5 Tips to Boost Profits by Focusing on Customer Retention Strategies
Businesses need customers to grow. That’s why most companies focus heavily on customer acquisition as part of their growth strategy. However, this isn’t the best way to grow your business. Especially when existing customers can add much more to your company’s bottom line with lesser effort. Customer retention is very important!
According to stats, it costs up to six to seven times more money to acquire a new customer than it costs to retain an existing one.
Of course, gaining new customers is beneficial for any business, but it is not the most effective way to boost profits. Research proves that investing in your existing customers can improve your earnings significantly. Yes, raising your customer retention rate by 5% can increase your earnings by 25 to 95%.
Show Some Love to Your Existing Customers
According to Marketing Metrics, the success rate of selling to an existing customer is 60-70% compared to a marginal 5-20% for a new customer. In other words, focusing on customer retention is a great marketing strategy that can add immensely to your company’s bottom line when done right.
But you already have a great product, and your customers love it – then why do you need a customer retention strategy?
Is that what you are thinking?
Consumers have evolved over the past decade and demand a higher degree of personalisation and attention from the brands with whom they interact. So, unless you make them feel important, sooner or later, they might leave you for brands that are genuinely invested in making their digital experience special.
Even stats confirm the above finding. According to Super Office, 68% of your customers churn because they think you no longer care about them.
Customer Retention Strategies to Boost your Profits
Customer retention refers to the various actions taken by a company to reduce customer churn. Below, we share some proven tips to integrate into your customer retention strategy to keep your customers returning to your site and add to your profits:
1) Provide Excellent Customer Service
Stats reveal that over 50% of customers use a brand more frequently after positive customer experience. And, 86% of customers are willing to pay up to 25% extra for a better customer service experience.
Excellent customer service matters to your customers. And, by improving your customer service experience, you can serve your customers better and also gain through referrals.
But how do you go about servicing your customers better when you are bombarded with hundreds of email and calls that take hours to get through?
The answer lies in adopting smart customer service technology, such as live chat that enables real-time interaction between your clients and agents. Cutting down on the wait times and customer frustration significantly. Data reveals that customers prefer to live chat because of the immediacy it offers. In a survey,44% of customers said that the option to live chat with an agent while making an online purchase is one of the most critical features a company can offer. Not surprisingly, 63% of customers prefer to return to a website that provides live chat as opposed to one that doesn’t.
Besides automating your customer service and reducing your backlog, live chat tool can also be used for monitoring user behaviour and making relevant product suggestions based on the gathered data. It is also possible to integrate your live chat software with co-browsing technology to enable real-time collaboration between staff and clients. It can improve your first call resolution by 18% and decrease call handling time by 14%.
2) Use Your CRM Software to Boost Customer Satisfaction
Your CRM software is a treasure trove of customer data and tools. You can use these to create better experiences for your customers and keep them coming back for more. You can also gain powerful customer insights with your CRM software to prevent churn and boost your retention rate.
For example, you can use your CRM software to identify the customers who haven’t purchased in the past few months, an indication that they may churn. Once you have made a list of such customers, you can send them personalised offers. It prevents them from leaving and seek feedback to learn why they aren’t purchasing from your site. Your CRM software can also help you curate highly targeted messages and offers for your clients by giving you access to their purchase history.
3) Reward your Loyal Customers
Returning customers are the most significant assets for any brand. Using your CRM software, you can identify your most profitable customers. And prepare a list of your VIPs that you don’t want to let go off.
And how do you that?
By offering your returning clients special offers and incentives, you can make them feel special so that they continue being loyal to your brand. Even research shows that customers are likely to shop more at stores that offer a loyalty program.
However, it is essential to add here that the same offers or rewards do not motivate all the consumers. Therefore, it is pertinent to analyse the buying habits of your most profitable customers to create value-driven loyalty programs. For e-commerce businesses, it is a good idea to create a tiered incentive program that rewards customers for spending more. Also, you can create a referral program to grow your user base while paying your existing customers at the same time.
4) Segment Your Email List
“Email continues to be the main driver of customer retention and acquisition for small and midsize businesses. According to the data, 81% of SMBs still rely on email as their primary customer acquisition channel and 80% for retention.”
But did you know you could get even more out of email marketing by creating segmented lists (based on their age, gender, location, etc.)? They allow you to target your customers with relevant content they are most likely to act upon
For example, everybody loves a good discount. You can urge an existing customer to visit your site by sending them discount coupons based on their browsing patterns and past transaction history. However, refrain from bombarding your subscribers with emails lest they get irritated and unsubscribe or report your emails as spam.
Besides sharing discounts and offers, it is also a good idea to send birthday emails to your clients. According to Forbes, 68% of customers leave a business because they feel neglected or find that a company is indifferent towards them. By sending a birthday email, you can make your customers feel special and also initiate action by sharing an offer or a discount coupon.
Data reveals that birthday emails generate 342% higher revenue than regular promotional emails. Read this article on Campaign Monitor to create highly personalised birthday emails that will make your clients fall in love with your brand.
5) Develop a Mobile App
Mobile apps are the most common vehicles through which humans interact with technology. Not surprisingly, they also happen to be very popular for transacting with businesses and making online sales.
Building a mobile app has significant benefits for your brand. Stats confirm that consumers love mobile apps. Research says that e-commerce customers are more likely to return to an online store that can be accessed via a mobile app.
Mobile apps also have a low shopping cart abandonment rate, as they offer a simple checkout process to users. As shipping and payment information is stored within the system, users can complete their purchase in just a few clicks, without any hassle or distractions.
If you already have a mobile app or plan to build one, here are some features that will be much appreciated by users:
- Clean, attractive, and easy to use interface.
- Live chat and other customer support options that can be accessed without switching to the desktop version.
- Push notifications to inform your customers about sales and offers.
- You can also implement a point-based reward system to boost loyalty.
Your customers are the heroes of your story. Therefore, in addition to acquiring new customers, it is vital to invest time in existing customers. The ones who already love your product and only need a little push to transact regularly with your brand. The points that we have mentioned above will help you in building an effective and cost-efficient marketing strategy. It will help you to reach out to your existing customers and build loyalty – an essential ingredient for successful brands.
This is a guest post. The views expressed in the article are solely of the author.
Authors’ Bio: Sam Makad is an experienced writer and marketing consultant. His expertise lies in marketing and advertising. He helps small & medium enterprises to grow their business and overall ROI. Reach out to Sam Makad on Twitter or LinkedIn.