. Using multiple, disparate backend systems to manage internal communications can easily gum up the works. This can make it challenging for your employees to access the information they need, which slows down customer service and jeopardizes customer retention. By unifying systems and streamlining communications, you can significantly reduce lookup time, which will increase customer satisfaction and promote customer retention. It’s also important that you invest in change management services, so that once you’ve deployed a unified system, you can move forward with confidence knowing that your employees are actually using it.
- Use a CRM for loyalty management. Customer relationship management (CRM) systems make it possible to store important data all in a single, centralized repository and easily access it on a moment’s notice. Build detailed customer profiles that enhance every experience, monitor loyalty and manage loyalty rewards, create seamless omnichannel experiences, and more — the right CRM system can do it all.
Improve Customer Retention Management with Hitachi Solutions
We hope these tips help you in your mission to boost your customer retention rate. For even more assistance improving your customer retention management strategy, look no further than Hitachi Solutions.
Every winning customer retention strategy starts with the right combination of technology and expertise. Here at Hitachi Solutions, we specialize in equipping our clients with the tools they need to deliver a modern customer experience. This is backed by our Unified Framework methodology, which enables businesses to achieve exciting results through a balanced approach that emphasizes people, processes, and automation.
Let Hitachi Solutions set you up for success, so you can focus on what’s really important: providing exceptional experiences and building long-term customer relationships. Contact us today to get started.