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Acquiring new customers has always been a tough and expensive task for any business. The main reason is- it is really hard to change human behavior. Even if you manage to get a new customer on board, research shows that the probability of selling to an existing customer is 60-70%, while the probability of selling to a new prospect is only 5-20%.
So it’s quite clear that businesses need to focus more on customer retention rather than acquisition.
There are various ways in which businesses can improve their customer retention rates. In this article, we will be discussing 10 such customer retention strategies that your business can benefit from.
What is Customer Retention?
Customer retention refers to the activities and strategies businesses use to keep their customers loyal and engaged. It is a process of creating long-term relationships with your customer base so that they continue doing business with you.
Why Is Customer Retention Important for Your Business?
Before implementing and trying out various customer retention strategies, it is important to understand why it is so important for businesses.
Repeat Customers Spend More
There is no denying the fact that it costs more to attract new customers than retain existing ones. But what’s even more interesting is that loyal and happy customers tend to spend more with your business over time. They not only make repeat purchases but also spend more per transaction.
Many businesses find it difficult to launch a new product because new customers may not be aware of the brand or may not trust it enough to make a purchase. But this problem can be easily solved if you have a loyal customer base. A study shows that existing customers are 50% more likely to try new products and spend 31% more money than new customers.
Reduces the Cost of Customer Acquisition
As discussed in the introduction, acquiring new customers is tough and expensive. But if you manage to retain your existing customer base, they will continue doing business with you, and you won’t have to spend as much on customer acquisition.
Creates Brand Ambassadors and Advocates
When businesses focus on customer retention, they create happy and loyal customers who become their brand ambassadors. These customers not only continue doing business with you but also promote your brand to their social circle. This word-of-mouth marketing is the best form of marketing as it is more authentic and trustworthy.
Improves Customer Lifetime Value
CLV or customer lifetime value is the total amount of money a customer is expected to spend with your business during their lifetime. When businesses focus on customer retention, they improve their CLV as happy customers tend to stick around for a longer period and also spend more with your business.
Builds a Community
The power of community should not be underestimated. A community of loyal and happy customers can do wonders for your business. When customers feel like they are a part of your community, they are more likely to stick around and do business with you.
When your customer is in trouble, they will look up to your business for help and guidance. This builds trust and loyalty among customers, which is essential for long-term relationships.
When you have long-term relationships with your customers, you have more data to work with. This data can be used to improve customer retention and sales strategies. You can segment your customers, understand their needs and wants, and target them more effectively.
10 Customer Retention Strategies From EXPERTS
Who wants to lose a customer or decrease the customer retention rate? If you’re like most business owners, the answer is a resounding NO!
Unfortunately, even the best businesses experience customer churn. The key to mitigating the effects of customer churn is to have an effective customer retention strategy in place.
Here are 10 customer retention strategies that could help your business in unpredictable times:
Implement a Loyalty Program
As we know, acquiring a new customer is much more expensive than retaining an existing one. This is where a loyalty program comes into play. We must differentiate between retaining customers and new customers because they are two different things.
A loyalty program is a system that encourages customers that have already been acquired to maintain their relationship with your company.
There are many different types of loyalty programs, but the most common is a point system. Under a point system, customers receive a certain number of points for every purchase they make. These points can then be redeemed for coupons, discounts, or even free products.
The key to an effective customer loyalty program is to make it simple and easy for customers to understand. In other words, don’t make them work too hard to get the rewards they want.
Offer Free Shipping on Orders over a Certain Amount
Who doesn’t love free shipping? Offering free shipping is a great way to encourage customers to spend more with your business.
In fact, according to a study of American consumers over the age of 18, high shipping fees are the most common reason for online sales cart abandonment.
Furthermore, the study found that free shipping is the number one factor that would encourage customers to shop more frequently with a particular online retailer.
So, if you want to increase customer retention and encourage customers to spend more with your business, offer free shipping on orders over a certain amount.
We won’t encourage you to lose money on shipping. But, if you can find a way to incorporate free shipping into your business model without taking a hit to your bottom line, it could be a great retention strategy.
Send Out Birthday and Anniversary Cards/Emails
If you have a decent amount of repeat customers, now they are like your family. You should celebrate their special days with them!
Sending out birthday and anniversary cards or emails is a great way to show your customers that you care about them and that you are thinking of them on their special day.
It’s not that hard to do; you just need to have their birthdate or anniversary date on file. Then, set up a system (automated) to send out the cards or emails on the appropriate day.
We’d recommend you attach a high discount coupon for a certain time frame to use on their next purchase, so they are encouraged to use it before it expires. Mostly it should relate to their special day, like “Happy Birthday! Here’s a 20% coupon to use on your next order!”
Run Contests and Giveaways
Everybody loves a good contest or giveaway. They are fun, they create excitement, and they give people a chance to win something for free. Contests and giveaways are also a great way to increase customer retention and generate repeat business.
The best part about running a contest or giveaway is that they can be done relatively cheaply and easily. All you need is a prize (it doesn’t have to be expensive) and a way to promote the contest or giveaway (social media is a great way).
If you run a contest or giveaway, be sure to promote it heavily and make it easy for people to enter. The easier you make it, the more likely people are to participate.
Provide Customer Service That Goes Above and Beyond
While providing excellent customer service should be a no-brainer, it’s still worth mentioning.
In today’s day and age, customers have a lot of choices when it comes to where they do business. Because of this, they have come to expect a certain level of customer service.
If you want to retain customers and keep them coming back, you need to provide customer service above and beyond customer expectations.
How do you do this?
By always putting the customer first, being helpful and friendly, and going the extra mile to solve their problems.
Stay in Touch with Customers after They Make a Purchase
Just because a customer has made a purchase doesn’t mean your job is done. In fact, it’s just beginning.
The post-purchase period is a critical time for building customer relationships and retention. This is when you need to stay in touch with your customers and make sure they are happy with their purchases.
There are a few different ways you can stay in touch with customers after they make a purchase.
You can send them follow-up emails, give them a call, or even send them a handwritten thank-you note.
No matter how you do it, just make sure you stay in touch and make sure they are happy with their purchase.
Be Active in Your Community
Many of us think that customer retention only happens online. But that’s not the case.
You can also build customer relationships and encourage repeat business by being active in your community and this way you can collect customer feedback that could be so real and you can use it to improve shorfalls.
This could include things like sponsoring local events, participating in charity work, or even just being involved in the local Chamber of Commerce.
By being active in your community, you’ll not only build goodwill, but you’ll also get your name and your business in front of potential customers.
And that could lead to more repeat business down the road.
In today’s age, customers are bombarded with marketing messages from all sides. And because of that, they have become immune to many of the marketing tactics that businesses use.
One way to stand out from the crowd and build customer relationships is to be personal.
What does that mean?
It means going above and beyond to make a personal connection with your customers. It could be as simple as remembering their names or asking about their families.
Whatever you do, just make sure it comes from a place of genuine interest and not just because you’re trying to sell them something.
As we’ve seen, customer retention is essential for any business looking to succeed in the long term. By implementing even just a few of the strategies we’ve discussed, you can make a big impact on your retention rates and increase customer satisfaction.
Of course, the most important thing is always to keep your customers’ needs and wants in mind. You’ll be able to create a retention strategy that works best for your business – and your customers.
Do you have any other customer success & retention strategies that have worked well for your business? We’d love to hear about them in the comments below!
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