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4 Steps to Develop Your Customer Retention Strategy

strategy

Customer retention is a major factor in making your company profitable. As we have discussed in previous blogs, retaining just 5 percent of customers could increase your profits by up to 95 percent. Therefore, you should check in with your business numbers, and ask yourself regularly: has the client retention rate of my business recently increased, decreased, or stayed the same? If your answer is either of the latter two, drafting a customer retention strategy can help achieve an upward trend in these figures. Today I will show you how to create your own strategy based on just four steps.

#1 Research What Your Customers Need

You cannot give your customers what they want if you do not know them! Analyze your marketing performance data, and make decisions based on your results. A study by Hubspot shows that companies that base marketing and sales decisions on data of their customers improve their return on investment (ROI) between 15 and 20 percent. Understanding what your customers need keeps them as customers. You should analyze the following subjects:

  • Customer service: poor service is the main reason 82 percent of consumers does not return to a business after their initial purchase. Make sure your customers are happy, or find out what they would like to see improved.
  • User experience: if the shopping experience in your online store is not smooth, why would clients return?
  • Clicks/open rates during the email onboarding: what converts first time buyers into second time buyers, and eventually loyal customers? What falls flat?

#2 Use Feedback from Existing Customers

Without collecting feedback, any changes in your customer retention policies would be primarily based on guesswork – and the chance of them magically producing the desired result is infinitesimally small. Listening to customer feedback can provide a substantial boost to your customer relationships. By collecting the experiences of your customers, you can find out the main sources of satisfaction or frustration. Open-ended survey questions are great ways to source from your clients specific issues and hang ups in the user experience you might not hear about otherwise. Also, improvements to products and processes that you make on the basis of feedback will connect much better to the needs of your customers.

#3 Set Up an Effective Loyalty Program

Along with improving your products and services to increase customer retention, you might also consider introducing a customer loyalty program. When done well, these effectively turn a passer-by into a brand advocate. Many businesses find the benefits include increased customer spending, the ability to upsell or cross-sell, and higher customer lifetime value (CLV). If you are looking to start a loyalty program, make sure it is worth it monetarily. Then, target your most frequent buyers first; after listening to their feedback and developing based on what they say, you can then begin to roll it out to other customers.

An effective loyalty program ensures your existing customers feel special when they are invited, so that they will be more inclined to remain loyal to your brand. The way you create this perk is therefore as important as the reward itself. Note: in my next post, I will explain more about the issues important for building customer loyalty.

#4 Make It Personal

Appealing to your customers’ emotions and giving them the feeling they really matter goes a long way. Research shows that the vast majority of consumer decisions are based on emotion, and even little things can make a difference. For example, 60 percent of all customers have at one time stopped dealing with a company based on their interactions with indifferent salespeople. Therefore, you need to focus your customer communications not around “any other customer”, but instead how your customer would like to be viewed: in a special class, all their own. Shape your communication in a personal way, so that each customer feels that he or she is not just a customer.

This level of emotional design brings your customers closer and helps build a sense of community, belonging, and attachment to your brand. It makes it easier and ultimately more pleasurable to buy from you than from another store with similar offers, but no emotional attachment.

In conclusion, although the formulation of an effective customer retention strategy requires effort, it will produce a lot of time and money in the long run for your business. When in doubt, remember the wealth of information available from current customers. I guarantee that keeping a longtime loyal customer happy is far more worthwhile than acquiring one – so get ready, get set, retain!

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