Customer Retention is defined as the ability of a company or an organization to retain its earlier customer. Customer Retention is a collection of activities and actions that every companies or organization take to encourage and engage their customers to use their services for a while. Customer Retention means you’ve already converted the lead into a customer for at least once and trying to build a long-lasting relationship with him/her.
Different Levels of Customer Retention
1. Just Starting [Gaining interest for purchase]
2. Gaining Grip [1-5 sales a week]
3. Consistent [Minimum one sale a day]
4. Established [Utmost ten sales a day]
5. Well- Established [At least ten sales a day]
Customer Retention Rate is huge for any business as it allocates the percentage of customers you keep engaged in your company over a period of time. It is important for every marketer to know their respective customer retention rate as it helps to understand how their company is performing. The mathematical formula of the customer retention rate is:
Customer Retention Rate = ((E-N)/S)*100
E = Number of customers at the end of a period
N = Number of new customers acquired during that period
S = Number of customers at the start of that period
For example, if any company has 20 customers at the beginning of the year and they gain five new customers with only one customer churn, then their customer retention rate would be 95%.
Retention Rate is the complements attrition rate. It represents the percentage of customers you lost over a period of time.
Nowadays, companies are lacking loyal customers since they have failed miserably to continue their good relationship with their customers. Every brand needs new customers but retaining old customers is even more important. Customer retention guarantees less number of customer desertions. The higher you retain your customers’, the more profitable your brand value will be.
Benefits of Retaining Customer
1. Customer Retention increases brand revenue
2. It lowers customer churn
3. Engaged customers are more profitable
4. Improve brand reputation
5. Loyal customers are more lenient
6. Retaining customer is faster and cheaper than customer acquisition.
7. Retained customers will provide valuable feedback
8. Retaining old customers requires less money than acquiring new customers
9. Customer Retention help you to find out weaker spots in your business plan
10. Dedicated Customers are the best source of new customers
People remember more of what they have experienced and less of what they have bought. It is important to optimize and update your customer retention strategies in order to stay relevant and keep your customers satisfied. Below are some customer retention strategies that every marketer should follow:
1. Set your Goals and Expectations in Advance
If you want to succeed and thrive well in the market, you need to set your goals and expectations. A study has reported that setting specific goals increases motivation than simply telling. Make sure to set your quarterly sales goals in advance.
2. Communicate and Engage with your Customers
Try comprehending your customer’s problem by keeping in touch with them. Be ardent and engaged with your customers and respond to their needs. Communicating with your customers effective can help you gain loyalty whereas failure in this field can create dissatisfaction, disturbance, and a decrease in sales. Create long-lasting relationships with your customers and that will eventually lead to repeated purchases, positive word-of-mouth, and referrals.
3. Notice Customer Churning
One of the best ways to retain your customer is to thwart them from leaving. Create a list of all customers who haven’t purchased anything from you for a while. Try analyzing their problems early and prevent them before they churn.
4. Develop a customer loyalty program
To engage more customers to your website through loyalty program follow these steps –
● Know your existing customers
● Launch a loyalty program
● Set your goals for the program
● Also, set the program budget
● Target specific customer
● Encourage client loyalty
5. Reward your best customer (s)
Another way to retain your customers is to reward them. Use CRM software tools to know every customer’s purchase history and identify the most profitable customer. Reward them by offering some handy discounts or some additional voucher discounts.
6. Ask for feedback from customers
Feedback surveys are one of the most important tools for customer retention. Listen from the customers helps you to know how they actually feel about your brand and its products. Through feedback you can re-encourage your customers, so be patient and pay attention to them.
Other customer retention strategies include:
● Reduce frictions
● Change your retention rates often
● Don’t over-promise
● Focus on short term loss and long term gain
● Be honest with your customers
Customer Retention means building a long-term relationship between an established company and your customers. Learn as much as you can about your clients like what are the things that are important to them and use your professionalism when dealing with them. Every company should have its strategies for improving customer retention problems. Here are some tips to improve customer retention –
● Build credibility and trustworthiness
● Always stay in contact
● Use social media platforms like LinkedIn, Twitter, and Facebook to communicate with your customers.
● Don’t push or force anyone to buy anything from you
● Try to observe your client’s pain and problem
Your marketing team should be able to express to your clients the advantages of your product and services.
It is important to bring on new customers but it is also important to bring back your customers who you lost because of their inactiveness. Customer retention is key for every business as it gives results in long-term. Businesses with strong customer retention strategies and pro-active services position your business to the top. It helps to increase lead, sale, and customer. Lastly, Customer retention helps to grow as a brand.