Finding new markets and customers is quintessential for a thriving business. But what’s more important is keeping the customers it already has.
Indeed, you need more new customers to drive higher revenue. But it’s your existing customer base that will prove to be critical for growth and sustainability. So, how do you plan to retain your customers?
As a company, you must learn the art and science behind customer engagement and retention, and that’s precisely what we will learn in this comprehensive guide to customer retention programs.
We will share some of the most successful strategies to create customer retention programs and use them to increase customer retention and drive more loyalty.
Let’s get started!
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What are customer retention programs?
Customer retention programs are essentially initiatives taken by brands to retain their existing customers and encourage them to make more purchases.
They are different from customer acquisition programs as “acquisition” refers to the company’s ability to bring in new customers.
While customer acquisition is responsible for growing a company’s revenue, customer retention ensures its overall stability. To measure customer retention, you will have to track customer retention rates.
Here’s the formula to calculate the customer retention rate in a given time period —
Customer Retention Rate = [(Total number of customers – Total number of customers acquired) / (Total number of customers at the end of time period)] X 100
Why are customer retention programs important?
Now that you know what customer retention is all about, let’s find out how a customer retention program benefits your business. Here are the key benefits of investing in customer retention programs —
1. Retention costs way less than acquisition
Did you know customer acquisition costs nearly five times as much as customer retention? This is because once you have gained a customer, it becomes easier to encourage more purchases and even loyalty.
However, when you are acquiring a customer, a lot of money and effort goes into outreach and providing enough incentives to encourage that first purchase.
Not just that, your sales team might spend months pursuing a prospect only to find that it is no longer interested in making a purchase.
2. Helps build loyalty and create referrals
In order to build a business that proves to be stable and sustainable over a long time, you will have to ensure a reliable customer base.
You can achieve this by investing more in customer retention programs. With retention strategies, it becomes easier to generate positive customer sentiments and encourage customers to share them with others.
Besides loyalty, you can even use customer retention programs to boost referrals through word-of-mouth marketing. In other words, keeping a customer happy can prove significantly profitable for your company.
3. Ensures increase in profit
If you are looking for strategies to boost profit at your organization, you have landed just on the right page. Customer retention programs will help boost your bottom line over a period of time, since loyal customers tend to spend more over time.
You can even increase profits by providing subscription-based services and products as these are known to ensure a steady cash flow from the existing customer base.
After all, your existing customers are more likely to give your new products and services a try than new customers.
4. Significantly reduces customer churn
If you are losing customers, your company is in big trouble as customer churn can really eat into your profits and ability to innovate as you ultimately won’t have enough cash flow to achieve the same.
With customer retention programs, you can reduce customer churn rates by figuring out reasons why customers stop using your products or services.
You will be able to know if your competition is beating you, which is causing customer churn, or if internal issues are leading to bad customer experiences.
5. Fosters innovation
As we mentioned above, customer retention programs can lead to the identification of issues that linger in the existing customer journeys.
As you come across the issues, you will be able to find innovative solutions to overcome the challenges, which will contribute to product or service development.
Not just that, fostering innovation will help develop better marketing and branding strategies. However, you’d not want to bring in too many changes to your existing offering as it might scare your loyal customers away.
How to use customer retention programs?
Here are the best strategies you can use immediately to create customer retention programs and retain more customers at your organization.
1. Make use of customer service tools
If you are a small business that caters to a very small customer base, hiring just a small number of people for customer representation will be enough.
However, as things get grander and you grow in the market, you will be catering to a much larger customer base.
In that case, your customer retention strategy will need to make use of customer service tools like a CRM that can efficiently record customer interactions and make it easier for you to create and resolve support tickets.
2. Kill your ego and apologize
As you grow, you are bound to make mistakes. Now, as a business owner, you have two choices. First, to be defensive and never admit to having made a mistake. Second, admit that you made a mistake and work towards improving your products and services.
If you want to retain customers, learn to apologize in a way that makes customers trust you even more. We highly recommend you take action that allows you to solve customer issues promptly and apologize for the bad customer experience.
