Here Are Some Reasons Why You Need to Care About Your Customer Retention and Avoid Churn
You've got an membership site, ecommerce store, or online subscription-based business and have spent time and effort getting new clients. You've created the perfect sales funnel, marketed to your relevant audience, and have spread the word.
Now that you have a client base, the work continues to ensure your business remains attractive to your clients so your customer acquisition costs don't go down the drain. To avoid your business running on a treadmill of getting and losing clients, you need to be proactive in maintaining better customer relationships. This can be done by implementing proven customer retention strategies.
Customer retention is vital to a successful business. The name of the game is to focus on practical and proven ways to boost customer retention to continue to experience sustained growth. Don’t be fooled into thinking once a customer, always a customer. Brand loyalty is a fickle thing. The very definition of retention which refers to a company's ability to turn customers into repeat buyers and prevent them from switching to a competitor makes retention a challenge for every business.
Save on Customer Retention Marketing
You get to do less marketing since it costs 5 times more to build a relationship with a new customer than to keep an existing one. You will save both money and effort in marketing to your existing customers.
There's no need to convince your existing customers they have to buy from you because the hard work is already done. Your marketing strategy should shift to retention through content marketing as a means to provide customer support on their customer journey.
Improve Your Business
Your customers are the ideal people to help you improve your service offering. They can let you know whether what you’re providing is good enough, whether you meet expectations if you can launch new products, and how they feel about the value. Repeat customers provide a rich data set, customer retention statistics, and metrics for measuring your performance.
More Profits From Customer Retention
When you sell to your existing customers, you don't have to focus on price as much because they already trust you. It's easier to convince them to sign up for more of your products if they are happy with what you are currently offering. According to Bain and Company, increasing customer retention by 5% could lead to a 25% to 95% increase in profits. You can upsell or provide special offers and provided that you have done your research, profitability should increase as you launch new products.
Customer Retention Strategies and Best Practices
So how do you boost your customer retention? What are the best customer retention strategies? Here are seven ways that will help you to keep your best customers and reduce churn.
1. Shift Your Focus to Customer Retention
Customer retention should be one of the main focal points of your business and should be included in your business growth strategy. This means that apart from customer acquisition, customer retention should be at the heart of everything you do in your business – from onboarding to customer service and every other interaction. Revisit your messaging to make sure that you are managing the right customer expectations.
Ask yourself, “In a perfect world, what’s the ideal and perfect customer experience?” Use data from customer service logs, Net Promoter Score (NPS), or point of sale systems to find out where the sticking points are. These are key indicators for your customer experience management.
When you identify the issues, do everything humanly possible to ensure these are eliminated for your customers. Your aim should be to make sure your existing customers have a smooth, seamless, and stress-free experience with your business and your product or service offering. Make your customer feel that they are taken cared of and your customer success is important to you.
2. Understand Why Your Customers Are Abandoning Your Business
Keeping a positive bottom line can be hard when you don't have the right data at your fingertips. Understanding why people are leaving is key to plugging any holes and gaps in your customer retention strategy. Understanding your high turnover can save your company in the long run. You must figure out whether churn is voluntary or involuntary. For voluntary churn, find out why the customers have chosen to leave your business in the first place. Is it poor customer service? Is it a bad experience with the software (if it's a SaaS)? Here are some methods to help solve customer issues that can inf
An easy way to convert the negative experience is to have a customer feedback form at the end of the customer's lifecycle or customer journey to find out the reasons why they weren't happy with your service. Use the results of the customer feedback to fuel improvements in areas that customers have mentioned. Find a way to take care of these customer complaints on their exit interview and follow up with them once you have done so. Your retention policy should be in place for immediate implementation by your customer support team.
A quicker way of finding out why customers are leaving your business is to create an exit survey, which can be displayed as soon as they cancel their membership or subscription. Surveys are a primary source of telling you where your customer retention pain points are. Because the survey is available immediately after they have decided to stop using your services, customers might be more candid and honest about why they decided to leave. Surveys are also a good idea because they don't take too much of the customer's time.
In terms of involuntary churn, have an action plan to follow as soon as a credit card payment fails. First, you should find out how many credit cards fail in your business overall and what this costs you over the lifetime of a customer. Working out the cost of failed credit card payments isn't that simple. You need to account for a compound effect that could cost you much more than your first estimate.
If you need help in finding the true cost of failed credit card payments and involuntary churn in your business, book a consultation with Gravy to find out what’s actually going on in the back-end of your business.
From our experience, most business owners have a rough idea of how much they're losing because of involuntary churn. However, as you stand to lose hundreds of thousands (or even millions of dollars) through involuntary churn, it is in your best interests to know exactly what is going on — and what can be done about it.
