Customer retention is a valuable piece of the puzzle for many businesses. Customers are our greatest asset. While you can look to obtain new customers, as most businesses regularly do, it is much more cost effective to retain as many customers as possible.
Why is retention important?
While most businesses are always on the lookout for new customers, existing customers are a more proven source of revenue. The benefits of retaining a high percentage of customers:
Higher conversion rates - Existing customers have already converted at least once making it much more likely they will convert again compared to new visitors, assuming they had a good experience.
Reduced marketing costs - The more customers you retain means less customers you need to consistently find to reach a sales number you are happy with. Additionally with a good customer retention program you are regularly getting feedback from customers, which allow you to improve your approach to new customers.
Higher profits - Existing customers are generally less price conscious than new customers which can lead to less discounts and promotions being needed to land new business. Also existing customers are more open to upselling and trying new products or services from the same business.
Customer retention tips
Create a plan - It is great to say you want to engage in customer retention, but a plan needs to be in place. Customer retention is a bit unique because it is a hybrid of marketing and customer service.
Use analytics - Often customerS provide you with signals when they are unhappy; it is just a matter of listening. In the case of the online world we listen via analytics. First you need to identify key variables using purchase patterns, customer service interactions and anything else that seems relevant to when or why a customer might leave. Then, procedures need to be put in place to recognize when a customer might be getting unhappy so you can attempt to win back that customer before they leave.
Show employee loyalty - If you are loyal to your employees it is more likely that they will be loyal to you. That is important because an employee who feels valued often works harder for the business and is happier. Happy employees can then create happy customers which is a win-win situation.
Talk to employees - Employees that deal with customers regularly will have insights and opinions that often prove to be invaluable. You can learn about problems and potential pitfalls along with getting ideas for solutions.
Reach out - Rather than waiting for problems, be proactive with customers to learn more about them, their problems, and what you as a business can do better to serve their needs. This level of customer care helps build a strong relationship because it is apparent that they are important to you.
Reward top customers - Top customers should receive some sort of incentive or accolade; after all they are the ones providing you with a lot of revenue. If you combine this with marketing you might even provide incentive to other customers for more transactions so that they too can be rewarded. Loyalty programs fall under this concept.
Special offers - Rather than just using special offers to entice new customers, consider using analytics to help target existing customers with offers that they will find relevant and appealing.
