For those who work in sales, their top priority is to find new ways to improve revenue. To do that, they must sell more, which ultimately means they need more customers.
Thus, salespeople often focus on attracting new customers that they overlook the need to keep those customers they already have. Yet, you keep hearing that it’s less costly to keep existing customers than to gain new ones.
Marketing Metrics reports that the success rate of selling to existing customers is 60-70%, whereas the possibility of selling to new customers is just 5-20%.
According to Frank Eliason, we need and must encourage employees to be customer advocates. That’s because customer retention is cost-effective, and it’s also a brilliant branding strategy that can help you keep your customers happy so that they become loyal brand advocates. Because if they’re satisfied with what you’re offering, they’ll refer you to their colleagues, friends, and family—for free!
Keeping Customers You Already Have
Customer retention tracks how successful a business is at gaining new customers and how effective they’re at satisfying existing clients. Also, it improves ROI, increases brand loyalty, and attracts new customers.
Again, it’s easier and less costly to keep the customers you already have than to attract new ones. In addition, repeat customers spend more and buy more often, and they refer their friends and family to their favorite brands for free!
Thus, based on the statistics, keeping existing customers can bring your business a ton of ROI.
Here are a few more reasons why customer retention is crucial to business success and growth:
- Affordability. It’s 5-25X more costly to gain a new client than it is to keep the one you already have.
- Return on investment (ROI). A 5% increase in customer retention rate can boost your profits by as much as 95%.
- Customer loyalty. Existing customers buy more frequently and spend more than new customers. That’s because they have learned the value of your service or product, and they keep coming back for more.
- Referrals. Satisfied and loyal customers are more likely to praise a brand and refer it to their colleagues, friends, and family—bringing in new clients, free of charge.
It may seem obvious that companies should focus on retaining existing customers—but when businesses skyrocket and struggle to execute a solid customer support program, proactive support for customers they already have can slip through the cracks.
5 Methods for Retaining Customers
Every customer wants to be treated as an individual, not like a unit of a target audience. To treat customers individually, companies need to collect a lot of information about their customers. Thus, having a good customer database that stores records of all transactions and interactions is the key to building a solid relationship with your customers.
Here are five customer retention strategies you can leverage to keep your customers satisfied and engaged, improving your profits.
1. Listen to Customer Feedback
Customer feedback is one of the most crucial tools to help businesses improve customer retention and lower churn rates. To know what isn’t working for your customer base, ask them!
Give your customers a voice by carrying out more surveys. For example, client satisfaction surveys could be as simple as asking customers for a “thumbs up or thumbs down” after your customer support team resolves their tickets. Also, it’s helpful to ask more specific questions, such as:
- How would you rate your experience with our service or product?
- What don’t you like, and why?
- Which of the following platforms do you prefer to use for customer support?
Further, supplement your surveys with feedback from your customer support team because they’re closest to your customers and can spot common complaints and general preferences.
Then, use customer feedback to restructure your processes and systems to deliver a better customer experience, ultimately reducing churn rates and improving customer retention.
2. Track Churn Metrics
One of the best ways to keep the customers you already have is to prevent them from leaving. If you pay attention, you can always see the signals of your customer’s roaming departure. Customer churn is the rate at which current customers stop doing business with your brand.
To monitor churn metrics, identify the critical variables of customer behavior, including product usage, purchase patterns, and history of customer service inquiries. Then, you must analyze churn signals and take action to prevent customers from abandoning your brand.
Note attrition in your client base is natural to a certain extent. For instance, a client might have gone through a significant change. Perhaps they went bankrupt, or they sold their business. Or they no longer need your service or product.
But, if your yearly churn rate is over 5-7%, it’s time to assess the happiness of your clients—-and figure out why there might be an issue. A high customer churn rate shows that your products or services aren’t meeting your customers’ goals or expectations.
3. Build Trust with Customers
When building trust between your company and customers, don’t assume customers trust you because they buy what you’re selling. Also, you must recognize that trust takes a lot of time to build.
When making a purchasing decision, 81% of consumers say that trust is fundamental in their decisions. However, trust isn’t a one-size-fits-all strategy that you can implement overnight. After all, “trust is the firm belief in the ability, truth, reliability, or strength of something or someone.” Thus, reliability is critical in building trust, so your businesses must consistently provide value to customers.
Constantly following through on your company’s promise and keeping your promises over time will determine whether your customers perceive your business as trustworthy. Building trust with your customers consistently will ultimately improve customer retention, helping you build a loyal client base.
4. Monitor Customer Satisfaction
Tracking any strategy is the key to success, and it’s no different when it comes to customer retention. An excellent leading metric of customer satisfaction is the Net Promoter Score (NPS). The NPS is a metric that tracks customer loyalty.
Here is how the NPS works:
A business sends a survey to its customers with one question: “How likely are you to recommend our product to your friends, colleagues, or family?”
Customers answer with a number 0-10, with 10 being extremely likely to market your business and 0 being least likely. Then, you categorize customer’s responses into three categories:
- Promoters. These are the most satisfied customers who will recommend and encourage their colleagues, friends, and family members to buy your product.
- Passives. These customers are happy with your products but are passive when it comes to marketing them.
- Detractors. These are unhappy customers who will talk negatively about your brand or products.
You can determine your NPS by subtracting detractors from promoters. To improve your customer retention and keep your customers happy, don’t be afraid to ask detractors where your business should make changes. Then, use their feedback to make changes and updates to deliver a better customer experience.
5. Correct Mistakes and Take Responsibility
Another reason customers continuously churn brands is to have a positive experience. So, while you strive to keep the customers you already have, make sure you take responsibility when issues arise and apologize to the customers involved. Also, it is essential to correct mistakes and learn from your mistakes.
You can build a solid business reputation that facilitates customer retention by correcting your mistakes and taking responsibility for not meeting your customer’s expectations and goals.
Keep Your Customers, Scale Your Business
Your current customers are the best asset your company has. These customers already know your products, they know your brand, and they appreciate your service.
Focusing your energy and time on delivering a better experience for this audience segment instead of always striving to gain new customers is a powerful strategy to supercharge your revenues.
CloudApp is an instant image and video sharing platform for business professionals. It offers the fastest way to record and embed webcam, screencasts, marked-up photos, videos, and GIFs throughout business workflows. We helped LeadIQ gain a 2X increase in marketing activities per week, allowing a 10X increase in revenue. In addition, LeadIQ uses CloudApp to record short videos and capture quick GIFs on how to use their products and leverages this content to deliver a better customer experience.