How to Increase Customer Retention Rates
Finding new customers is challenging. You have to actively search the market, stay up to date with recent trends and perfect your existing processes.
Sadly, 44% of companies still focus their time, energy, and money on customer acquisition, yet it’s five times more expensive than focusing on customer retention.
Customer retention ensures that you:
- Increase your customers’ lifetime value while boosting revenue
- Build outstanding relationships with your customers
- Earn customers’ trust because you deliver value in exchange
We’ll look at the importance of retaining customers and share customer retention strategies that’ll keep your existing customers engaged and happy.
What Is Customer Retention and Why Is It Important?
Customer retention measures how well your company retains its customers over time. It’s impacted by how many new customers you acquire and how many existing customers churn.
Research shows that:
- When you nurture your existing customers, they’re 31% more likely to spend more on their average order value with your business.
- When loyal customers buy more, 67% of it is done in their first 31st to 36th month with a brand than in the first six months of the relationship.
- A 5% increase in customer retention rate increases profits by 25-95%.
- Selling to a new customer has a 5-20% success rate, while selling to an existing customer has a 60-70% success rate.
With a customer retention strategy, you can snap up these conversions and create strong brand advocates that drive referrals to your business.
Programs, Initiatives, and Actions to Increase Retention Rates
Now that you know why you need to retain your customers, here are three customer retention strategies to implement.
Implement a customer satisfaction survey
Globally, 89% of companies say that excellent customer service is critical in customer retention. Therefore, take a proactive approach to customer service with customer satisfaction surveys.
You’ll strengthen relationships with your customers, and they’ll tell you what they like or dislike and their most common questions.
Implement service level agreements
A service level agreement (SLA) defines the kind of service you commit to giving to your customers. For example, how much time it’ll take before they get a resolution to a support ticket may serve as one SLA.
With an SLA, your customers know what to expect and have peace of mind. Plus, you work towards meeting those expectations, and they’ll feel more comfortable transacting with you.
Be more proactive when dealing with customers
Even if your customers don’t give feedback, be proactive in communicating with them. Re-establish your relationship with those who haven’t interacted with your brand for a while.
Launch promotional offers and proactive customer service features to remove any roadblocks before customers know they exist. For instance, if their subscription is almost expiring, email them to remind them that they need to renew their account.
Key KPIs and Metrics That Show You How Well Your Customer Retention Strategy is Working
You can’t fix what you don’t know. That’s why you need to diligently track and analyze your customer retention rate and why customers decide to stay or churn.
These three customer success metrics can help you with that.
Net promoter score
Your Net Promoter Score helps you learn more about your customers and get their feedback. You also identify their behaviors and challenges proactively while reaching out to empower them to succeed.
Number of support requests not fulfilled on time
If a problem arises, your customers want you to hear them out and resolve it. Meet their needs with empathy, make the support process easy, and provide it on a channel that’s convenient for them.
Some customer needs are critical, time-sensitive, and need an immediate live chat or phone interaction. Resolve the less pressing issues at a more casual pace.
Get an accurate customer retention rate for your business
Instead of hiring more reps, use your CRM to record customer interactions and create support tickets.
Provide timely responses for each ticket. This keeps your support team organized and creates more delightful customer experiences.
Streamline sensitive or urgent issues to improve your chances of increasing customer retention.
Focusing too hard on acquiring rather than retaining customers may be to your detriment. Keeping customers coming back costs less and will continually result in greater returns on investment.
Want more customer retention ideas for your business? Faye has a variety of solutions to help you realize the full potential of your CX investments.
Contact our experts today to see how we can help.