3 Strategies You Can Employ to Improve Customer Retention
Once you have launched a new product or services into the market you only have only one thing in mind: “How do I get more customers?”
However, acquiring more customers is only the beginning of the business growth journey. Too often existing customers get forgotten, wasting all that effort in acquiring them in the first place. How well you retain customers is actually the 'true' measure your product-market fit.
Let’s go through 3 strategies that will help you build loyal customers in the long run.
1. How many customer left and why?
It’s hard to solve a problem without getting to its roots. Start by measuring the number of clients that drop out and understand the high level reasons for doing so.
You need to set out a standard Customer Retention Rate calculation. Here are the three types of data required:
CE — The number of clients at the END of a given period
CN — The number of NEW customers brought in during the specified period of time
CS — The number of customers at the START of that period
Once you’ve collected the data, all you have to do is apply a simple formula, and you have your CRR.
Customer Retention Rate = ((CE — CN)/CS) x 100
CRR is a simple but useful tool to help you keep track of your customer retention and how that changes over specific time periods. Not just for new clients or dropouts, but also the loyal ones.
When you have established a clear CRR, you now need to establish an ideal or target CRR. This will be different for each business and industry, so it is best to do some research to establish a benchmark.
Now you need to discover the reasons why people no longer get value from you. It is important to segment your customers and understand patterns and behaviours. Some useful ways to segment
purchase size or frequency
'Job-To-Be-Done' (this is the customer goal why they hire your product)
company type or job role
signup date (or time based cohort)
demographics or psycho-graphic
By investigating why different segments of customers leave more than others, you can start improving your products and services to keep the right customers happy.
2. Simplify the on-boarding process
We tend to value time, and we hate it when others abuse this particular resource of ours. Do you want new signup customers to experience the real value of your product? This is what you should do:
1. Research how and when customers experience the real value of your product. Use product use observation and interviews with both experienced customers and new customers.
You need to identify:
WOW or magic moments
2. You need to evaluate how invested or motivated the customer is to on-board your product properly. This may mean that a free trail period is going to fail if the customer never gets to WOW or magic moment. Think about how the customer can become more invested.
3. Typically you will be trying to remove unnecessary steps or friction points while on-boarding. You want to gain a fast throughput to a WOW and give new customers a pleasant surprise.
4. Simplify bureaucracy and paperwork. This is not always easy, but look into how auto fill forms or automated features minimise data input.
5. Make sure customers have the right prompts and the information they need to complete on-boarding tasks. It is surprising how often customer get stuck!
TIP: Have an outsider go through the on-boarding process for you. It’s a good way to get an honest opinion about how a customer feels. Or, use social media to ask your clients how they feel about your on-boarding process. Then, simplify again!
3. Connect to customers emotions
Customer loyalty is both a rational and an emotional decision. The emotional is often linked to personal feelings of a person towards the customer getting the job done, or a company.
To connect on the emotional level with your customers, you need to ask the customer about
how they want to feel or be perceived by others
how they want to feel when getting a their ‘jobs’ done
how they want to avoid feeling when getting a their ‘jobs’ done
how do they want other people to perceive them when getting their jobs
How do people feel about your company right now? How do they want to feel about your company?
A final tip
Once you start implementing these three strategies, there’s a high chance that you will know why customers are leaving, how to get customers to experience WOW faster and that you can start to make the will feel comfortable and at home with your product and company.
It may take some time, effort and dedication, but your work will pay off.
However, there is a factor that might hinder your positive achievements: which customer segment do you really want optimise your product and services for?
To understand which segments want different or similar things you need to understand how to segment your market using customer needs. To achieve this you need to analyse the customer job to be done.
To find out more about Jobs-To-Be-Done or market segmentation can help your grow and retain customer - book a free consultant here.