A business with poor customer retention is a lot like a bucket with holes. You can try to make it work, but you’re better off figuring out how to patch the holes up.
First things first: what is customer retention? As the name implies, this is a process of turning your existing customers into loyal buyers. Studies show that increasing your customer retention rate by 5% can increase your profits by up to 95%.
Focusing on customer retention strategies comes with other benefits as well. It helps you figure out how satisfied your customers are and what might be turning them off. Retaining customers is also much cheaper than acquiring new ones.
Not sure how to retain your customers? Here are seven tips to get you started.
1. Educate Your Customers
Once your customers sign up, don’t leave them to fend for themselves. Instead, help them learn how to use your products by offering the right resources.
The most common method of doing this is to provide product onboarding. This provides simple tips and tutorials to guide new customers. You can get a similar effect by sending a series of lifecycle emails to all new customers.
For customers who prefer self-service training, offer an online academy of training resources. The academy may include live classes that anyone can register for. One-on-one training sessions with an onboarding specialist are also worth it.
2. Provide Surprise Reciprocity
Surprise reciprocity is one of the most effective ways to retain customers. You could even say that reciprocity is one of the things that makes the world go ’round.
Reciprocity is a simple concept: people will respond based on how you treat them. If you’re nice to someone, they’ll be nice to you as well. This is why providing good service is a great way to get people to recommend your products.
Now, the big thing about reciprocity is that it works even better when it’s a surprise. Can you remember the last time someone did something nice for you out of the blue? Even if the gesture wasn’t a big deal, it likely still left an impression on you.
The trick, then, is to surprise your customers with a nice gesture once in a while. You can send them swag or even a handwritten note. Though these may seem old-fashioned, they can still make your customers feel special.
3. Do Loyalty Programs Right
Many businesses use customer loyalty programs, but few of them are effective. The good news: there’s a ton of research that can help you get it right.
For example, did you know that the biggest pitfall of loyalty programs is getting started? Customers are twice as likely to finish loyalty cards if they’re automatically started as soon as they sign up. We call this the endowed progress effect.
Also, customers love being “gold” or VIP members. The only catch is that there needs to be a class below them on the totem pole. If you implement a silver and gold class, you should see an uptick in gold members’ participation.
Creating a loyalty program is much easier with the right loyalty program software. This gives you all the tools you need to improve the customer experience.
4. Stand for Something
Most customers don’t feel like they have relationships with brands. Of the ones that do, though, most cite shared values as the main reason for that relationship.
Why does this happen? Well, it’s all about a cognitive bias known as implicit egotism. People have an unconscious preference for things that resemble them. If you want loyal customers, you need to let them know what values you share.
Many businesses shy away from this strategy because it’s “political.” This is a flawed line of thinking, as all companies have political agendas of some sort. Make the most of the things you stand for by making them a part of your brand.
5. Capture the Momentum
Making exciting improvements to your products can be a big momentum driver. That said, your customers may not feel the same way.
One thing you can do to change that is to share your work. Let the customers know what the latest versions of your products will let them do. This also helps the existing customers, as many of them might miss out on the new features.
Other than creating excitement, this momentum will carry over into your sales. Studies show that telling customers about new products makes them 30% more likely to repurchase it or recommend it to others.
6. Focus on Quality Over Speed
In an ideal world, your customer service would get perfect marks in both speed and quality. In reality, the latter is much more important than the former.
See, customers are far more likely to engage with a brand if they deem their service as helpful. This is why spending more time with customers leads to a more positive experience. Rushing them will likely create more problems than it solves.
Speedy service can help too, but only if you’re delivering what your customers want. If you don’t, the customer is more likely to feel ignored. For instance, people are more sensitive to price changes if they receive poor support.
7. Reward Your Advocates
When it comes to how to retain customers, loyalty matters a whole lot. This is why it’s important to reward your brand advocates whenever you get the chance.
Let’s say you see someone recommending your product on social media. Most of the time, the right thing to do will be to reply to thank them. This shows that 1) you’re paying attention, and 2) their gesture means something to you.
For bigger rewards, consider using a referral program. One way to do this is to give your customers a $100 Amazon gift card when they refer someone. Consider giving that new customer some credit on their account as well.
Other Customer Retention Strategies
You’ll notice that none of the above customer retention strategies include shortcuts. This is by design — business relationships are a lot like personal ones.
Here’s one final tip for the road: overdeliver on your promises. Customer expectations are at an all-time high, so impressing them isn’t easy. The best way to stay competitive is to go above and beyond what your customers may expect.
Want to know more about how to have loyal customers? Trying to make the most of your marketing strategy? Keep reading our business-related content!