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Let’s add on to the chain!
Idea- Business- Sales- Customers.
What truly makes a business thrive is the customers that it magnets over time.
But is it all about acquiring customers and getting fancy numbers for the total sales score?
Absolutely not! So, what matters?
It’s about how many customers come back to you repeatedly and choose you over the competitors. The number of repeat customers that your company can get defines success for your business.
Here’s where the theory of Customer Retention strikes in.
What is it?
The concept of customer retention talks about the ability of a business to turn the customers into repeat buyers and also prevent them from reaching out to one of the competitors. In other words, it can also be defined as the process to reduce the number of customer defections.
Is it similar to the process of lead generation?
Lead generation is a process of attracting potential customers and driving them towards your end product through your marketing strategies. It lets you build customers’ interest in whatever you sell. Undoubtedly, it is an important element because without building their curiosity, you cannot sell anything.
Since customer retention is about giving your customers reasons to stay with you, it is an entirely different theory as compared to the one of lead generation.
How does it distinguish from customer acquisition?
Customer Acquisition comprises bringing new customers to your business. It is a process that lets you convert the interested leads and make the customers form buying decisions. This includes bringing the people down the marketing funnel through effective marketing strategies that target them through online and offline modes.
FACT CHECK
A report by Harvard Business Review says that it is 5 to 25 times more expensive to acquire a new customer than to hold on to an existing one.
What is the formula to calculate Customer Retention?
CRR = ((E-N)/S) x 100
CRR- Customer Retention Rate
E- Number of customers acquired at the end
N- Number of customers acquired during the period
S- Number of customers acquired at the start
For instance, if 100 customers were there at the start of the month, you lost 5 and gained 10 more.
Number of customers at the start: 100
Number of customers at the end: 105
CRR= ((105-10)/100) x 100
=95%
Thus, the CRR is 95%.
What is its importance?
The customer retention process lets you form amazing relationships with your customers and also helps you build brand loyalty.
Have some more in mind?
Let’s dive into its benefits in detail.
When the customers choose to glue themselves with you, it’s because they have seen the innocence behind building your products. This is where they begin to trust your brand and it helps you to turn them into loyal customers. With the trust and loyalty coming for the product and the business, research also shows that engaged customers buy 90% more frequently, spend 60% more per transaction, and are 5 times more likely to indicate that it is the only brand that they would purchase from in the future.
Businesses often strive to get those crazy ROI numbers for every new move that they take and also expect to reach the maximum, as compared to the previous ones. From the customer’s perspective, there are many factors that affect the digit. The key strategy to stay in sync with your customers is by being in constant touch with them so that you get to know their feedback, have a chance to explain your thought process and also, analyse the red flags or the churn signs.This way you can give a vibe to your customers and make them feel that they are valued which would make them stay.
As per various studies and research, it is shown that it’s less expensive to hold on to a customer as compared to acquiring a new one. Think of the efforts, money and time that you had to put in to acquire a new customer, it might have been a costly process.As a matter of fact, it can be easy for you to approach someone who you have known for a longer period of time, understood the behaviour and also have an idea about their reactions.It’s because of the relationship that you’ve built with the customer.
When you have a lot of loyal customers who have chosen to stay with your brand as a reward for their loyalty to you and your business, they are more likely to recommend it to others. Here’s where the advantages of word of mouth come in. Through referrals and silent advertisements, you tend to attract many new customers who have higher chances of retention, given the trust, feedback, and experience that the referral has had with you.
If you invest in customer retention strategies, you can increase the Customer Lifetime Value. It is because the longer the customers stay loyal, the more they tend to spend. This is undoubtedly the result of the trust that they have built for your brand over time. But you shall be cautious and not play with the prices too much just to study how long they can stick. As a part of your loyalty towards them, you shall be understanding the values and never misuse any of them so as to continue being on the top of the list.
Brainstormed? Quite a lot!
But with the benefits reaching your head, you wouldn’t just want to stay away from it!
Let’s move ahead and understand it better.
What are some of the pillars of Customer Retention and how to define them?
To extract more value from your customers, you have to make sure that you provide them with top-notch customer service. With that in place, you can be successful at retaining most customers. This can help you recoup the acquisition costs and also produce a loyal following for your brand.
Looking for something fancier?
These customers who are happy with your services, turn into testimonials and reviews and also serve as case studies which in turn attract more customers.
Having a bunch of satisfied customers for your brand is no less than a dream for many. To live it, you have to focus on strategies that help your customers add points to their list of reasons for staying. It is important but dissatisfied customers are at a higher risk of retention and losing them can cost you more than you could even imagine.
