Increasing your customer retention rates is an investment that is always worthwhile.
Customers are what shapes the success of your business. In fact, according to CallMiner, U.S. companies lose as much as $136.8 billion per year, due to customer switching that is completely avoidable.
With an ever-evolving digital marketing space, direct responses and inbound tactics are easier than ever.
However, with every business doing the same thing, you have a double-edged sword in your hands.
On one hand, customers expect that you have the same CRM systems in place as your competitors. Emails, Social Media support, and telemarketing support are a must.
On the other edge of the sword, poorly implemented tactics can result in the loss of your clients.
So, how do you go about increasing your client retention rates? ????♂️
It’s easy and simple. And I'm to show you just how to do it.
But first, what is all the fuss about?
Table of Contents
I’ve seen a lot of business owners stumble upon CRM tactics after the fact.
In building a strategy, they consider the cost of the product, calculate the profit margins, jump on a marketing tactic and wait.
Yet, in about a year or two, they wonder WHY isn’t their business successful.
It was boasting profits in the beginning, so what’s changed?
Well, you’ve considered ONLY your customer acquisition costs. Have you thought about the experience they have ONCE they purchase?
According to research posted in Harvard Business Review increasing your customer retention rates by JUST 5% can result in an overall increase in the profits of your business anywhere from 25% to 95%.
Client retention isn’t simply an extension of their subscription service or another purchase. It’s an increase over the course of the lifetime period of your customer.
To understand the impact client retention has on your business, you must first make sure that your KPIs and profit calculations are based on the value a customer has for your business.
This will help you make better investment decisions for your business, rather than just focusing on your customer retention score.
As estimated in a case study by KISSMetrics, the average lifetime value of a Starbucks customer is $14,099.
Having this number, Starbucks is easily able to calculate how much they would be able to invest in their customer acquisition and customer retention strategies.
While speculative, a huge part of the reason why the LTV of a customer of Starbucks is so high, despite their relatively low-profit margins per product is the customer satisfaction rates they have. (62% Very Satisfied, 27% Satisfied and 11% Not Satisfied)
Despite the shaky economy in the first part of the 2010s, Starbucks continued to successfully open new stores. The reason for their confidence?
Knowing their KPIs and making sound business decisions, despite overall market conditions.
Go back to your KPIs and add these numbers. Start building your business analysis and profitability analysis based on your LTV to CAC ratio value instead of simple profit margins.
Analyze Where to Spend More
Step #1: Analyze your CAC based on Industry Averages ✔
Locate and find research in your industry that shows whether your CAC is within the boundaries of normal. DemandJump is a great resource.
If it’s lower, that’s great! If it’s higher, it means that you should optimize your customer acquisition process.
Step #2: Check your CAC to LTV Ratio ✔
It’s universally accepted that 3.1 to 1 is a good CAC to LTV Ratio for a business.
If your acquisition costs are normal or within the target, but your ratio is too low, it means that you should spend more and optimize your customer retention process.
If it’s too high, then a good rule of thumb is that you should invest both in your customer acquisition process, but also your customer retention process as well.
Now that you understand the importance of customer retention and response management, let’s talk about the tactics you can use to improve them.
Here are the top 16 cutting-edge customer retention strategies for 2020, alongside tips on how to implement them in your existing business.
According to Forrester, As much as 69% of U.S. Customers shop more with retailers that offer great customer service both offline and online.
This means only one thing -- to increase your customer retention, you should make sure that your customer response management process goes above and beyond the expectations.
The best way to test your CRM system?
EMPLOY CRM TESTING AGENTS OR DO IT YOURSELF
To understand all the points of improvement that can be made in your CRM process, you should ensure that the test is completed in a proper manner.
Is there a recurring or common issue customers are having with your business?
Start thinking outside the box. ????
Vodafone UK is a great example of how this can be done. A few years ago, they implemented an interactive graphical map that showed the real-time status of their network.
The results? (As shared by eConsultancy)
To improve your client retention, start by checking the most common complaints existing customers have about your business.
