The basic definition of customer retention is very straightforward. It simply refers to the company’s capacity to retain its customers, not to change their service providers. In this case, less is more. But making it work in reality requires some serious brain crunching.
Customer retention is the goal of every company. It is the one factor that makes you keep upgrading your product quality to ensure that a competitor doesn’t poach your customers. It is also a good indicator of your customer relations quality.
If your retention rate is high, you can be assured that you are tapping the right keys. But this requires some serious planning and brainstorming from your end.
Making a sale is far easier when compared to retaining that customer in the long run. No company can afford to just stop with a good sales rate in today’s highly digital market. This will translate into nothing if the customer you gained this month will pay your competitor next month.
As revenue generation is mostly always linked to making new sales, companies often forget the importance of retaining the clients they have gained. Losing existing customers will be a bigger loss to any company than not gaining new ones.
With the plethora of choices available today, customers have a wide variety of options and companies to choose from. They are truly spoilt for choice. Getting their attention for the first time is a task by itself. And retaining them even for the next six months will be even harder.
This is precisely why most companies invest without a second thought in customer retention strategies. It is as important as lead generation or digital marketing.
Now, let’s take a closer look at the methods which results in high customer retention rates:
Make it clear to your employees and yourself the ultimate goal everyone will be working towards. Under this topic, setting goals means finding out your current customer retention rate. This involves a simple calculation done using the current, new, and initial number of customers.
Once you have this figure, it will be much clearer on how to increase it. But be very careful while setting a future target. Companies usually get carried away and set lofty, unachievable targets.
For example, if your current rate is 20 percent, setting a goal of 60 percent is neither practical nor reasonable.
Instead, try setting smaller targets to be achieved in shorter periods. Try reaching 30 percent in two months instead of 50 percent in a year.
You can also set this goal based on your customer and product type and size of your customer base. If your products are grocery items or personal care products, people will come back to you every month even if you don’t strategize much to retain them.
In this case, you can afford to have higher target rates. But if you are selling non-essential or luxury products, you need to fix logical targets.
This age-old dilemma confronts us all the time—old Vs. New customers. But time and again, multiple surveys and studies have shown us that existing customers always win this fight. It is always much cheaper and easier to retain an existing client than securing a new one. This doesn’t change with time, and it is advised that all companies swear by this rule for their benefits.
According to the Harvard Business Review, acquiring a new customer can be 5 to 25 times more expensive. As per recent studies, profits rise by 25-50 percent with a five percent increase in customer retention rate. Also, there is a 50 percent higher chance that your loyal customers will try a new product. Also, they are 31 percent more likely to spend more in general.
It is also easier to pitch and sell new products to old clientele than selling them to new customers. Existing customers are still doing business with you because they trust your company and product. But this is not the case with potential clients. They need to be convinced, and even then, there is a good chance that they won’t take the bait. Studies have shown that the success rate is 60-70 percent while selling to old customers while it is only 10-20 percent with new ones.
Companies that mean business indulge in smart work rather than only hard work. Creating a separate customer retention team is one such move.
Though this means hiring more manpower and spending more on salaries, it is beneficial in multiple ways in the longer run. Several studies have found that 68 percent of sales come from existing clients rather than new leads.
Such a team of experts can easily ideate new strategies and techniques to increase the retention rate. As one team will be held responsible, it will be easier for company owners to focus on improvement areas.
This team can, in turn, communicate and coordinate with the sales, customer service, and marketing teams. Instead of employing just one or two methods to increase this rate, a company can implement several through this exclusive team. These could be programs focusing on customer education, corporate social responsibility, customer loyalty, and more.
You could invite this team to specific sales and marketing meetings to generate better functioning and results. They will get to know about existing VIP customers and potentially loyal customers through the sales department.
The digital marketing team can share information on the company’s performance on different social media platforms. And in turn, the retention team can communicate to clients on these platforms accordingly.
For any relationship to continue, listening is key. And this applies to ecommerce businesses as well. If you want your new leads to transform into loyal clientele, listen and listen some more.
