Customer Retention Strategies

If your company doesn't offer a good or service that people only ever need to purchase once, what is the tipping point? You can build all the fancy acquisition strategies you want. A new customer costs five times as much to acquire as an existing one does to keep. Selling to an existing customer increases your chances of success by 60–70%, whereas selling to a new one reduces your chances to 5–20%. Profits can rise anywhere from 25% to 95% by raising retention rates from the current level of 5%. Retention should therefore be a top priority for every business, with a portion of your efforts devoted to it.

Nevertheless, as anyone who has spent more than five minutes with me will attest, that is not the case. Ad hoc email marketing campaigns that are sent to subscriber lists that are constantly losing subscribers because the recipients of the emails stop engaging with them frequently neglect retention or attempt to "cover" it. The fact that such a crucial aspect of any business is frequently overlooked really irritates me.

So, continue investing time and energy into your growth strategies, without a doubt, but don't just leave all that extra money and loyalty on the table; instead, proactively invest in a retention strategy.

What to do first when developing a customer retention strategy.

Begin with something straightforward. Avoid feeling overpowered. There are many things you can do to develop a fully functional retention strategy, but the most important thing is to take action. You won't be able to build and launch all aspects at once, even with a dedicated resource in place to manage retention, so it's critical to concentrate on what's crucial for your company. But since we have to start somewhere, why not with your current retention rate?

The formula for calculating customer retention.

We need to begin by comprehending how well you are currently retaining customers in order to accurately measure how well your retention strategy is performing. To accomplish this, select a specific time frame (the previous quarter or year, for example), and then perform the following calculation.

Total number of customers at the end of the period - new customers acquired / customers at the beginning of the period = customer retention rate.

Once we've established that benchmark, we'll be able to measure the effectiveness of our retention strategy with precision.

We're going!

Next, let's begin at the beginning. An effective onboarding procedure will encourage new customers to interact with your brand and leave a positive impression. This can be as easy as sending them a series of emails to welcome them and explain what to expect from your product/service now that they're interested in you. Or it can be more comprehensive and extend to emails that are sent out in response to the actions that users take or links to additional content on your website or app. Getting this process right is the most crucial step. Onboarding errors, such as incorrect data entry, poorly timed, or poorly thought-out messages, can leave a lasting impression on new customers and harm your company's reputation.

Integrate this onboarding process into your current customer journey (if you have one; if not, create one now!).

Adhere to the data.

Like acquisition, retention is never setup and then abandoned. You will never be able to finish it. Despite having all the necessary components in place, you still need to spend time maintaining and enhancing them. Understanding the data to make improvements is a significant part of that. Keep an eye on performance and make adjustments if one step of the process isn't working. If it's an email, is it getting delivered okay, is it being opened (which is trickier to gauge these days but still a sign), and are recipients clicking through?

However, the information you are gathering isn't just for improvement. It should be used to foresee your customers' needs as well. By analyzing data, you can be more proactive, using real-time data to see where your customers are coming from, what they are buying, and how long the sales cycle takes. You can then apply that information to the retention strategy by sending triggered messages at important events.

Be consistent and set expectations.

It's important to keep your customers as much in control of this as you can, but your onboarding process should help to set expectations about the kind and frequency of communications you will be sending. Giving people the choice to choose the kinds of messages they receive helps to reduce fatigue and maintain engagement, even though an all-singing, all-dancing preference center is difficult to achieve.

To follow through on your promises is crucial in this situation. A fortnightly email from you should be sent if you tell customers to expect it, so make sure to do so. Check to see if you are communicating with them in the manner you have indicated they should expect.

Even if your messages are exactly what people signed up to receive and delivered on schedule, if your customers start disengaging then you need to take stock and iterate. Consistency of the message and timing are important, but remember to keep an eye on the data.

Observe, look, and listen.

Observe the data, but also pay attention to what your clients are telling you in person. Whenever it is appropriate during your customer journey, ask for feedback from them. Reviews of goods or services, comments on how they perceive your emails, and remarks made to your account managers, customer service representatives, and other staff members. Find every channel of communication available to your customers and pay attention to what they are saying. Each piece of this direct feedback is anecdotal, but when examined collectively, it can reveal some sobering information about how your company is actually viewed.

Be alert for departing customers.

When a customer starts to ignore your communications, whether they come in the form of emails, push notifications, or other channels, or when they stop using your digital product daily, it's often a sign that you're about to lose them. Keep an eye out for these crucial metrics, create targeted segments and communications for these individuals, and attempt to re-engage them as soon as these signs begin to emerge.

But don't be reluctant to bid someone farewell.

No matter how hard you try, you'll never be able to keep everyone. But you can try to make sure that your good or service is remembered favorably. If you see a decline in usage, get in touch with the user and express your regret for their departure or, if it's obvious that the user isn't a good fit for the messages right now, promise to remove them from future marketing communications. Being open and encouraging is preferable to trying to bully people into sticking with you.