As a brand, you shall be paying enough heed to build stronger relationships with your customers because, in the end, that’s the greater reward that you can earn in the lifetime of your business. When you are able to connect with your audience on a personal level, you tend to understand them deeply, recognize their needs, and work towards excelling at winning them. This helps you build a sense of mutual understanding whose benefits can be enjoyed forever.
A customer is said to be loyal not only if he is a repeat purchaser but also when he refers you to others and acts as a landmark example for your business. If you have a well-defined loyalty program in place, you can build emotional connections and reach newer customers easily. This also helps you skyrocket your ROI digits and that’s exactly what you look forward to.
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When there’s higher customer engagement, your brands always stay at the front of their minds. The more engaged they are, the more loyal they would be and this significantly increases the time span that they’re likely to stay.
Is that all? No!
It would also help you to reduce the customer churns while also increasing the number of sign-ups by new customers.
Fascinated enough?
Wondering how you can be using it for your benefit? Read ahead!
What are some of the techniques that can be incorporated to get your dream numbers?
Getting a handle on what your customers feel and how they look at your company is valuable. Start paying attention to whatever your customers say about your brand and your products because their feedback is your go-to start to measure customer satisfaction. As you start mapping out their feedback, you can see the scope of improvisation and innovate accordingly. This can also be of great help to build good customer relationships.
In today’s era, businesses are thinking of better ways on how best they can reward the loyalty of a customer and it should be a priority because rewards give you the required push to continue doing what you do. An organised loyalty program will be a great hit as it would magnetise new customers and also give more reasons to the existing customers to stay.
Make sure that you communicate everything to your customers because without proper communication, you cannot expect others to understand and find reasons to stay with you. This helps in building trust and also, articulating their expectations, and figuring out the challenges. Most importantly, with clear and effective communication, you tend to build strong relationships with your customers which can yield better benefits.
When you are transparent, you tend to be open and this openness offers satisfaction to the customers which let you build strong bonds with them. This also means that all your customer communications should be honest and filled with integrity. Since this helps to eliminate the suspicions, the customers get to build the strongest factor of trust.
Wasn’t that some really insightful content to take? Most definitely!
To help you be more convinced, let’s check out some crazy facts and statistics that would drive you to take action.
82% of companies believe that acquisition is more expensive than retention.
Profits can be boosted by 25% to 95% if customer retention is increased by 5%.
A major portion of the company’s business, almost 65% comes from repeat customers.
52% of customers would make an effort to buy from their favourite brand.
There is a 60% to 70% chance of selling to an existing customer.
Superior customer service is considered an essential element of customer retention by almost 89% of companies.
75% of customers prefer companies that offer rewards.
Stores that offer consistent customer service attract more people and almost 69% of people shop more frequently from them.
Building a long-term relationship with a new customer costs 16 times more as compared to keeping existing one.
91% of customers are more likely to shop from brands who recognise, remember, and provide them with relevant offers and recommendations.
Before we conclude, let’s also take an eye on some relevant examples.
LANDMARK EXAMPLES OF CUSTOMER RETENTION
Uber
Uber came in with the most interesting, real, practical, and revolutionary idea in the market. What helped it acquire so many customers was nothing but the product itself for obvious reasons. But if we look at the customer retention part of the business, it adopted a mix of strategies ranging from referrals and reward programs.
Coca Cola
Coca-Cola was a company that came in 140 years ago, staying in the market with so much popularity was no less than a challenge but what helped it create a hook for its customers was many techniques that focused on customer engagement which led to retention. Their campaigns, clear CTAs, active social media, and personalisations, combined together made it a great hit.
Amazon
Amazon hit the goal with yet another strategy that aimed at providing a seamless user experience. With the introduction of Amazon Prime Video and Amazon Cash, it also attracted a bunch of new customers. Their rewards game is so strong that customers enjoy getting discounts and special offers regularly. That’s how they won the battle of Customer Retention.
Apple
For Apple, it was quite a challenge because, with such prices, they had a narrow target group. But what brought them here to where it is today is nothing but their strong marketing tactics, amazing customer service, and the diversity of the products. Let’s take it raw- we all are admirers of this one!
Insightful enough?
Of course!
If all this doesn’t inspire you to rework your existing strategies, nothing else would.
Try this out and it’s a bet the results would leave you awestruck because there’s nothing better than it.
Wait, you’re missing out on the BIGGEST ADVANTAGE!
Still, wondering?
None other than- COMMUNITY BUILDING!
There’s nothing better than having a community of customers that build connections with your brand and choose to live with you for a lifetime. Once you have a robust community formed, there’s no looking back and there would be nothing else you would ever want for your business!
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