3. Learn to inspire existing customers
What does your business stand for? This is an important question to ask as the answer alone might make you stand out from the crowd. You have got to attach your business operations to a mission or vision that pushes customers to be a part of your organization.
In other words, your mission should entice your customers to stay with your brand as it genuinely cares about doing good for the environment, and people, and providing solutions that serve customers in need.
4. Prioritize convenience for customers
How convenient is it to use your products and services? As a business owner, you must try walking in your existing customers’ shoes. In other words, it’s crucial to walk through the customer journeys and figure out existing and potential roadblocks.
If you want to make your products and services convenient, you will have to first make them as accessible as possible. Track the needs and desires of your customer base and develop solutions to satisfy them.
As you prioritize convenience for your customers, customer retention will get a boost.
5. Personalize the customer experience
Personalization works. People like to be part of a business-customer relationship where they are addressed in a way they feel more personal and cared for. Investing in personalization means that you are prioritizing customers.
This is because you will have to consider people’s needs, opinions, and recommendations to develop better experiences and give your brand character.
Adding personality to every interaction significantly improves customer experiences and even improves customer retention rates.
6. Interact with your customers
How often do you speak to your customers? Listening is a major aspect of an improved customer experience as customers have a lot to share regarding the products and services they use.
However, how are you going to interact with your customers? We highly recommend you solicit firsthand accounts of customers who are part of your organization.
One of the most effective ways to interact with customers and boost customer retention is one-on-one conversations. These help interact with customers on a more personal level and generate intricate details about the customer journey.
7. Standout from competition
Eyeing authority over the market? You will have to come up with ideas to set yourself apart from the competition, which will eventually help retain more customers.
One of the best customer retention strategies to use for this is reputation cultivation across your organization.
You can achieve this by developing a personality that is true to your brand. This makes it easier for customers to connect with your brand and turn into brand advocates.
8. Make subscriptions available
As a business owner, you should aim to bring in more and more repeated purchases. The more repeated purchases, the better your business will perform in crisis.
Another customer retention strategy worth implementing is making subscriptions available to customers.
A subscription-based model that includes exclusive offers, events, content, and more will certainly help gain more customer loyalty. At the same time, you shouldn’t charge customers a fee to subscribe to your products and services.
9. Positive emotions, positive results
If your existing customer base is satisfied with your products and services, chances are they will stay with you for a long time to come. In other words, you will have to make sure your customers have a positive mindset and feelings about your brand.
To elicit a positive mindset, you will have to tap into their sentiments and build an experience that provides a sense of community and belongingness — besides your usual product and service offering.
10. Social proof boosts retention
They say the greatest form of marketing is no marketing. And it’s true if you know what you are doing with your marketing campaigns. One of the simplest forms of marketing is social proof, especially if your customers are the ones marketing for you.
We highly recommend you capitalize on social proof as customers tend to trust the recommendations of their family and friends. This customer retention strategy includes customer testimonials and information that can be published on public portals.
11. Make your customers smarter
How often do you educate your customers? Keeping your customer base educated about your products and services and what you intend to do in the future will only help customers make better purchasing decisions.
Customers always have options in the market, therefore you should offer them something valuable to stand out.
We suggest you develop an educational program that keeps customers engaged with your brand, get to know your products and services better, and learn how you can improve their lives.
12. Surprise customers often
Who doesn’t like to be surprised? We are sure your customers love to be delighted with offers and events they weren’t expecting from you.
This is an excellent customer retention strategy if you are able to surprise customers in a way it becomes unforgettable.
However, to achieve this, you will have to know your customers closely.
As you understand the preferences and likes/dislikes of your customers, you will be in a better position to prepare surprises that make a positive and long-lasting impression on their minds.
13. Offer superior customer support
Customer support is often a factor that pushes customers away from you to competitors.
You’ll have to audit your customer support service and figure out if the KPIs are duly met.
As a business owner, you will have to offer support on the right platforms and make sure the support is superior to your competitors.
