Depending on who you ask, retaining customers is either valuable — or really, really valuable.
By some estimates, a repeat customer is the equivalent of striking gold. One study found that increasing customer retention rates by 5% increased a business’s profits by 25% to 95%. On the other hand, the cost of acquiring a new customer can be steep: anywhere from five to 25 times more expensive than the cost of retaining an existing one.
Cut down on expenses and increase your profit, all in one marketing strategy. Customer retention doesn’t have to be complicated, especially when your business is well established. Focus less on reaching new customers, and more on increasing the frequency and spend amount of the customers you already have. Here are five ways to increase customer retention and start growing your revenue to new heights.
There are two benefits to digging into your retention rates to see where you’re losing customers. The first, obviously, is you begin to identify areas where your customer experience can begin to improve. Are people frustrated trying to navigate your online ordering process? Is your customer service failing to resolve their issue? Do they feel disconnected from your brand after being loyal customers for so many years? When a customer closes their account or decides to stop frequenting your business, send them an email to find out why. If sending a personal email feels uncomfortable, send them a survey. You can also start to pay attention to your online reviews — and follow up directly to learn more about your customer feedback. When customer experience is the root of the problem, a better time tracker can make employees more aware of their tasks and ultimately provide better service.
The second benefit? By asking these questions, you begin to build a personal relationship with your customers. Not many companies take the time to connect directly with their clients. Even if you may not convince someone to return to your business, you will start to build a reputation as someone who cares.
Customers — especially millennials — want the brands they shop from to be more “authentic.” What does that mean? They want transparency, great customer service, and a personal touch. Again, customers want to see that there’s a human person behind the businesses they frequent. Look to Everlane’s “Radical Transparency” or Harry’s Shave Club for inspiration on how to make transparency work for you.
To be more authentic, you need to be committed to being honest, open, and personal. If a customer doesn’t trust you, they will find a company they can trust. Look for ways to recognize your customer as an individual with personal touches: hand-written notes, small gifts and remembering birthdays are all details that can go a long way. Even when you mess up — and every company messes up at some point — be sincere about what went wrong and open about your process to fix the problem.
It’s easier for customers to switch companies if they do not perceive any differentiated value between your company and your competitors. One way to create value in your brand? Include customers in a larger social mission. Research shows that customers are likely to ignore brands that don’t “stand for anything.” Of customers who cited they had a strong relationship with a brand, 64% reported their “shared values” as the primary driver behind that relationship.
Start by identifying who your best customers are. If you’re a local business, think about what issues in the community you can support: the local animal shelter, for example, or donating to a food drive. If your company is bigger, dive into your data to get a clear picture of your customers’ goals, pain points, and desires. Then, craft a mission statement that mirrors their language and goals.
Getting your customers to set up an online account can be a tricky proposition. Some customers may not want that level of commitment: they may be wary of sharing their personal data with a business. But, customer accounts make repurchasing much easier (and pre-filled shipping information can be enough incentive for a customer to sign up!).
One tactic you may take to lead customers to create accounts? Provide the option to “create account” after the first order has been placed. This does not disrupt the checkout flow or distract someone from finishing their final purchase. At the same time, once someone has an account, it becomes much easier to retain their business. Some platforms will even allow your business to send email invitations to activate their account after the purchase is complete. If your business runs on a membership model, make sure you have a membership management software to manage members, payments, events, and more.
Everyone loves free stuff! It turns out loyalty can be bought: and surprising your loyal customers with great perks can lead to much higher lifetime value. Discounts and free rewards are the obvious extras you can offer your best customers.
Don’t be afraid to get a little more creative. If you’re running a B2B company, reward your customers by returning the favor (customer loyalty programs, anyone?) — and using their products or services when you can. Use your social media channels to do a little cross-promotion, or let a customer take over your account for the day. Some companies will tie their rewards back to their mission — REI’s Co-Op Dividend and American Express’ Small Business Saturday are a great examples of this. Show your customers you appreciate them, and they will return the favor!
Originally posted in ClickTime.