For any small business, customers are its most valued asset.
Sure, growing your audience base matters but what’s more important is retaining the existing customers.
And creating loyal customers requires extra effort.
However, it is easier than acquiring new customers. In fact, about 82% of brands have stated that customer retention is comparatively cheaper than lead acquisition.
It’s no surprise that more brands are investing their resources into creating personalized subscriptions and engaging with their existing audience through multiple channels.
So, how exactly does customer retention benefit brands?
Through this article, we’ll discuss the definition of customer retention, why customer retention is important, and check out some customer retention strategies too.
What is Customer Retention?
Customer retention can be defined as a brand’s ability to keep or retain its audience over a continued period of time. The activities that companies integrate to gain active engagement and repeat purchases from customers can be considered as customer retention strategies.
Loyalty programs, user-generated content, and virtual communities are some popular retention methods.
Now you might be thinking how to calculate customer retention? Well, here’s the formula to calculate customer retention
(E-N)/Sx100 = CRR
To get the retention rate, you require the following data:
(S) Total number of users or customers at the beginning of a specific duration (example: 6 months or a year)
(E) Total number of users or customers at the end of the specific duration
(N) Total leads or customers acquired during the stated period
Why is Customer Retention Important?
Customer retention can be beneficial to brands in the following ways:
1. Retention is more affordable than lead acquisition.
2. Retention strategies help in increasing customer loyalty and creating a strong brand image.
3. Customer retention helps in improving the audience size and directly translates to higher revenues due to increased sales.
4. Brands can gain new customers through referrals from existing customers.
5. Brands can get personalized data from existing customers through feedback and surveys that can help them in product development and future marketing campaigns.
Now that you know how customer retention helps to create long-term business success, let’s check out some retention strategies.
12 Customer Retention Strategies that Brands Used
1. Don’t just Sell Products, Create Experiences
Customers don’t just want a beneficial product; they look for an engaging buying experience. That’s why businesses have started integrating storytelling or interactive activities into their marketing plans.
Coca-Cola is known for its wonderful campaigns that complement its mission of uniting people through shared experiences.
They entered the digital space by launching their Non-Fungible Token (NFT) through ‘The Friendship Box.’ The rare collectibles were auctioned off to support the Special Olympics.
2. Show Your Gratitude through Rewards
Statistics prove that approximately 75% of customers choose brands that offer incentives or rewards. Reward programs also allow you to gather user data directly from your audience in exchange for offers or incentives.
You can also send exclusive promos on special occasions like birthdays or milestones to make your audience feel special.
Starbucks has created a rewards program to enhance its customer retention. Not only do its customers get freebies, but they can also play exclusive games to win prizes and get the convenience of easy orders and payments through the Starbucks application.
3. Make Your Services Accessible
Customers look for products that provide multiple benefits and ease of use. It’s important that brands keep updating their offerings so that customers don’t get bored.
Google constantly updates its maps with features that make them accessible to a larger audience. From introducing maps for eco-friendly routes to biking navigation, Google provides more options and a quality brand experience to its audience.
4. Create a Virtual Community for Your Brand
Online communities can work wonders in increasing audience engagement. They don’t focus on a customer’s purchase history to engage with them. Brands can utilize this space to get direct access to their audience.
Apple does a great job of creating exclusivity with its audience not only through its products but also through its communities. Apple’s community forums allow users to interact with each other, share technology hacks, and earn points or awards.
5. Use Social media for Efficient Customer Service
Reports show that 89% of buyers repeat brand purchases after a good sales experience. Meanwhile, almost 59% of buyers halt their purchases after an unsatisfactory customer experience.
For example, look at Target and Best Buy’s Twitter accounts. They have created separate Twitter handles ‘Ask Target’ and ‘Best Buy Support’ to address customer concerns that are received even on their main Twitter profiles.
If your audience is reaching out to you on your social profiles, it’s because they expect a quicker response.
6. Incorporate Customer Feedback through Polls or Surveys
Accumulating user data or feedback allows you to update your services as per your audience’s requirements. Approximately 77% of people view brands favorably if these brands invite and accept user feedback proactively.
