Even businesses that have already experienced considerable success tend to devote more effort to attracting new customers than retaining current ones. However, this strategy is misguided. Developing sound customer retention techniques is a much better investment. Existing customers are the foundation of your customer base and the key to your continued success.
Numerous studies have shown that recruiting new customers is much more expensive than retaining customers that already buy from you. It costs at least five times as much to convince a customer to buy from you for the first time than it does to convince previous customers to make an additional purchase. Meanwhile, a study by Frederick Reichheld of Bain & Company shows that a five percent increase in customer retention can nearly double a company’s profits. Truly, repeat business from loyal customers is low-hanging fruit.
It isn’t difficult to see why putting effort into retaining customers is worthwhile. The next question is which customer retention techniques work best? Here are four approaches to customer retention strategy that will have a major impact on your business:
When a company publicly takes a position on a political issue, it can great for customer retention if done well. Show your support for a cause that your customers already believe in.
Airbnb is an example of a company that successfully increased customer retention by addressing a controversial issue in its promotional materials. The #WeAccept campaign directly opposed anti-immigration policies. The marketing executives at Airbnb knew that their loyal customers favored policies that welcome immigrants. The #WeAccept campaign showed that Airbnb has similar values to its most loyal customers and succeeded in improving public sentiment about the brand and keep current customers coming back.
Customer service just might be the most important element of customer retention strategy. Consistently treating customers with consideration and respect makes them feel valued, which increases their loyalty. Not only does good customer service inspire customer loyalty, but the numbers show that bad customer service costs you customers. More than two thirds of customers have stopped buying from a company because they were unhappy with the customer service. Sometimes a single incident involving a rude cashier or unhelpful tech support representative is enough to lose a customer. Customer service can be even more important than products.
Branded content does not have to take the form of advertisements. In fact, today’s consumers tend to be skeptical about content that sounds too promotional. Instead, use your online presence to talk about subjects that you know interest your existing customer base.
An excellent example is the Yarncraft podcasts. The knitting supplies company produces podcasts about knitting. The target audience is people who already buy Yarncraft products. They are experienced knitters who are interested in learning more about knitting. The podcast brands itself as being to knitting enthusiasts what Car Talk is to do-it-yourself auto mechanics.
Data can show you what your repeat customers like, and it can also show you what they dislike. What makes customers click on a product but not buy it? Is it additional shipping charges? If so, get rid of the shipping charges so that customers will keep coming back. If that sounds like you are taking a financial risk, it will pay off. When customers find a vendor they really like, they do not hesitate to spend a lot of money on that vendor’s products.
Amazon learned this lesson when a quarter of its customers changed their mind about purchases when they saw the shipping fees. Amazon Prime’s free shipping policy has turned out to be one of the most successful customer loyalty strategies in the history of e-commerce.
The best customer retention strategies offer customers something practical and show appreciation for your customers. Demonstrate that you are listening to their requests and general values.
Annex Cloud helps companies of all sizes develop customer loyalty. It uses cloud technology to make the most flexible and reliable sources of information on which to base marketing decisions. Contact Annex Cloud to discuss how to build loyalty with your customers today.