Every expert in marketing understands how important customer retention strategies are compared to customer acquisition. If experts were to believe, it might cost you five times more to acquire a new customer than to retain an existing one. Simultaneously, retaining existing loyal customers is valued seven times.

All in all, it is important to improve your customer retention if you want to grow more in your business. Okay, let’s face it – getting the exact number is no less than a hard nut to crack. However, one thing is certain: retention is significantly more valuable than acquiring new ones.

Nonetheless, before moving ahead with the listed strategies through which you can improve customer retention, let’s talk briefly about customer retention.

What Is Customer Retention?

Customer retention, also known as client retention, is a process in which you turn your existing customers into loyal and repetitive customers/clients.

The word “retention” itself is derived from retaining, and the meaning of it is, keeping something. Therefore, your ultimate goal is to keep your regular customers.

The process that entails retention is varied from industry to industry. For instance, an eCommerce company has different strategies than an organization that sells software and other proprietary closed-source digital products.

The procedure may differ from one enterprise to another, but the idea remains the same. Speaking of the idea, it is to provide the optimum quality in the services and products, and quality is the deciding factor in retaining customers.

What Are The Benefits And Importance Of Retaining Customers?

Customer retention plays a significant role in generating exponential ROIs. It’s because 68 percent of the generated profit comes from existing clients. When you give them a chance to express and speak out about their experience using your products and services, they provide you with the necessary feedback.

Based on their feedback, you improve your products and services, and the clients tend to buy more and keep sticking around to your brand only. It wouldn’t be wrong to say that, they are not only your cheerleaders who do mouth-to-mouth advertisements of your brand but also help you in understanding your brand more profoundly.

This is exactly what you’d desire to keep your customer intact to your brand line. Mentioned below are some of the noteworthy benefits of retaining customers;

• The loyal customers that you have succeeded in keeping around, will eventually provide you with increased sales and enhanced profits.
• A loyal or satisfied customer would recommend your products and services to others and ultimately bring you more customers.
• Your loyal customers will try other products and services of yours and therefore, buy more from your brand line.
• Your ROI will explode exponentially. Isn’t it more profitable than acquiring new customers, right?
• Your loyal customer will likely experiment with new products from your brand, and the chances are six times higher, as the study shows.
• The relationship between your brand and the loyal customers becomes stronger with time.

In simple words, an enterprise needs to focus more on its brand value by enhancing brand trustworthiness. Stats say that only 12 to 15 percent of customers stay loyal to your brand. However fraction of a percentage it may appear to you, it signifies 55 to 70 percent of your sale value.

Apart from that, it is of utmost value to you because it leads to a higher retention rate. Now that you know what customer retention is and what is the importance and benefits one can reap from it, let's briefly understand the customer retention rate.

How To Calculate The Customer Retention Rate?

Before you move ahead with devising a plan to execute customer retention, you are required to calculate your brand’s customer retention rate. The retention rate of your customers tells you how many customers are there that are sticking around to your business.

Here’s how you can calculate it;

{(Number of customers remaining in the final phase – Number of customers acquired before the final phase) / Number of customers at the initial stage of the starting phase} X 100 = Customer Retention Rate.

Let’s shred it down to make it more understandable.

To begin with, define your phase. It could be anywhere from quarterly to half yearly to annually to anything that works best for you. Now, let’s begin

Suppose you have 10,000 customers during the initial phase. 5,500 new customers were acquired during the phase. 2,500 of them bailed out on you. Now, according to the customer retention rate formula, you are left with 1,300 customers.

Now, to calculate the retention rate, it goes something like that;

{(1300-5500) / 10000} X 100 = 75

Your Customer Retention Rate = 75%

Why is this stat so important? The number has great significance as it denotes your performance in keeping your customers loyal to you. If you talk about the benchmark, 35 percent or higher lets you know that you’re doing well in your SaaS or eCommerce business.

Strategies To Improve Customer Retention

While devising a plan to improve your customer retention, you are suggested to focus on the below-mentioned key factors that facilitate customer retention rate;

1. Win Your Customers’ Trust And Build A Great Rapport

Building trust on a strong foundation is not something that happens overnight. It requires consistent efforts and hard work to attain it. You need to take care of the core values and ethics at all stages.

• Educate your customers regularly about the products and services you provide. Don’t forget to tell them how to use them effectively by conducting product training sessions.
• Try to sell them your products and services through effective service channels. An accurate response by providing the right channel can solve a lot of problems.
• Make a calendar and organize events and contests to promote your products. It will make your customers engaged in the event and become aware of your brand.
• Don’t forget to offer lucrative offers such as discounts, free-returns, fast-shipping etc. to lure your existing customers to become loyal to you.

Trust is a fragile and intangible asset that can be created by empathizing with your customer. Be empathetic to their queries and instead of countering their aggressive rebuttals with the same pace, be proactive and guide them.

2. Create A Strong Customer Loyalty Program

Perhaps you already have a loyalty program but it isn’t effective to enhance ROI. Chances are you may be just expanding and testing your retention phase. Either way, you must know that your brand loyalty program must have the below-listed elements;

• Reinforce your core ethics and business goals. Whether you are encouraging more incremental purchases or you are promoting more trials, make sure the program is well-structured with rewards and discounts.
• Go for a tiered program for your valuable customers. Usually, the customers who spend more or purchase more of your brand products can be considered valuable customers. It could be anything from exclusive promotions to accelerated earnings.
• Devise a plan for the targeted rewards and offers. Make good use of digital marketing tactics to focus on the targeted audience. It will provide you with keen insight into their buying habits and buying power.

3. Leverage Customer Data

Data is the real king in this new tech era. By utilizing digital tactics and analytical tools, you will get to know brief information about their purchasing power, interests, buying habits and a lot of other information required to know their needs.

Instead of asking them now and then, you could get a lot of insightful data about them using digital tactics. From transaction history to browsing history of buying, you will be availed with tactful knowledge about your customers.

4. Use Market Automation

Market automation is something that only regulates the data you are getting about your valuable customers but also segregates them as an individual to know them even better. It simplifies the work among the marketing team and helps customers to re-engage with you.

The strategy requires full-blown AI/ML implementation by which you will get to know which customers engaged and who didn’t, and when did they engage the last time. The system automatically recognizes when a customer engages and relapses.

5. Personalize The Brand’s Offers

Just because you got the email from your customer doesn’t mean it’s the job gets done. It requires more than just emailing and calling them. Instead, make a firm plan to personalize the offer by specifying their needs, purchasing power and buying habits.

It will make a customer think they are valuable and that you are aware of their requirements. Also, providing an opportunity to express their experience using your products and services will add nothing less than a cherry on top.

Concluded

No wonder customers are the core foundation of a business. Without having a customer, you cannot imagine a business. It is not even about how many customers a brand has. It’s about how much it can retain to sustain a business. Speaking of customer retention, we hope the strategies mentioned in the blog post help you in retaining customers.

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