Often in a romantic relationship, the guy reduces the intensity of his efforts once he’s gotten the girl. But, without intentionality, the relationship will die.
Being intentional will keep the relationship and increase commitment from both parties.
It’s the same with brand-to-customer relationships when it concerns customer retention —one metric every business should take seriously, especially if you’re a subscription business.
Customer retention is a measure of how many of your customers are loyal to your brand and return to make further purchases or recurring payments for a service. At the base of customer retention is customer satisfaction, the ability of a brand to continuously satisfy the needs of its diverse customer base.
Many businesses spend a lot of money to acquire new customers and sometimes get so carried away trying to acquire new customers that they fail to focus on retaining the customers already acquired.
Research shows that 14% of businesses focus on customer retention while 44% focus on customer acquisition. Sadly, this indicates many businesses experience a high level of ‘potential’ revenue loss.
Based on some factors like brand recognition and trust, it will cost an average business seven times more to acquire a new customer than it does to sell to your old customers.
This proves that it is wiser to invest in maintaining the relationships of your existing customers which can generate new customers via referral.
Below, I share 6 effective customer retention strategies for sustainable customer and revenue growth.
Let’s dive in.
Why Customer Retention is Important
Customer retention is way cheaper than customer acquisition and generates a higher ROI.
Customers who are already familiar with your brand and are satisfied to a certain degree will keep patronizing and find it difficult to switch products or services. This is true as the probability of selling to old customers is between 60% and 70%, as opposed to the probability of selling to new customers which is between 5% and 20%.
Brands who are able to retain their customers will see an impact on customer acquisition through referral because happy customers are always willing to refer the brand to friends and family.
Customer retention is important for sustainable business growth.
Ash Maurya, Founder of LeanStack said
While getting paid is the first validation, getting customers to keep coming back is the ultimate validation to building a repeatable and scalable business model.
If you are unable to keep the customers who buy from you, you can’t say you are growing as a business. It’s like a pocket with holes, you’ll always be bleeding money.
Leaky pockets mean your customers aren’t safe, and your competitors are likely to be picking them up when they fall from you.
6 Effective Customer Retention Strategies for Business Growth
To avoid potential revenue loss, especially to your competitors, here are 6 effective customer retention strategies you need to boost your customer retention rate.
1. Great product experience
It all starts with a great product. This is the foundation of your customer retention effort. Without a great product experience, the drop-off on your product will be high. It’s why 77% of people say that what makes them loyal to a brand is quality products.
No matter how good your marketing is, a bad product will affect your acquisition drive, as bad reviews can stop people from even trying out your product.
Focus on building what people want and ensure you do a good job at making it loveable and easy to use.
2. Better customer support
A lot of your competitors would be betting on building a great product too so focus on offering better customer support for your customers.
This is where customers are transformed from just customers to business evangelists, telling their friends about your product and business and how much you value your customers.
3. Consistent communication
Every relationship is built and sustained by consistent communication. And your brand-to-customer relationship is no different. It thrives on consistent and effective communication which builds customer engagement and promotes trust.
Don’t wait for your customers to buy from you before communicating with them. Understand your customers and identify the best time and channel to send them personalized messages and seek opportunities to celebrate them too.
This is why multichannel marketing is important; sending messages to customers in channels they are most likely to respond to, for example, SMS, WhatsApp, Email, and In-app messaging.
4. Rewards and loyalty programs
Rewards and loyalty programs are great customer retention rate boosters. This helps you incentivise and reward your customers for their continuous commitment to your business.
Loyalty programs have shown to cause 54% of a company’s customer base to increase spending with that company, and almost half of a company’s revenue can be attributed to 8% of their most loyal customers.
Your customer base can be a goldmine if you discover a way to satisfy them and convert them into loyalists and product evangelists.
Everyone loves to be acknowledged and appreciated. Once your customers feel appreciated, they are more likely to stick around and become your raving fans. This is the power of rewards and loyalty programs.
5. Opportunities for customer feedback and surveys
Customers are generous with feedback and it is a great way to make them feel heard and empowered by giving them a voice to share and have a say in your business. It’s hard to improve your business if you don’t know how customers feel about it.
Get to know the feelings and thoughts of your customers by all means. You can do this through one on one calls, interviews, NPS survey, contributions to a public product roadmap, website surveys, or by studying the behaviour of your website visitors or customers through customer experience tools like heatmaps or analytic tools.
This survey shows the top channels brands are using to listen to and respond to customers.
[Source]
Getting insights into your customers will help you to make data-backed decisions that matter to the business and your customers, and improve customer retention rates.
6. Customer segmentation and outreach
Your customers are on individually unique journeys and would require a different approach to retain them.
Customer segmentation is the process of grouping customers into different buckets based on conditions like behavioural patterns, preferences and monetary value. For instance, our segmentation by payment history reveals details like how recent, or frequent a customer made a payment or the worth of the transaction.
And our segmentation by payment failure can help you discover the reason for a payment failure for quick payment recovery.
There are many conditions to segment customers. This is dependent on the business type, the insights you want to uncover, and your strategy for customer engagement and retention.
For instance, a customer who is on a freemium plan would need a different retention strategy from a customer who is on a paid basic plan.
For e-commerce or retail businesses, there are customers who drop off after a one-time purchase and it’s not advisable to have them in the same segment as those who drop off after their third purchase or after six months of consistent purchase.
You want to segment your customers based on different events, actions, or attributes and personalize your outreach to them to successfully retain them.
Segmenting Customers with Bunce
Bunce is a simple way to better understand and engage your customers based on their payment data.
By connecting your payment provider like Paystack, Flutterwave, Monnify, or Korapay, you get real-time insight and metrics on your customer and revenue performance. With this, you can segment your customers based on their payment history, behaviours, preferences, and actions to enable you to create personalised and targeted messages that are unique to each customer to drive customer retention and lifetime value. You can engage customers on Bunce through multi-channels; SMS, E-mail, WhatsApp, and In-app.
Bunce helps to shape your customer experience and increase customer engagement, customer retention rates and lifetime value; factors that impact your business revenue and sustainability in the long run.
To discover more about Bunce’s offerings, schedule a demo. We’ll be glad to help you explore Bunce and show how you can use the tool to deliver a better customer experience.