Paying close attention to customer feedback is advantageous for both parties, the customer and the company. They will feel that their opinions are valued, and two, you will gain significant insight into their thoughts.
According to a survey by Oracle, 89% of customers shift to a competing brand after having a bad experience with the previous company. American Express found 33% of customers considered switching companies after just one incident of poor customer service.
Without rectifying problems indicated by customers, any company will struggle to make progress. And this is irrespective of the quality of your product.
Most of the time, customers are upfront about what they expect from their service provider. This could be anything from quicker delivery, better customer service, or even a product suggestion.
Also, be as quick as possible to respond to queries or problems. Even if you offer a favorable solution, but you tell them this a week later, you will get a poor rating soon enough. With umpteen advancements in technology, it is no longer acceptable for companies to make delayed responses.
If you are struggling in this area, try adopting CRM solutions offered by Slack, HubSpot, or the likes. With an efficient ticketing system in place, it will quickly notify you of any customer problems.
Incentivizing customer loyalty is an effective technique to improve customer relations. It stops being a mere transaction of money and goods. Instead, a bond based on trust is created.
There are several ways to do this. Even small gestures go a long way. Always keep a list of your loyal customers and remind them often why you love having them on board.
One way of doing this is to install a customer loyalty program. This is a basic point system that rewards discounts and coupons to customers on making more and more purchases. This is an old-school method but vouched for and followed by many companies to date.
Many studies have also shown that referrals by existing customers are a major revenue boost. Keeping loyal customers pampered and happy is one way to ensure this.
Ways to reward customers:
Younger companies with a stronghold on their social media accounts have come out with innovative and fresh methods. The surprise method is one such technique. Such companies send simple but thoughtful gifts like hand-written cards and other personalized items to surprise their clients.
A USA-based pet company called chewy sent a customer a painting of their dog along with a thank you note. Other companies respond to their customers’ tweets and posts on social media platforms with quirky messages.
Ease. Easy. Simple. This is pretty much everyone’s life mantra. And it is very important to follow these, especially if you own an ecommerce website.
Nobody likes to stare at a webpage that takes 10 minutes to load. Nobody will wait for a month to get a product delivered. And no one is certainly going to take a look at your website if it’s not user-friendly. In the end, you will end up losing a customer.
Your website should be like a good salesman. It must convince the customer to stay on it and make a purchase. Just like how a salesman needs to have good communication skills, your website must have a smooth interface. To ensure this, invest in website development and Ecommerce Search Engine Optimization.
Customers opt for online shopping in the first place as it is an easier and quicker process.
One fail-safe way to retain clients is to offer much delivery and return options. There are myriad types of shoppers out there. Make sure you have a unique shipping option available for each one of them.
Flat-free shipping, calculated shipping, and local pick-up are the most common options put into use by companies. Another method is to have multiple billing options.
Social media marketing plays a key role in customer retention. And this is a must-do, especially if your customers are from Generation Z or are millennials. By having a strong social media presence, you will communicate with your clients in real-time.
Find out which platform they are the most active on (you can do this through email surveys). And focus on getting their attention there. You can amp up your online advertising on particular platforms based on this pattern.
Make-up and personal care giants like L’Oréal, Nykaa, and Maybelline have completely shifted their marketing focus to Instagram. They share short videos, series of posts, interviews with celebrities on Instagram as most of their buyers spend their time here.
Ecommerce stalwarts like Amazon, Google, and Slack now use Twitter to inform their customers about any technical snag.
Moreover, you can find out what people are saying about your brand on social networking sites. You can respond to their tweets, create hashtags, run ad campaigns, and more. The engagement rate with customers is very high if your company invests in a good social media strategy.
Only if a company knows how a customer started using their services will they attract more such crowds. It’s the company’s responsibility to ensure that the customer’s journey ends up with your company as the destination.
Most companies think that their job is done after creating a decent website. This is not so. Mapping a customer’s journey is imperative to a successful business. Even more so for ecommerce companies as there are so many distractions that could derail your customer’s attention on the way.