You can ensure that by walking in your customers’ shoes and figuring out the obstacles customers face when connecting with you.
14. Never miss out on thanking customers
Your business is running on customers who have decided to stick with your brand and make repeated purchases. Such customers are a blessing, and you should never miss out on expressing gratitude. It can help make your brand memorable.
But, how should you thank your customers as a brand? We highly recommend you share personalized messages over mail, SMS, or even write personalized notes. However, saying a simple “thank you” can also be an effective customer retention strategy.
15. Provide incentives to keep customers
Incentives work as these function as a major catalyst for repeated purchases and higher customer retention. However, most companies limit themselves to offering only free trials, yearly subscriptions, and attractive introductory offers.
In order to beat the competition and gain the attention of your customers, we suggest you track customer behavior and provide incentives before customers decide to terminate their relationship with your brand.
You can retain more customers by getting on a phone call with such customers and asking how you could enhance their experiences.
16. Become a trustworthy brand
How can you gain the trust of your customers? Approaching customer trust with a strategy will provide better results than just taking a shot in the dark. Customers are valuable and so are their issues.
As a business owner, you should prioritize existing customers’ issues and solve their problems first.
Put your customers first no matter what and even be ready to offer solutions for free. The customers you’ll gain through such actions are bound to stay with you long-time.
17. Develop a community around your brand
This is a no-brainer. Customers, regardless of the brand they are with, want to feel connected as a brand member.
They want to know what other customers of the brand think and feel about using the products and services.
This is why we suggest you build an online community around your brand. The online community allows customers to bridge the gap, discuss issues with other customers, and hold chats or meetings.
18. Gamify the customer experience
One of the best ways to keep things interesting and increase customer retention is gamification of the customer experience.
You can introduce gamification by offering incentives or points based on purchases your existing customers make at your store.
You can even divide the customer base based on points won and assign exclusive incentives to different levels. This can also help reduce cart abandonment and boost social proof collection.
19. Keep things fresh and interesting
While customers want to experience uniformity and consistency in the products and services they use, they are always in for a customer experience that breathes freshness into their lives.
So, how can you keep things interesting for your customers? Besides gamification, you can come up with exciting offline events for loyal customers. Such novelty of surprises can help you retain more customers.
20. Reward your best customers
Why not? Not all customers are going to make repeated purchases from you. So the ones that do should be treated differently.
Customers who are essentially big spenders and tend to make repeated purchases should be rewarded with incentives, exclusive products and services, events, and special efforts from your brand.
You can make the most of this customer retention strategy by knowing your customers and the factors that drive their loyalty.
21. Omnichannel marketing
Your customers and prospects will try connecting with your brand on all kinds of online and offline platforms.
Not only that, they might use different devices to get connected. How will you cater to such diverse platforms, devices, and queries?
We suggest you have omnichannel marketing campaigns and revolve the campaigns around your customers.
22. Respond promptly to queries
Time is running out. If a customer leaves a query at your portal, you will have to respond to it as quickly and effectively as you can.
You must slash customer response times by speeding up the customer support process. One of the best ways to do this is by introducing a live chat function to your website.
23. Send out customer feedback surveys
How often do you listen to your customers and customer expectations? Listening to the customers can be key to business success, especially if you conduct the exercise with your existing customer base.
We suggest you send out surveys like NPS, CSAT, and other feedback surveys at critical touchpoints of the customer journey.
The solicited feedback should be tracked and analyzed to make better business decisions in the future.
Final thoughts!
There you have it. We have shared everything you need to know in order to create and use customer retention programs and improve customer retention rates at your company.
We discussed the benefits of customer retention programs and listed some of the most practical and effective strategies you can implement right away. Customer retention programs are critical to retaining customers and to your business’s success.
Therefore, we suggest you come up with tricks and tactics that bring you closer to your customer base and encourage them to turn into brand ambassadors — bringing more business and revenue.
Did you find this post helpful? Stay tuned for more informative posts in the future.