Ever heard of the saying, “The secret to success is to treat all customers as if your world revolves around them”. This saying goes very well with the customer base you have already gained or otherwise what you call as existing customers.
Existing customers mean much more profit to that of new customers. This can be vividly explained through the process of Customer Retention Rate.
What is Customer Retention Rate?
Customer Retention Rate in its simplest sense is trying to retain more customers for a longer period of time so they spend more over their lifetime. It is the process of retaining old customers than investing in new leads.
Customer Retention Rate is very crucial in terms of understanding how satisfactory services you provide to your existing customers. To understand how existing customers and new customers are managed, we need to analyze the basic understanding of customer retention and customer acquisition.
Customer Retention vs Customer Acquisition
Customer retention is the opposite of customer acquisition. When your online business tries to make new customers it is called as Customer Acquisition. To discern which is better, a few following criteria are to be considered and compared.
- In terms of facileness:
Selling to existing customers are much easier and undemanding. Your existing customers very well know about your products and your service. So the task of campaigning and convincing becomes easier with existing customers.
Customer Retention saves you more than acquiring new customers. Several statistics state that the affordability factor of new customer ranges between expense percentages of 25%-50%. Investing in new customers can prove to be a big threat to your financial hold.
- Add-on profits with Existing customers:
Your existing customer will be ready to spend 51% on new products. The likeliness to sell your products to your existing customer profits around 60%-70% while profits expected from new customers can be as less as 5%-7%. Your profit rates can also be calculated through new customers gained from the old ones
When an existing customer is contented by your products, he is more likely to spill the beans about your service by Word-of-mouth.
Word-of-mouth strategy is by far the most powerful method of informal marketing. A happy customer brings ten more customers to your business. This strategy is much more efficient than promotion through ads and paid influencers. Your existing customers expect nothing in return for spreading positivity about your services while you need to pay for promotion via ads and influencers.
After all, the purpose of business is to create a customer who creates customers.
In consideration of all the above criteria, Customer Retention strategy is all the way for the win.
Customer Retention Strategies
The goal of customer retention is always to increase profits. Agree? In order to execute your strategies successfully, you must set marketing plans, build a team that can excel in this area of expertise, come up with creative agendas, works hard on your strategies until your target is achieved. Following are a few basic strategies to boost your Customer Retention Rate.
1. Provide great service.
Providing exceptionally great service is the very elementary factor yet, it also is the deciding factor of your business’ future. By providing great services, you try to meet the expectations of your customers. Whenever a retailer buys a product or service from you, it is your duty to keep them informed about their product status.
2. Communicate results on a regular basis
Providing great service follows the order of having successful communication with customers. Communicate with your customers on a regular basis, understand their perspective and provide services accordingly. Communication is also the key factor in improving the relationship with your customers.
3. Customer Complaint Management
Make sure you have a good system for tracking and reporting on the metrics that relate to customer satisfaction. Customer complaint management is an offensive management strategy that focuses on acquiring new customers. Your unhappy customers are your greatest source of learning. If your customer is unsatisfied by your service, you gain a room to improve it in the future.
4. Service recovery strategy
Service recovery strategy follows suit with customer complaint management. Service failures tend to occur and it is the company’s responsibility to establish suitable recovery systems to win over upset customers. Service recovery strategies include:
- Complaint tracking
- Suitable resolving action
- Providing detailed explanations
- Promising that doesn’t happen again
- Learning from recovery experiences.
5. Educating your customers
“Don’t just sell to your customers, educate them”. The idea of educating customers is keeping them informed about your services with the help of great content. Promoting services through blogs, through social media contents prove to be fruitful in educating your customers.
6. Customer loyalty program
Loyalty programs are giving rewards to customers who are in frequent merchandise with your store. Your loyal customers should definitely have benefits over other customers and a loyalty program is helping that idea come true.
7. Feedback system
Listening to a customer’s opinion and feedback makes them feel more appreciated. Reviews, ratings, experiences of your existing customers can also help in acquiring new ones.
8. Segmentation of customers
9. Build a Customer Relation Management
Create a CRM(Customer Relation Management system) that can foster your relationship with your customer over a period of time. Another important strategy to ensure progress in your customer retention rate is adapting to the idea that the whole team should be in touch with a customer. If he reports a complaint regarding inconveniency of your service, make sure that it is managed by different departments. This ensures that the customer’s relationship is not solely based on one person.
10. Lifetime value measurement
Put your efforts in analyzing how much a customer invests in your company for a lifetime. Once you analyze how much-combined profit a customer adds to your business when they make repeated purchases, over months and years, you’ll realize the critical importance of taking care of your customer’s interests.
It takes years to make a customer and minutes to lose one.
So make sure you provide services that are satisfying, reliable and according to customers interests and expectations. All the aforesaid strategies can be highly fruitful only if you step forward and assure to provide loyal services to your customers.