First, understand your customers. But for this, you need a ton of data and demographics. Google Analytics is one simple software that helps you with information about their age, gender, income range, etc. Next, look at psychographics.
This tells you the reason behind their choices and helps in establishing a purchase pattern.
Based on this, you can personalize their shopping experience and send blogs, articles through emails. The info needs to map customer journey:
Now you will be able to find the troubleshooting areas and fix them soon. The analytics will show on which part of your website people stay on and for how long. You can map personalized charts for your VIP and most influential customers. These will generate more organic sales too.
Effective communication is the most powerful tool ecommerce businesses can use to increase customer retention. Always stay connected.
Make sure your brand name is always lingering in the customer’s mind. Especially when it comes to upselling and cross-selling, establishing a clear line of communication is key.
There are several methods to execute this. Based on your company’s size and the target audience, you can decide this. Setting up a two-way communication channel helps in a variety of things. This includes collecting feedback, sending personalized blogs, informing them about new products, getting referrals, and more.
Email marketing and maintaining a communication calendar are the two most popular methods to do this.
Through the first step, you can send emails welcoming new clients to reconnecting with old ones. It’s a commonly used method due to its effectiveness. But bombarding customers with numerous emails a week will make this whole process futile.
Instead, your email about new offers, sales, and discounts. Things that will hook them on. If executed with a balance, email marketing will help you keep in constant touch with your clients.
Creating a communication calendar is a slightly newer approach in comparison. This is essentially a chart that keeps track of all communication you have had with all your clients.
This way, you can remind clients to renew their subscriptions, inform them about discounts on specific items based on their purchase patterns, and remind them to touch base again if it’s been a while since their last interaction.
You can strengthen a customer-company bond to a great extent by personalizing your communication with them.
No customer wants to be treated like a stranger, especially those who have been doing business with you for years. And with today’s technology, company’s know exactly what their customers like and dislike. Play this to your advantage. This is a great way to attract and retain customers.
Most ecommerce businesses have a detailed database of their customers’ purchase history. Some might buy only electronic products or only sports items. Once you find a pattern, you can email them subject-specific blogs, articles, and offers on similar products.
Most retail websites like Amazon and Walmart recommend other products based on your most recent purchase. If you buy bed sheets for your room, Amazon will suggest accessories and appliances for the same.
Moreover, this is a great method to upsell and cross-sell products too. Through personalized communication, you can urge customers to buy closely related products to their previous purchase or spend more money on the same product.
For example, if a client clicks on a specific laptop, you can either suggest a more expensive laptop with better benefits or recommend a scanner or printer to be bought along with this.
If you want your business to have a future and become a notable competitor in the market, sell value along with the product.
Convey the company’s motto and ideals to the customers to build trust. Gaining their trust is a long, detailed process, but it is rewarding in the long run.
You must make customers view your company or product as the solution to their problem at hand. This is when you stop being a mere service provider and become a part of their routine.
A customer’s perception of any company is not just limited to its products or discounts. It’s the entire brand. This includes the company’s stance on social issues, how it treats its employees, the kind of social ad campaigns it runs, and more.
Corporate Social Responsibility is one such method to achieve this. This is a great way to showcase your core moral values and get involved in the customers’ communities. This shows that you care beyond sales and money.
According to Nielsen’s (USA-based marketing research firm) global CSR report, 66 percent of respondents said they are willing to pay more to companies whose values align with theirs.
Harper Wilde, a company that sells bras, has a CSR project towards women's upliftment, and 75 percent of its workforce comprises women. This connects the product to the customer and boosts their social responsibility brand. Click here to read more about such examples.
Artificial Intelligence has crept into most of the crevices of website development. There are computers to replicate a human’s work. This is exactly why it has become increasingly important to play up the human factor.
Companies are founded, led, and run by humans. And we need to convey this more often than we think.
One way to do this is to keep interacting with your clients in real-time. Conducting live webinars is one such way.
