“When the customer comes first, the customer will last.” – Robert Half
Acquiring new customers is fantastic. But keeping existing customers and keeping them happy is even better.
You must have heard that it’s cheaper to retain existing customers than acquire new customers like a million times.
But how do you actually halt that customer churn from hampering your organization’s health?
In this blog post, we’ll explore more about customer retention and share some smart ways to improve your customer retention rate.
What is customer retention?
Customer retention is maintaining relationships with your existing customers to delight them even after they’ve purchased your product or service. In doing so, you engage with these customers to build loyalty towards your business.
Why is customer retention important?
According to a study, the success rate of selling to an existing customer is 60-70%, while the success rate of selling to a new customer is only 5-20%!
- Improve conversion rates
- Lower costs
- Improved profits
- Boost customer loyalty
- Increased referrals
How is customer retention rate calculated?
Before you begin to craft your customer retention strategy, you need to find out what your current customer retention rate is.
First, you need to define a period of time — whether that’s quarterly or yearly. Then, follow this formula:
Customer Retention Rate = ( (No. of Customers at End of Time Period – No. of Customers Acquired During Time Period) / No. of Customers at the Start of Time Period) ) X 100
For instance: You start the year with 25 customers, gain 5 new customers in the second quarter, and have 1 customer churn.
( (24 – 5) / 25 ) ) x 100 = 95% retention rate
Once you know your retention rate, you can understand what your retention position is and find out what you can do to improve.
7 smart ways to improve customer retention
We are well aware that content is the king and we’ve listed 7 ways for you to harness the power of content marketing to improve user experience and retain more customers.
1. Understand your audience
It’s important to know ‘who’ makes up your audience. Use your Net Promoter Survey results, and ask the ‘promoters’:
- Why did they choose your business and not your competitors?
- What do they like about your brand?
- What do they think you could do better?
You need to know the answers in order to build an effective customer retention strategy. Without this, you may not know who is leaving your business and, most importantly, why.
2. Use a mix of content for ongoing engagement
Once you acquire a customer, it’s important to let them know that they’re not forgotten. Keep them engaged with the perfect mix of content for different stages of the buyer funnel.
3. Create a customer loyalty program
Implement a program to build loyalty. Offer a special discount/early access to new products or a personalized ‘thank you’ note. Your loyal customers can even get you referrals. Use customer insights to see which reward aligns best with your customer’s preferences.
For instance, if a user has signed up for a basic subscription of your product, offer them a free trial to a pro version for 30 days.
4. Meet your customers where they are
Develop an omnichannel mindset and a multimedia approach. When you know ‘who’ they are, ‘what’ they need from you, and ‘where’ they spend their time, it will help you create the type of content (e.g. blog, video, infographic) they want, and then share it wherever they prefer.
Slack, a workplace communication tool, is a perfect example that they have a solid understanding of their customer’s most preferred channels which is why they use Twitter, to share frequent updates or other customer issues.
5. Leverage technology
Use technology to scale your customer retention efforts. Email marketing is an effective online strategy to create conversions. When a user signs up for one of your products, easing them in with onboarding emails to educate them quickly helps them understand the value your product offers. Integrate your email marketing platform with your CRM to send targeted emails to inactive customers.
For instance, when users have been inactive for a while, you can nudge them with special offers.
6. Focus on UX
Remember that first impressions matter. The same is true for your business because the way you present your brand determines how people view you. Transform your website into an easy plug-and-play, that means your website should be easy to navigate and should include:
- Help centers
- FAQ pages
- Resource page
This helps your visitors to do things on their own if they want.
7. Ask for feedback and embrace it
Having access to customer feedback data but not using it is one of the biggest customer retention mistakes you can make. Feedback can help give solid insights into what your customer really wants from your company. Use NPS surveys, to know who your ‘on the risk customers’ are. Reach out to them and understand your weaknesses and assure them what you can do better.
The great marketer Peter Drucker once said, “Marketing has two purposes: to create and keep customers”. And with the aforementioned ways, you can safely keep your customers and burn that churn rate!
Want to learn how content can work its magic on customer retention? Talk to us.
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