As customer acquisition is always quite challenging and money-consuming for every business (particularly a small one), it becomes essential to use specific marketing strategies and tactics that make customers return again and again. In this article, we’ll name the advantages of customer retention and give practical advice based on examples from well-known and smaller brands.
What Is Customer Retention?
Businesses use customer retention as an indicator of client loyalty over time. Companies apply various strategies to improve customer experiences and increase retention in a given time frame.
The formula for calculating the customer retention rate is the following: the total number of customers (CE) minus new customers acquired (CN) divided by the total number of customers acquired at the beginning of the period (CS).
You may wonder, isn’t it more efficient to invest in acquiring new customers rather than target resources for retention?
Both actions are equally vital for business growth, and in an ideal world, salespeople and customer service specialists work together to accomplish both goals. After a new client acquisition, marketing and customer service specialists start working with them. The customer service team solves their issues, offering onboarding support, gathering feedback, and ensuring they get the most out of their purchase. Marketing specialists work on ways to re-engage customers, like special offers, discounts, newsletters, and other customer retention tactics.
This stops people from writing bad reviews or claiming refunds. If your clients are satisfied, they’ll keep doing business with you, provide testimonials, recommend you to their friends, and post favorable feedback about you on social media and independent review sites.
Allocating the budget to acquiring and retention activities, keep in mind that developing a new client is much more expensive. According to Forbes, it’s up to five times more costly than retaining existing customers. It happens because new clients don’t trust your business yet. It costs time and money to get their attention and much more to persuade them to buy from you.
Benefits of Customer Retention Measures
Implementing client retention requires both resources and time. But it’s worth it, as retaining customers has many advantages. Long-term profitability may be increased, and your brand’s perception among the target audience can be enhanced.
Increasing the Average Order Value and Repeat Customer Rate
Not following up with clients to upsell or cross-sell more items and services is standard error businesses make. These follow-up activities can boost the average order value and improve the repeat customer rate.
For instance, a consumer turned to you for a PSI (PageSpeed Insights) audit of a Magento store. Why not get in touch with them after it’s done to see if they want to order Magento Google page speed optimization or other related services?
Upbringing Brand Advocates
Consumers develop a sense of loyalty toward goods and services when they turn to the company often. First, they start spending more on your products, increasing customer lifetime value. They then recommend your company to friends, family, and acquaintances, widening your client base.
Lowering acquisition costs
Loyal customers tend to leave positive reviews, which also serve as advertising. These comments will surely attract new clients, and you can lower acquisition costs.
7 Ways to Retain Your Clients
1. Give Material Incentives: Loyalty Programs & Coupons
If the customers don’t feel valued, switching to another producer or service provider won’t take much. You need to nurture your consumers and never take them for granted. Express gratitude by rewarding them for remaining with you:
- Offer coupon discounts and bonuses when a consumer places their tenth or thirtieth order.
- Measure customer loyalty by how long they’ve been your client. You may consider delivering extra presents at significant intervals, like a year.
- Establish a loyalty program. This way, the customers will know they’ll save the most by systematically ordering from you.
- Show them exclusive discounts via exit intent pop ups to encourage them to check out even before they leave your site.
Sephora’s Beauty Insider program is one of the brightest examples of loyalty programs. Customers who participate in it may accrue points for each purchase they make and exchange them for rewards of their choice, typically in the form of samples or exclusive goods.
But most importantly, customers can access the Beauty Insider Community, where people interested in beauty exchange advice, ideas, and their favorite new items.
With time customers get access to bigger benefits for their loyalty, including tickets to special events at the highest tier. Additionally, during sales, higher-tiered consumers get additional discounts.
2. Build Closer Connections: User-Generated Content
According to a Stackla report, over 60% of consumers think they would be more devoted and inclined to purchase from a company if it asked them to participate in a customer advocacy network and actively aid in creating more user-generated content (UGC) for the company.
Brands can then use this content for marketing campaigns, fostering cooperation between customers and businesses. By offering the customers rewards like brand merch or a discount for subsequent purchases, companies may encourage their clients to send the content directly to the brand to activate this collaboration. Alternatively, UGC content generation can be inspired by holding a competition. Companies can give consumers a voice through these acts, building a solid feeling of trust. When clients feel valued and heard, they are more likely to patronize a company in the future and recommend it to their friends and family.
