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11. May 2019
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Investor Relations – what is it and why it is key to customer relations
14. June 2019
 
Customer retention is what businesses thrive on, it is devising marketing in such a way that you are able to retain as many customers as possible, decreasing the customer acquisition cost CAC over time, increasing ROI and customer lifetime value.
That is where customer relationships are similar to relationships in normal life. The start is with recognizing who is the right customer, building and strengthening the relationship to avoid attrition.

Strong companies have numerous tips and tricks and strategies up their sleeves for retaining as many customers, as possible. If you thought customer acquisition was difficult, customer retention is even more difficult. It requires having clear marketing goals, planning, data collection, and analysis. For boosting revenues, it is important that your customers keep coming back to you and become your lifetime buyers.

Customer retention meaning is retaining your customers and having loyal customers for as long as possible, and to be able to achieve that you must have clear marketing targets, impeccable customer service, and listening to the needs of your customers is very important. If you want to be spending less money on customer retention, you have to listen to them, assess answers from clients, conduct surveys and polls, analyze data and improve your services. No company is a one-off, selling one product at a time and then gone, to keep your customers coming back to you, when there are so many options available, you must deliver the best, and not compromise on quality.
 

Why customer retention is important for any business

As the focus has now shifted more to the success of the business, we would like to delve into why customer retention is so important, especially for online businesses. We are often asked by marketing executives of different kinds of company, what is the best customer retention strategy for an online company; the number one strategy would be to set a target of how many customers you want in a particular time frame. Once you set a goal, you’d keep working towards it, one step at a time.
Along with having a marketing team, you should have a customer retention team, why? Because, they will work on those strategies one by one, and will focus entirely on this goal of keeping the customers.

Online businesses always seek different ways and strategies to be able to retain customers, as long-term customers mean, more revenue. If you are unable to keep any customers for longer that means there is something wrong with your services or your product is flawed, this will also help you improve your product with the help of the feedback gathered from dissatisfied customers. The number of repeat customers is crucial for any online business, more customers also mean more reviews for your business, and happier customers refer their friends and family, and colleagues, too.

Companies now spend so much time and energy on gaining repeat customers, customer retention and satisfaction defines the success of a business. Facebook now has 2.7 Billion active monthly users, and its revenue has boosted even 30percent in the last 3 months of 2018, it has a huge number of loyal, dedicated users, who aren’t going anywhere in the next years.

Facebook and Snapchat are few of the examples of successful online businesses, despite having several data breaches in 2018, Facebook was able to retain its market share and gain even more. This is because the ability to connect with family and friends and easily searching events and places to go nearby, is important to common people, every time you want to visit someplace, Facebook reviews are taken, very seriously.

Snapchat was a unique interface model, targeting the younger lot globally, it thrived on the techniques that other social media platforms weren’t doing at the time. In 2018, the app has 186 million daily active users. Instagram is another success story, and marketing on Instagram and Snapchat for any company is very important. These businesses have retained customers due to very strong and clever marketing objectives and customer retention strategy.


What are the best customer retention strategies?

If your company is slightly gaining traction and you are having sporadic sales, and not as much sales as you would have liked, you need to implement some customer retention tactics and strategies and come up with new and improved strategies. One of the ways to go about is to engage with your existing customers, by engaging we don’t mean you need to make cold-calls, by engaging we mean, you need to conduct surveys or polls, or send targeted emails to your customers, and inform them of new services, improvements, features, promotions and sales.

Whatever company you are in, you need to be spending less on customer retention as compared to customer acquisition. You are 50 percent more likely to gain profit from an existing customer than trying to woo a new customer. When you focus hard on existing customers, you are focusing on creating brand ambassadors, happy customers will bring in more customers for your brand. Using a customer retention calculator or formula, you can analyze how many existing customers have made a purchase in the given time frame. Below are a few strategies we swear by for customer retention.
 
 
  1. Understand "why" a customer became your customer
  2. Set the highest standards for customer service
  3. It is about a relationship, so you need to constantly nurture it
  4. With every possible touchpoint, apply personalization
  5. Define, check and validate the customer expectations
  6. Value is something that needs to be delivered proactively from your side
  7. Improve your solutions and processes with the pulses from your customers


Being consistent with your customer retention goals

Once you have a clear goal of retaining customers, you can start to apply your strategy for customer retention, and be consistent with it. Whether it is sending targeted marketing email newsletters, promotions, sales, or any improvement in your services, you have to implement it and be consistent with it. When you see your customers as cherished guests, your business allies and partners, and ambassadors, you are likely to invest more into what goes into customer retention. Did you know a 5% increase in customer retention in marketing increases profits by 75 percent, and that’s true for many businesses?