Customers tend to engage and respond better when they directly deal with humans/employees. And with the ongoing Covid-19 pandemic, online seminars have become a new key tool of customer retention.
According to a survey by Buildfire, an app creator, 30-40 percent of webinar attendees turn into viable leads. As per the 2015 content marketing trends, webinars boosted brand awareness by 84 percent, engagement by 81 percent, and customer retention by 69 percent.
Blog posts, articles, ebooks, and other written content limits human interaction. There are only so many words that can convince and convey. In webinars, customers see a representative of a company helping them by allocating individual time for them. This is a good exercise to build trust as well.
The second method is to educate customers. You can do this by investing in a customer education program. This teaches clients about your services, workflow, and products.
To simply put it, it acts as a guide. Book. This enables customers to find solutions for themselves. This is an option for people who don’t like interacting with the customer services of a company.
Word of mouth or referral is two aspects of marketing that can make or break any enterprise. Though it plays a key role in boosting brand image and revenue, many companies often ignore it.
Several studies have shown that existing customers' referrals generate more sales than even paid advertising and marketing.
Here is how you can capitalize on this factor. The customer is the king. But a loyal, existing customer is your knight. They are responsible for spreading a good or bad image about your company. If a sales executive messes up one sale, this means losing one customer. But the spread of negative feedback from an existing customer means you will be losing at least 10 potential leads. This is an area which needs to be tread very carefully. This is why dissatisfied customers should be tended to immediately.
According to a Forbes article, 78 percent of new leads in B2B companies are created by referrals. It is also advised for salespersons to ask a new customer for referrals as soon as they make a purchase. They are still excited by the product and are more likely to give friends and family positive feedback. If you wait for too long, the customer might have forgotten about the whole experience by then.
One way to do this is to play up the success stories of your happy clients. Share their experience and testimonies on your social media page, website and newsletters. This is another way to include a human element in your business as well.
Creating a customer advisory board is another useful method to achieve this. As customers know best what works and what doesn’t work for them, this is a fail-safe method. A group of customers will advise you on improvements, requirements, and more.
This is a good tool to have a healthy hold on your customers. But this comes with its own set of risks. Overall, this is a feature that a company should consider during the website development stage itself.
For existing customers, this might be a doable step. But for new customers who are just browsing through your website, this might seem like a big commitment. Business insiders suggest a loophole to overcome this difficulty.
Give them the option to create an account after the first purchase. This way, there are fewer obstacles in front of them while making a purchase, and they will come back to buy more.
Through the communications calendar, the company can also remind first-time buyers to register and open an account.
It is human to err. But not all humans apologize for erring. Something as simple as following basic courtesy will make sizable impressions on your customers.
Client complaints are big assets to any company as this gives room for a learning curve. So, when you receive a complaint, don’t forget to apologize and act quickly on it. This way, the customer feels like their problems were heard. And don’t worry, politeness never goes unrewarded under any circumstance.
Make it a point to send out thank you emails to customers who have given positive referrals. Similarly, send emails apologizing for any inconvenience caused by the company. Make sure to loop these into your communication calendar so that this becomes a well-oiled machine and not a one-time activity.
For VIP customers, you could even go a step beyond. You can opt to send gift cards or special discount coupons on their anniversary or birthday. This will be an insignificant expenditure when compared to the trust you will be building through this act.
For example, Zappos, an online clothing store, keeps track of gifts, cards, and other times sent to their customers every month. And are encouraged to keep this at a significant number for better brand imaging and customer retention rate.
Are you looking to increase your customer retention rate for your business? Get in touch with us to have a free consultation with our experts.
Anahi Farley has more than nine years of expertise in the copywriting industry. She loves to blog about ecommerce, SEO, and conversion optimization. By writing quality content, she is helping many ecommerce businesses to increase their traffic and revenue.
He has spent more than 12 Years in strategising and executing SEO campaigns. He is interested to writing Digital-marketing, PPC and Social Media Marketing related topics.