Expedia allows users to leave feedback through their website. Additionally, their customers can also leave real-time ratings or feedback about their travel experiences.
This data can help Expedia and their partner hotels to work through any concerns and provide better service.
7. Educate Customers through Blogs or Tutorials
Brands can educate their audience through guides or video tutorials. This strategy doesn’t just help customers understand how your products work; it also enhances brand awareness.
Canva’s Design School offers free design and marketing courses, video tutorials, and a blog full of informative content to help its audience use Canva.
Giving access to free content shows the audience that a brand isn’t solely focused on selling its products.
8. Create Loyalty Programs to Encourage Repeat Purchases
Offering subscriptions guarantee repeat purchases from existing customers. However, it’s essential that brands provide unique benefits as these customers invest more than one-time buyers.
Amazon Prime subscription retains customers by offering free and fast delivery, access to Prime Video, ad-free Prime music, free Twitch, Kindle subscriptions, and much more.
With so many benefits through just one subscription, customers consider Prime worth every penny. Amazon offers a free trial to new customers and exclusive offers to its loyal customers.
9. Create a Buzz through Announcements
Companies can use multiple channels to create a buzz by teasing a launch or return of a product. In fact, many brands create launch strategies to keep their audience hooked.
McDonald’s creates excitement through a mysterious announcement on their Twitter account. Brands can incorporate this strategy to introduce new launches or relaunch any fan-favorites.
The number of likes on the announcement tweet proves that McDonald’s succeeded in getting its audience’s attention.
10. Support Causes that Your Customers Care About
Brands that support environmental or social causes stand out from companies that purely focus on sales. Numbers show that about 64% of Gen Z buyers are okay with paying higher prices for eco-friendly products.
IKEA prides itself on being a brand that supports sustainability. They collaborate with their employees and customers to support healthy living, tackle climate conditions, and provide equal pay to their team.
IKEA’s customers support these causes by purchasing their sustainable products.
11. Promote UGC Content for More Engagement
User-generated content invites your audience to not only use your services but also collaborate with you. By acknowledging your audience’s shared content, you can encourage new users to participate as well. UGC can also serve as great testimonials.
GoPro’s marketing plan thrives off on User-generated posts. They regularly promote UGC content on all their social profiles.
Not only do they credit their members for the pictures, but they also endorse their customized hashtag ‘GoPro’ to stand out. By offering paid and feature opportunities, they encourage more viewers to participate in their UGC campaign.
12. Keep Your Audience Informed through Emails or Newsletters
Emails are considered the most effective marketing channel to improve retention, with a percentage of 56%. Staying in touch through emails will make it hard for your audience to forget you.
Condé Nast sends out customized newsletters to all its subscribers. These newsletters include stories and content from their publications like Vogue, Vanity Fair, Wired, GQ, Pitchfork, and more.
Users can select the type of content they’re interested in and only receive that information. By personalizing the newsletters based on the audience’s preference, Condé Nast’s readers find no reason to unsubscribe.
Retention Metrics to Track
In order to know how well your retention strategy works, you’ll have to track it. Here are a few retention metrics that you should regularly analyze:
Repeat purchase probability rateCustomer lifetime valueCustomer churn and revenue churn ratesCustomer retention costPurchase frequencyCustomer satisfactionCustomer growth rate
Brands can see which metrics apply to their specific plan and track them regularly. To strengthen customer retention, brands must gather user data and evaluate them.
By incorporating a mix of these strategies, brands can boost customer loyalty and create better relationships with their audience. Encouraging UGC content and loyalty programs can aid in boosting your brand’s customer retention.
In fact, your happy customers are more likely to market your brand through word-of-mouth.
With customers expecting personalized services from brands, it is vital for brands to keep away from standardized content. So, utilize email marketing and social media to engage with your audience and give them reasons to stay with your brand.
The post 10+ Ways Small Businesses Can Improve Customer Retention appeared first on SocialPilot.