4 Strategies You Can Employ to Improve Customer Retention
Once they put their product or services into the market, startups and marketers have only one thing in mind: “How do I get new customers?” The answer depends on how well they have done finding the best product-market fit.
However, acquiring new customers is only the beginning of the business growth journey. Too often new customers get forgotten, wasting all that effort in acquiring them in the first place. How well you retain customers is actually the 'true' measure of product-market fit.
Let’s get through 4 strategies that will help you build loyal customers in the long run.
1. Create a Strong Business Culture that Keeps Your Employees Engaged
How is employee engagement in anyway related to customer retention?
Well, let’s take a look at some statistics. A Gallup Study shows that only 13% of the employed people worldwide are engaged at work. According to the study, companies with happy staff have between 10% and 65% better results regarding:
Have you noticed the customer-related factors in the list? For instance, customer rating means happy clients. The same goes for high-quality products. So, it seems that passionate, fully engaged staff tend to influence client satisfaction.
2. Find out How Many Clients 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 want to buy 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 the tasks they hire your product to do)
company type or job role
signup date (or time based cohort)
demographics or psycho-graphic
From this moment on, you can start improving your products and services to keep the right customers happy.
3. 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 to create a pleasant experience for your customers? This is what you should do:
1. Research how customers experience the on-boarding process — observation and interviews work best and look for:
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 the a 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!
4. 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 a company. So, try getting more personal with your clients.
Create a social media group to test new ideas, ask for feedback or suggestions
Create contests to involve customers into the design of a new product or service
Invite clients to some of your company’s events.
Reward loyal customers
Reimburse or compensate unsatisfied customers. Make sure they get to see you in a good light even when you fail
A Final Tip
Once you start implementing these four strategies, there’s a high chance that customers will stick around more. 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:Knowing which customer segment to optimise your product and services for.
Have you put enough effort into discovering the perfect match between your product and the right market segments? If not, that’s where you should start from.