It’s common knowledge that it’s less expensive to keep existing customers than it is to acquire new ones. When you take the time to measure customer lifetime value, you realize that the benefits of customer retention compound over time, making it a business best practice.
Repeat customers are more likely to buy from you again, spend more money than new customers, and become the brand ambassadors that herald your products and services to their friends and colleagues.
How Customer Retention Benefits the Bottom Line
Here’s how customer retention benefits the bottom line (and why you should be motivated to spend considerable time addressing it):
- It lowers customer acquisition costs because you’re not having to replace the customers you lost and find new customers.
- Customers who stick around are more likely to become brand advocates for you, and referrals are a great way to get more business.
- Combine to previous two bullet points and growth starts happening with some momentum simply because you chose to take good care of your customers.
Customer Retention Strategies that Work
Listen to Feedback
- Take any feedback you receive seriously. If it makes customers happy, find out ways to do more of it. If it upsets customers, figure out how to change it.
- Monitor the vitals of customer satisfaction. (What makes customers happy or upset?)
- Conduct CSAT and Net Promoter research so you know exactly which areas of your business need improvement.
Place a High Value on Relationships
- Reduce attrition by tending to relationships. People appreciate a little TLC.
- Actively engage with customers online. Interact with them on social media. Make sure live chat is timely and effective.
- Give your clients experiences worth talking about.
Establish Expectations Early
- Set clear customer expectations from the beginning of the relationship. Under promise and over deliver.
- Be transparent about your operations, policies, and availability so customers know exactly what to expect along each step of their customer journey.
- Provide quality products and services consistently. It doesn’t matter how friendly your staff may be if the product breaks immediately.
- Work to be consistent across product lines, personnel, and customer service experiences.
Build trust by doing what you say you’ll do. Keep promises before and after the sale.
Make Customer Service a Top Priority
- Add customer service KPIs to your list of KPIs.
- Resolve complaints in a timely manner instead of avoiding them.
- Go above and beyond with the friendliness and positivity of your customer service.
Be Proactive about Customer Service
- Take preventative measures to reduce complaints (Send thank you’s, make follow-up phone calls, etc.)
- Be accessible/approachable/easy to find. Customers should know how to readily reach you.
- Reconnect with dormant purchasers to see if you can answer any questions or help them with anything.
- Remind customers why they chose you in the first place.
- Overcome buyers’ remorse by presenting the benefits of their purchase again after the sale.
Communicate Like Your Business Depends on It
- Err on the side of over-communicating, especially if you’re in a service-centered industry.
- Emails don’t always have to be promotional. Sometimes they can just communicate helpful information like product tips, updates, and recalls.
- Blogs provide free and educational information proactively.
- Phone calls generate leads, but they are also a means of providing vital information like account updates or fraud alerts.
Reward Customers for Bringing Business to You
- Loyalty programs let customers know you appreciate their repeat business.
- Referral programs reward customers for speaking on your behalf as brand ambassadors.