Here’s an example of an online furniture store called Sohome. Customers are encouraged to provide product pictures with a branded hashtag, as the best ones are shown on the website’s Instagram widget.
3. Nurture Trust: Customer Reviews
Customer feedback provides you with insights into how customers see your company. Additionally, they provide a clearer picture of your performance, allowing you to improve it in the future. Also, the customers feel that their opinion matters, and you are ready to change for the best. Customers should be requested to provide feedback regarding the goods or services they received and their overall shopping experience so that you can see the whole picture. Offer a small gift or bonus to encourage people to give their opinions.Either you show a survey popup or add a simple feedback from anywhere on your site.
Make a plan for how you intend to address each of the concerns mentioned.
Select the best channel to ask for feedback. Email is the most frequent option. Consider customizing the feedback form and directing inquiries to the right team.
4. Engage: Giveaway Contests
Giveaway contests are a fun method of improving customer loyalty, audience engagement, and retention rate. As we’ve mentioned earlier, it can also be a good way of getting user-generated content. You can also gamify your popup campaigns for more engagement.
You strengthen the bond with the customers by placing them at the center of the narrative through competition. The good idea is to give small rewards to all the participants, regardless of the final results.
For instance, Domino’s held a competition that awarded 50 members a $10,000 check. Ten winners also got a trip to the company’s international headquarters in Ann Arbor, Michigan. All participants had to share photos demonstrating that they’re big fans of Domino’s and add #PieceofthePieContest.
5. Re-engage: Newsletters and Push Notifications
To retain customers, you need to remain at the hearing. One of the most effective strategies for this is re-engagement activities:
- Ask clients who haven’t opened an email from you in more than a month if they still want to receive newsletters;
- Offer them a discount on their subsequent purchase or a coupon for a certain sum of money;
- And inform them about new products.
To get the best results, tailor your messages to different customer lifecycle stages, for instance, by sending abandoned cart emails reminding your clients that their items are still available. Offer a discount or a free product if they purchase within the next several hours. If your company has an app, you can send these messages via push notifications.
6. Make Shopping Experience Handier: Customer Support
All the efforts to ensure clients are using your products effectively are referred to as customer support. Keeping your clients satisfied could encourage them to do business with you longer. As a result, your investment in customer support will return through lower churn.
Customer experience heavily depends on customer support quality.
You may improve customer experience by combining efficient problem-solving with excellent communication when the customer faces an issue.
Make sure that a customer support button or icon is always in sight on your website or app. To make the communication process convenient, offer different channels to submit inquiries, like phone, live chat, voice message, etc. You can also use reliable client portal software to be in constant touch with clients and quickly handle all the issues they might face.
7. Prompt: Gift Finders
Customers sometimes feel disoriented in the virtual environment. They look for quick ways to get reliable, genuine, and tailored advice. Such clients are more likely to use helpful search and navigation features to assist them. To introduce the most valuable solutions, thoroughly study the customers’ pains.
Looking for gifts, for instance, is a big problem for most people, especially before the major holidays. You’ll re-engage many customers by introducing a gift finder tool. The customers will only need to answer several questions to select suitable gifts. Notify your clients via email or send a push notification about the feature, and you will surely notice an increase in purchases.
Lacoste gift adviser helps those looking for a suitable perfume for their loved ones. This five-question quiz offers a fun approach for users to select a product they may otherwise find challenging to choose online.
The interactive experience keeps consumers interested and involved. After taking the questionnaire and receiving a gift recommendation, customers can start a timed race game where they must gather as many perfumes as possible while dodging obstacles.
Every business is unique and requires unique retention strategies. But now that you have a list of effective client retention tactics at your disposal, you’ll be able to come up with the right strategy for your company.
Although implementing a retention strategy may seem challenging, as long as you keep the demands and pains of your customers in mind and act accordingly, they’ll be delighted to buy from you whenever they get the opportunity.
About the Author: Kate Parish is the Chief Marketing Officer at Magento ecommerce development company Onilab with over eight years of experience in Digital Marketing in eCommerce web development. Kate always aspires to broaden her competency in line with cutting-edge global trends. Her primary areas of professional interest include SEO, branding, PPC, SMM, Magento PWA development, and online retail in general.