How important is a customer retention strategy?
- The cost to acquire new customers can be five times higher than retaining existing ones.
- Increasing customer retention by only 5% can increase profits from 25 to 95 percent.
- The success rate of selling to an existing customer is 60 to 70 percent, while only five to 20% for a new one.
By retaining customers, your business gains more value from a product or service and improves the chances of customers engaging in word-of-mouth marketing or becoming brand ambassadors.
This glossary covers some of the most common customer retention strategy terms. It should help you increase retention and build lasting relationships through tactics like personalized service, effective communication, and marketing automation.
Why customer retention strategy Is essential?
Customer retention is a metric used to measure customer loyalty. Strategies for customer retention are any activities or actions a company takes to increase customer retention and reduce customer churn. Customer retention efforts begin with the customer’s first contact with your company and continue throughout the relationship’s lifetime.
A customer retention program aims to help your organization retain as many customers as possible. While every growth-oriented business wants and needs new customers or clients, it’s essential to have a plan for improving customer retention rates. The best customer retention strategy plans are a blend of art and science and require understanding each customer’s journey and equipping your team with the tools they need to deliver an extraordinary customer experience.
What are the tools that can help?
The easiest way to track customer data and satisfaction metrics is with digital customer retention solutions that help you discover which of your strategies to keep customers coming back are and aren’t working. The best customer retention software helps you:
- Improve communications between your customer success managers and their customers.
- Save time by automating manual processes.
- Increase customer satisfaction and renewal rates.
- Analyze onboarding and ongoing customer playbooks in one place.
Though creating individual messages isn’t always realistic, you can group existing customers by traits like preferences, locations, purchasing history, and more. You can then create and send group-specific communications that reflect the insights you’ve gathered on customers during their interactions with your business. The result is customers who feel emotionally connected to your company and who desire to continue doing business with you.
Customer Loyalty Program
Brands must give customers a reason to keep buying from them. A customer loyalty or rewards program is an effective customer retention strategy that encourages customers to continue buying from your brand instead of from your competitors. They also maximize customer lifetime value by offering incentives to spend more and buy more often. Common customer loyalty programs include points programs, game programs, and hybrid loyalty programs.
Brand Advocates and Ambassadors
Brand advocates and ambassadors are customers who promote a company’s product or service on a purely voluntary basis, though sometimes businesses hire and pay brand ambassadors. They refer new customers, create content on your behalf, and can even offer helpful insight for creating buyer personas.