3. Shine the Spotlight on your Best Customers
Keep data and information about your most loyal customers. They don't have to give you their business, but they choose to use your services or product. They could easily go to a competitor, so show them you appreciate them by creating a loyalty program, by giving discounts, bonuses (free piece of content, percentage off next purchase, etc.) other incentives from time to time. A bit of personalization goes a long way when offering these promos. Subscription boxes, retailers, or even course providers can keep customers happy and engaged with handwritten notes, specialized birthday greetings, and occasional gifts. Happy customers show their satisfaction with word-of-mouth referrals! Satisfied customers have a habit of leaving a trail. You will get new clients in time, but showing spotlight to clients you currently have will boost customer retention.
4. Be Aware of the Risk Points in your Business
The risk points of a customer leaving look different for different businesses. If you are operating a SaaS business or running a membership site, it does no good to try to catch the horse after it's bolted, if customers have decided to stop using your service. Signs that your customers are about to cancel their service are obvious in hindsight. For instance, it could be that your customer hasn't logged in for a certain amount of time. Your retention strategy should have details about what to look for and what will happen when a customer hits a risk point — in other words when they wave a red flag.--- For example, if a customer hasn't logged into your subscription-based business or your membership sites for three months, you can reach out to them and find out what is going on and how you can help them re-engage.
You must also pay close attention to customers who have made complaints for the first time. This is a point where they will feel most frustrated and might be looking for other alternatives to your company if the complaint isn't sorted out properly. Your support team should have a plan in ensuring customer satisfaction after a complaint. Voluntary customer churn is preventable.
5. Stop Involuntary Churn And Provide Better Customer Experience
A key way of increasing your customer retention is to figure out how to solve billing failure with subscriptions. To stop (or drastically reduce) involuntary churn, you'll have to go beyond the normal dunning software and ensure that customers hear from you as soon as the credit card payment fails. Dunning software should only be the beginning when a credit card payment fails and, yes, automated emails are still OK to use. However, customers tend to ignore your emails or, even worse, they often go into their spam folder. What you need is someone who doubles-up on dunning emails to provide a human-touch to communicate with your customer to ensure that the payment is received as soon as possible. These personalized communications also increase your customer engagement and in effect, your customer lifetime value.
With Gravy, whose advocacy is keeping customers on your crm, you get to experience the best and most effective communication techniques to get your clients back online with their payment reinstated as soon as possible. And we also do this while enhancing the reputation of your brand and your business, something automated dunning software simply cannot do.
Looking for more tips to recuperate failed payments? Click here to read our 4 Ways to Recover Failed Credit Card Payments post.
6. Make Use of Live Chat for Customer Support for Better Metrics
Most customer retention programs forget one very easy solution to churn. Keep your communications open. You should make it as easy as possible for your customers to get ahold of you. Gone are the days when customers expect to wait 24 or 48 hours to be contacted by email when they have a complaint. Customers who can get ahold of you quickly will feel respected and they'll believe that your speed in responding to them shows that you value their business. Hubspot, a full platform of marketing, sales, customer service, and CRM software, says that this is especially the case if your service is important to how they run their business. Research shows that 53% of customers would opt for live chat over getting on the phone when they first contact a company. Control on how they contact you leaves a better customer experience
Therefore, if you don't offer live chat, you’re failing to cater to the needs of over half of your subscriber base or membership base. Live chats give your customers peace of mind with functionality, like sending screenshots and links. Nothing is as frustrating as being unable to get hold of someone from a company when you have something that you need to be resolved. Implementing live chat is a practical way to boost your customer retention because getting hold of your business immediately versus waiting for an email or getting on the phone may be the deciding factor in your customers canceling their memberships.
7. Communication when Marketing with a Customer Retention Strategy
Even if your user appears to be doing great with your product and you don't hear from them, that's no excuse to go radio silent. You should be using all the tools that you can to communicate with your subscribers, students, or members on a regular basis. Customer loyalty is also built on your visibility to your customer base, wherever they might be.
Marketing automation, content, like blogs and newsletters, posts on social media, email marketing, will help them to feel familiar with your brand. As a marketer, your content should serve two purposes: First, to get new clients, and second, to make your existing customers feel appreciated. Check out Amazon, Apple, or Shopify for great examples keeping loyal customers through communication.
In terms of the above tips to boost your customer retention, most of them have one element in common. That is, you have to show the human side of your business. Automation has its place, but there's still the need for customers to feel that you value them on a human level. Loyalty statistics points to personalized communication as one of the key aspects of repeat purchases.
Let Us Be Your Customer Retention Partner
Retention should be a top priority for your business, but it does not have to be difficult when you work with the right partner. Because churn rates and retention rates can be hard to track, it can be difficult to allocate this to one person or one team.
You and your team members likely already have your hands full dealing with the number of customers you already have and their issues; adding retention work to the already bulging workload likely won’t maximize the results, leave money on the table, while also draining your team of time better spent growing your business. This is where Gravy comes in.
When you think about customer retention, think about partnering with a company whose full-time, laser focus is on retaining your customers and giving them a personalized experience, day in and day out. Read our post on improving customer retention rate in 15 minutes flat.
Get Your Free Revenue Recovery Plan to find out how Gravy’s excellent customer service and full-time virtual retention specialists to help you retain customers to reclaim your failed payments