Where can you find the easiest group of customers to sell to? It’s nothing to do with targeting new demographics or making use of the latest social media channels. Just take a look at your customer database and you’ve got a vast list of contacts who know you, have purchased from you before, and who are probably all fans.
What is customer retention? A cost saver
There’s a classic saying in business that the thing better than acquiring a new customer isn’t acquiring two, it’s retaining an existing customer. This is a drastic change from traditional business mentality, who look at their sales team with dollar signs in their eyes, and set off on a one-track mission to bring in as many new faces as possible.
But if you’re welcoming them through the front door and they’re leaving straight out the back, that’s a lot of lost potential revenue. That is why customer retention KPIs have quickly become one of the top targets for businesses all over the world. By creating processes that convince your customers to be loyal to you, you save the huge expense it takes to reach a contact and bring them in. Instead, you can spend a fraction of that money on your customer service and customer success strategies to enjoy repeat business.
What is customer retention? A time saver
The process of getting a new customer is a long and arduous one. From first contact to the marketing funnel and then into a sales funnel up to a deal, there are so many moving parts involved and in general, people take a long time to convince. When you’re selling to current customers, they’re already in the room, they know who you are, and they like your business.
There is no need to grab their attention, start your sales pitch, and lure them in with a deal. Instead, you can instantly contact them through your regular channels to offer new products or subscription renewals with a much higher success rate. So, with reduced costs in advertising, as well as your team’s time better spent, working on your customer retention rate is a far more efficient process that leads to bigger profit margins and a more sustainable business model.
What is customer retention? An effective use of technology
Taking care of your customers so they provide repeat business certainly includes a lot of personal aspects. From caring customer service, to assigning an account manager to each of your clients, that connection is crucial in keeping your customers on side. However, there are fantastic tech solutions out there that can set the scene for your people to shine.
A well-organized CRM
One of the most important tools for customer retention is a powerful CRM. You can keep records of all your customers in the cloud, so all of your sales agents have it at their fingertips for any conversation. This is all part of building strong personal bonds with your customers.
Tools like Bitrix24 allow you to segment your customer database into lists, so when you find one user is likely to slip away, you can assign them to your customer success team. From there, you can send a series of automatic (but personal!) emails with offers and incentives to bring them back into the fold. With a good CRM, you can also pull out analytics reports that tell you how well you’re doing on your customer retention KPIs, such as churn rate.
Getting feedback from your customers is a key part of customer retention. If you don’t know what they think, it’s hard to offer what they want.
One of the best ways of getting feedback, which works very well for measuring your customer health score, is to leave forms available on your website, or even send them directly via email or social media. This gives you the data you need to make serious changes to your approach and to ultimately keep your customers on board.
Multi-channel communication tools
What is customer retention without a good customer service team? However, no matter how dedicated your customer service team is, it’s pretty useless if your users can’t get in touch.
Your customer retention strategy simply must have a far-reaching contact center as a base for both incoming and outgoing communication. Quick, well-prepared customer service through a variety of channels is one of the best ways of retaining your customers when things go wrong.
Personalize your communication
When you ask yourself "what is customer retention?", one of the first things that should come to mind is a personal touch on your interactions. Nobody wants to feel undervalued, and it's relatively easy to put in structures that allow you to speak to your customers on a personal level.
Email marketing, like newsletters, offers, and announcements can be personalized if you have been smart about your sign ups. Make sure to include a first name field in your forms, and with the right CRM, you’ll have ample records to draw upon. Rather than writing out the same email for every contact, you can include a smart field that inputs their name every time you contact them. Personalized communication is essential as it gives your business a human side. It is the opposite of cold-calling and the first step to creating customer loyalty.
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Honesty with your customers
When considering “what is customer retention?”, honesty should be a cornerstone of your approach. On the other hand, being upfront about what you offer is a great way of creating customer loyalty. There is even a trend now for advertising that goes so far as to deny it is the best in its class. Not all hotel companies offer five-star luxury and personalized service, but some of them specialize in convenience at an affordable cost, which many audiences want.
So when it comes to repeat customers, especially in subscription services, be honest about your advertising and you’ll prevent a mass exodus shortly after you’ve struck a deal. If you over promise with what your product can offer, your client base will quickly realize they haven’t got what they wanted and start looking elsewhere for a more reliable service. This will not only reduce your customer retention, but can easily create a bad reputation for your company.
