It’s no secret that a business grows by acquiring new customers, but a business thrives when it’s able to retain its existing customers. While finding ways to obtain new customers is important, many businesses fail to place the same amount of effort on customer retention.
According to Harvard Business Review, acquiring one new customer on average costs anywhere between five to 25 times as much as it costs to retain one.
With such a high difference in cost, it’s clear that businesses must build upon their efforts used to initially bring in a new customer to help improve retention, which will ultimately help save them money.
We’ll be taking a closer look at a few tips you can begin implementing today that will help increase customer retention for your business.
Before we begin, let’s define customer retention
Customer retention is the strategy of engaging with customers so that they are more likely to continue purchasing a product or service from your business. While many businesses focus on ways they can entice new customers to enter through their doors, many fall to take a deeper look into their retention strategies.
Customer retention is different from customer acquisition or lead generation because your business has already done the hard work of convincing customers to give you their business.
Why customer retention is valuable
Every customer is important – we as businesses understand that. The key difference between a repeat customer and a new customer, however, is in their spending habits.
Here are a few reasons why a loyal customer can be more valuable than a new customer:
- Higher average order value: Studies show that repeat customers on average spend 3 to 15 percent more than new customers. With such a difference, having multiple repeat customers can significantly boost your business’s average order value, helping you reach your goals much faster.
- Higher chance of referrals: When customers are happy, they let it be known. When it comes to repeat customers, those are the individuals who are most likely to refer their friends and family to your business.
- Easier to convert again: According to Annex Cloud, there is a 60 percent chance a happy, existing customer will repeat a purchase, compared to only a 5 to 20 percent chance for a new customer. This means that your business won’t have to spend as much money or time convincing an existing customer to return as you would for a brand new customer.
How To Improve Customer Retention
Now that we’ve taken a look into the reasons why customer retention is important, let’s explore some ways your business can increase its customer retention.
- Engage with your customers, even after a purchase.
Maintaining a line of communication with your customer base is the easiest, most effective way to improve customer retention. While it isn’t possible to individually connect with every customer, your business can utilize social media to show your appreciation, reply to any comments, and to simply stay connected. These easy strategies that your business can begin incorporating today will help you build relationships with your customers.
Another way your business can maintain a line of communication with your customers is to request contact information, such as an email address, where your business can then send follow up emails and special offers to your customers.
By doing so, your business receives contact information for all of its marketing efforts, and your customers get access to special saving opportunities that they’ll be happy with – it’s a win-win!
- Get personal
For many customers, the quality of your service (friendliness, familiarity, helpfulness, etc.) is just as important as the quality of your products or services.
To increase customer retention, make your business a friendly and welcoming partner in the eye’s of your customers. The more your customers see that you care about them, the more likely they will be to continue giving you their business.
70% of a customer’s buying experiences are based on how the customer feels about the way they are being treated. A way your business can begin being more personable is by customizing your special offers around proven customer behavior using your business’s analytics rather than making predictions based on general demographics.
Giving customers more of what they want is an effective way for improving customer satisfaction and retention.
- Problem solve and take responsibility
Nobody is perfect. Although your business may do everything to prevent them, problems do occasionally arise and your business is only as good as the reputation it has.
Whenever a problem occurs, be sure to quickly acknowledge your mistake and apologize if necessary.
Being honest with your customers shows authenticity, and it also let’s customers know that your brand is ready and willing to correct any mistakes and improve its processes.
It is also important to handle problems in an effective manner. When a customer has an issue, that last thing they want is to be directed to a dated FAQ page that doesn’t have a solution to the problem they are facing.
People enjoy speaking to other people, so be sure to implement ways in which your customers can speak with a real, sympathetic person ideally in person, or by phone, whenever a problem arises.
- Use social media to connect with your customers
Social media is a great tool to use for connecting with new potential customers, but it is also an effective way for maintaining customer relationships after an initial sale.
You can use your social media to show the human side of your business, such as sharing posts of your employees and the people customers can expect to see when visiting your business.
Your business should also use social media to get an understanding of what your customers interests are and to monitor any current trends which you can apply to your marketing efforts that will help you reach more customers.
When it comes to social media, the key is to let your customers know that your business is always accessible to them, and that it is actively listening to the world in which it operates. With the growing number of customers being conscious about who they give their business to, it is best to occasionally use your social media to remind your audience what fundamental principles your business believes in.
- Simplify your customer’s experience
Ultimately, the buying experience your customer has at your business will be a main factor that determines whether or not they will return. A simple way to simplify the customer’s buying experience is to use modern technology that streamlines the check out process.
Incorporating tools such as contactless payments may seem small, but it shows customers that your business is ready to implement any technology that can improve their experience.
Your business should also consider implementing purchasing practices that make it easier for customers to have access to pricer purchases. A popular example is offering customer payment plans options. By offering payment plans options, you make it easier for your customers to enjoy big-ticket purchases while spreading the payload out over time.
Using services such as Denefits can help your business quickly transition into offering customer payment plans, contactless payments, and more!
Denefits is an innovative complete payment options system that provides businesses in any industry with easy payment solutions and flexible payment plans options for its customers.
With Denefits, your business can offer customer payment plans with no credit check and instant approvals to further simplify a customer’s buying experience. Denefits also transitions your business towards an electronic invoice system and automates the collections process for you.
Denefits is free to use. There are no service fees nor is there any equipment to install, so your business doesn’t waste any time or money providing more accessible options for your customers!
As discussed, the secret to having high customer satisfaction and retention is showing your customers that you care and appreciate their business. While every business can say they care for their customers, not many put forth the effort to effectively convey the message. Above all, your customer service and providing value to you customers is what will keep them coming back.