Learn how your customers feel about your brand

As we have been emphasizing, being considerate and invoking an emotional connection with your customers is so important, if they don’t feel cherished and valued by your company, they will leave you sooner than later. It’s not only about lowering the price but how they feel about the product, does it bring any value, how is it solving their problems, how likable is the customer service, are few of the metrics you need to observe and calculate. Efficient customer service is a great tool to measure customer’s feedback. Customers like to search reviews online, so emphasize on the reviews customers leave for you.

Customer experience is everything

While value and quality of the product will always matter, it’s the role of the customer service that determines, whether you will have life-long customers, or not. We have previously mentioned in a blog that a trend in recent years show that consumers would even buy a rather expensive product if the customer service and experience is outclassing. By 2020, customer experience will be everything, and it is based on the current metrics that show 86% of buyers will always go back to a brand that offers a better customer experience. Nobody cares how beautiful your website is, and how amazing your product is if the customer experience is bad - nobody is returning!


Typical customer retention mistakes

When activating your retention programs to drive growth with your company, you should be aware of and avoid the following mistakes:

  • You don't know that the customers struggle with some product or service elements
  • You don't care if the customers need support with solving problems or struggles
  • You are only reacting and not acting proactively
  • You are (almost) never available for your customers' needs


KPI to measure customer retention

With setting up retention strategies, there is more than the retention rate as performance indicators. Check your customer with these KPI:

  • Customer retention rate: It shows the percentage of customers your company has retained over a given time period. Retention rate is the reverse side of the churn rate, which shows the percentage of customers your company has lost over a specific period.
  • Customer Lifetime Value: It is a prediction of the net profit attributed to the entire relationship with your customer.
  • Net Promoter Score: It shows the loyalty of your customer relationships on a scale from -100 to +100.
  • Repeat Customer Rate: It shows the purchases from repeat customers divided by all purchases from your business for a given date range.


Creating a better customer experience and increasing retention

Now it is clear that customer experience has to be the number 1 priority for customer retention, to be able to increase customer retention rate, have dedicated and passionate employees, who are willing to provide exceptional customer services. Companies like Uber provide exceptional customer service, it's business model has thrived on customer retention and due to great experiences, marketing through the word of mouth. People do connect and remember when they receive exceptional customer service, likewise, people never forget a horrible customer service experience. Responding to customer feedback is very important, replying positively even to negative answers matters, a lot.

Enhancing customer experience also involves the effort people have to put in while making a purchase, if your company has a complicated website or order placing system, consumers would be easily annoyed. Customers should be able to register their issues easily, if they are going from one representative to others, they would clearly be frustrated. Our stats show that 89 percent of customers don’t like waiting longer for the registration of their complaints.
The ease of placing orders, the ease of registering reactions of customer loyalty all should be taken into account. Have a look, how simple and easy it is to place an order on Amazon.


Monitoring and calculating customer satisfaction and retention

Now you have mastered the game of customer satisfaction, you need to monitor it and measure it, remember there are no hard and fast rules to follow, every company is different, but most businesses are customer-centric, especially B2C. By 2020, more and more businesses are shifting to artificial intelligence technology for customer service and retention, the best part of having AI technology is supplying a customer service 24/7 that doesn’t rely on current “mood” of the customer service provider. It will have answers to all their questions, while still maintaining a human touch.

The younger generation and the millennials give customer experience the highest priority; 72% say making a call to a customer rep rarely solves their issues. Calculating repeat customers, purchase frequency, the value of the orders, over a given period of time lets you calculate customer retention and satisfaction.

Get your customer retention running

As retention of customers is currently a much easier and cheaper way than acquiring new customers, you should master it to grow and make your company future able. Do you want support with your customer retention? Get in touch with us.

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André Wehr
André Wehr
As a founder and entrepreneur, I experience every day how important Traction and Customer Centricity is. It makes the difference between a nice idea and a viable business.

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