What Is Customer Retention?
Customer retention is when businesses take proactive steps to encourage first-time customers to become repeat customers by purchasing products, services, or subscriptions. Repeat customers are a huge asset because they already know or have an idea of how your business works and what to expect from you. That means you can spend less time educating them about products and services they’ve already purchased and more time engaging with them about additional products and services or getting valuable feedback from them.
Engaging these existing customers encourages them to continue supporting your business. Prove that you’re committed to keeping them happy and offer them great value for their money and time spent.
Customer acquisition initiates a customer base. Retention through active engagement creates a community of customers and builds strong relationships with them that make them feel valued and appreciated.
The amount of time and money you should spend on customer retention depends on your business model. Subscription-based e-commerce businesses, for instance, depend on customer retention for survival.
Why Is Customer Retention Important?
New businesses that have just recently launched or are preparing for an upcoming launch need to focus on drumming up new customers. But businesses that are already established should concentrate on retaining existing customers. The importance of customer retention is made evident by the following points.
Improved Conversion Rates
Conversion rates measure how many customers come into your store—whether it’s brick-and-mortar or online—and actually make a purchase. These are your value-driven metrics. From the moment customers enter your business, you have an opportunity to engage with them and make an impression. Positive customer interactions are especially essential to e-commerce businesses.
Website features like easy navigation, cybersecurity, an accessible search bar, special promotional pop-ups, etc. can all help boost your conversion rates.
Increased Profits
Customer retention has also been proven to yield greater profits. Customers who are satisfied with your products and services are likely to continue supporting your business. Customer lifetime value (CLV) is a metric that can be used to measure the amount of money a single customer has spent on your business.
Lower Cost for Marketing
Customer retention costs less than acquisition because you don’t have to try as hard to win these customers over, provided that they had a positive experience. The real challenge is to turn them into repeat customers and get them to try some of your other products. This is where employing the “customers also bought” feature is useful. E-commerce businesses use this feature on their websites to introduce existing customers to other products and services that might pique their interest based on past purchases and views.
Build Up Brand Loyalty
By offering consistently intuitive good customer service, you can build up brand loyalty. Happy customers are more likely to continue to support your business to varying degrees. Some customers might sign up for a subscription package while others might occasionally make a purchase.
As long as you keep bringing your A-game with exceptional customer service, great product selection, discounts and promotions, and available stock, customers will keep supporting your brand over your competition.
Customer Retention Can Drive Acquisition Rates
Did you know that customer retention and acquisition are related? Customer retention can invariably drive up your acquisition rates. Current customers who are happy with your products and services are more likely to recommend your business to people they know. This is an indirect form of word-of-mouth marketing. As old fashioned as it is, it’s still just as effective as it ever was. Prospective customers are more likely to listen to the recommendation of people they know than some stranger or random salesperson.
Customer retention can also drive up acquisition rates through online reviews. Overcrowded e-commerce spaces have driven most prospective customers to read online reviews before making a purchase. In fact, online reviews are a key factor in the decision-making process. Some customers are even willing to spend a little more money if the perceived value of the product or service is worthwhile.
What Are Some Customer Retention Strategies?
Leverage Customer Feedback Surveys
Customer feedback surveys provide valuable insight into how customers view your brand, products, and services. Satisfaction ratings and comments provided can be used to make improvements to your business model.
Communicate with Your Customers
Follow up with customers from time to time to see where they stand on your brand. This will make them feel valued and show that you care about their opinions.
Offer Incentives and Promotions to Existing Customers
Existing customers deserve just as much attention as prospective ones. Engaging with them on a personal level and offering special promotions makes them feel valued and drives up sales simultaneously.
Educate Your Customers about Special Promotions, Products, and Services
Based on their past purchases, you can inform customers about other products and services you offer that might interest them.
Offer Consistent Service
Customers like to know what to expect from brands they’ve supported for a long time, so it’s important to provide consistently good customer service. Treat every customer with the same level of respect and dignity.
Build a Customer Community
Focusing on customer retention helps you build a strong community of people advocating for your brand at every turn. Cultivating a brand community effectively spreads word-of-mouth indirect advertising for your business.
Learn from Customers’ Complaints
Use customer criticism and feedback to make improvements to your business model, products, and services.
Create Customer Loyalty Programs
Loyalty programs such as earning points for purchases, cashback incentives, punch cards, hybrid loyalty programs, fee or membership-based programs, etc. make existing customers feel special, like they’re getting a little something extra in return for supporting your business. This is a great incentive to keep them coming back for more.
Customer Retention Services from 3C Contact Services
Need help managing your customer retention programs? 3C Contact Services is a top-tier customer service retention provider in North America. We’ve helped numerous small- and medium-sized businesses build their companies from the ground up by providing top-notch customer service on their behalf. Contact us today to learn more about our services.