Committed customer service
What’s the reason for free returns, instant messaging chatbots, and the entire concept of customer experience? The most successful companies in the world today have pondered the question of “what is customer retention” with care, and have realized that great customer service will stop their numbers from shrinking. Customer service platforms include contact centers and social media, and should cover all requests in as many languages as possible.
If you don’t quite have the resources to fund an expansive customer service department, you can get started with one of the most passive methods: An FAQ page. With a week’s worth of writing and smart UI design, you can produce a seriously well-developed page for your website that answers all your common questions without having to use resources on direct responses to your customers. Bad experiences lead to customers distrusting your company and looking to your competitors for something better. You can’t get everything right 100% of the time, but what you can do is to show you care and try to turn a bad situation into a positive one, which improves your customer retention.
Set up loyalty systems
Your competitors will try anything to get your customers to jump ship and join them instead. By making it worth their while, you can use loyalty rewards and programs to create a strong sense of loyalty with your customers.
But what is customer retention going to do to help new users join? When you provide benefits for those who are already customers, you can create a sense of exclusivity. Think about how loyalty clubs and executive bank cards work. Their members get access to the VIP lounge, they’re first on the airplane, and they get a glass of champagne on arrival at the hotel. Therefore, loyalty systems encourage customer retention while attracting new customers who will also want to stay with you.
Consistently improve your offer for existing customers
It’s common practice for companies to set up preferential terms for their new customers. And why wouldn’t they? With a free month or a one-year discount on a subscription service, it’s a great way of opening up new markets or appealing to new demographics.
However, your existing customers will start to feel bitter if they know they’re getting a bad deal compared to recent sign ups. Therefore, one answer to the question “what is customer retention?” is that it’s an ongoing sales tactic to incentivise their loyalty. Of course, this doesn’t mean offering increasing discounts year on year until they’re paying nothing. Instead, when you launch a new product, give your customers a chance to buy in advance, or offer them preferential prices as a current customer.
Open conversation with your customers
When thinking about customer retention, you might not think about directly reaching out to them, but for more and more companies, this is entirely the point. For these businesses, any incoming customer service requests should be quickly turned into a conversation — either by instant messenger or phone — to build a relationship with your customers and show you care. But no channel is better in this day and age than social media.
Find out which platforms your customer base tends to gravitate towards and make sure you’re available to help in an instant. Not only does this make it as easy as pie for your customers, but you can also draw in a lot of social media traffic by encouraging users to choose this channel. When customers know they have a close connection with your company, they are much more likely to be satisfied with your service. Having someone they know they can trust at the other end of the line gives that extra bit of confidence.
How to measure your customer retention
It’s no good working on retaining your customers if you have no proof of your efforts. Apart from not being able to share your progress with your stakeholders, a lack of analytics means you’re simply stabbing in the dark, hoping for the best. One of your top customer retention metrics is your churn rate.
Nothing to do with butter, this refers to the amount of users who start or end their communication with you over a timeframe of your choosing. If your customer retention strategies have worked, you should have a low churn rate, but if you’re missing the mark, your churn rate will be high.
So how do you work out your churn rate?
Start off by turning to your customer relationship management tool (CRM) and choosing a period of time you want to analyze — monthly or quarterly are normal. Now, all you have to do is divide the number of contacts you’ve gained or lost at the end of your timeframe by the number at the start, then multiply it by 100.
To make things more simple, if you have 100 contacts at the start of July and lose 10 by the end of the month, your churn rate is 10% (10/100 = 0.1 X 100 = 10%).
Using powerful CRMs like Bitrix24, you can analyze all of these metrics within one tool, but also separate your findings per customer service representative to quickly identify your strong and weak areas.
As a final note, to implement customer retention strategies and reap the rewards, it's our advice to use the right technology. This is where Bitrix24 comes in. From a far-reaching CRM system to email marketing, forms, and all the communication channels you could ask for, our all-in-one platform acts as mission control for your approach. Available on desktop and mobile devices, all connected on the cloud, you can manage any customer issues that come up and stay one step ahead of your competitors. So what are you waiting for? Get started with Bitrix24 for free!
What does customer retention mean?
Customer retention is the number of your customers who continue to purchase your product, service, or subscription over a set period of time.
What is a customer retention strategy?
A customer retention strategy refers to the actions you take to stop customers from leaving.
Classic strategies include:
- Personalizing your communication.
- Having a fluid customer service department.
- Being honest in your marketing.
- Creating a bond with your clients.
- Offering benefits for members.