These can be a range of different issues.
Address the most common ones by thinking outside the box.
The options are endless and only bound by your imagination.
Personalization is key. In fact, 71% of shoppers are found to experience frustrations, if their customer experience is not personalized.
According to research from Deloitte, 44% of customers are more likely to purchase from a brand again, if their experience is personalized.
Trust in the brand is what builds customer loyalty and in turn, the key factor to increasing your customer retention.
Regardless of whether your marketing strategy is inbound or outbound, make sure to employ all best practices to make the experience of your customers more personal.
Want to Have a Personalized Email Marketing Strategy?
Including the “Name” tag in a subject line isn’t the best, but it’s a good way to start.
Make sure to personalize all portions of your email marketing experience. Feel free to book a free consultation for our AWESOME new-age email marketing service. ????
Gamification is a great way to increase customer retention while improving the customer engagement with various other aspects of your business.
It’s widely used to empower both customers and employees. And in fact, according to ProgressiveGrocer, 87% of retailers will use gamification strategies in their operations in the next five years.
Make sure you are ahead of the trend.
A gamification system can be tricky to implement and may require the hiring of a firm, experts or developers to properly implement in your business.
However, here’s how to start building a gamification system.
Starting out as a gamification tactic, loyalty programs have transformed into a beast of their own.
26% of customers find brand loyalty programs and rewards to be a primary factor in their decision to continue their service with a company.
This step-by-step guide from Antavo would be the perfect place to start.
Having trouble with cold leads? Check out my tips on how to warm up cold leads.
People are becoming actively engaged with companies that reflect their personal values and ethics.
In fact, hope, vision and cultural fit shape 11.5% of the predicted reasoning behind a customer becoming an active promoter of your business.
And that’s only in the IT B2B sector!
Sufficit to say, having and actively promoting your company mission is not only a must, but can increase your customer retention and net promoter score at the same time.
How to you achieve it?
Having a way for customers to reach out to you directly can have a vast impact on your business.
In fact, 80% of customers expect brands to respond to their inquiries on social media.
Ensure that you have a human-driven system in place that allows people to contact your business and resolve issues directly on Social Media.
This great DM guide for Instagram by Social Media examiner would be a good place to start.
To ensure proper response on social media inquiries from customers
Make sure that you also have all the right social media growth hacking tools in place!
According to research from Gallup, customers are far more emotionally engaged with a brand depending on the quality of customer engagement.
Speed is also a factor, but it’s far less important than the quality of the response.
Your brand or a business doesn’t need to have all tactics set in place, but the ones you have implemented, should be focused on driving a quality-first experience.
Have a B2B business? Create an outbound B2B Sales pipeline!
According to Uberall, about 80% of customers who have engaged with a chatbot describe it as an overall positive experience.
In addition, according to Mobile Marketer, 40% of Millenials use chatbots on a daily basis.
In fact, all stats lead to the fact that chatbots are the future. ????
However, a chatbot should only be a part of your CRM base, as 86% of customers prefer interacting with humans rather than chatbots.
To install a chatbot to your website:
Surveys are a great way to interact with your customer while receiving direct feedback on how to improve your business.
In fact, 79% of marketers agree that using interactive content in your strategy is a successful way to retain the attention of your customer.
Even the biggest brands, like Nike, understand and actively use the power of surveys in a business.
People love supporting the David in a David vs. Goliath battle. Positioning your brand as “the one that is aware” and “the one that understands the struggle” can have a positive impact on your business.
AMD is a great example of this in the technology sector.
Having lower performance processors than their main competitor Intel, they’ve launched their “Ryzen” brand addressing the main issues customers had with their competitor (primarily price, care and awareness).
This lead to AMD growing their computing and graphics side of the business with as much as 69% on the year.
Remember the Mac vs. PC ad campaign. Same thing!
Your customer experience should extend way beyond the normal customer journey.
Engaging your customer by actively building out experiences with the sole purpose of customer advocacy is a great way to improve your customer retention scores.
A great example of this is ADOBE and their highly interactive experience event, the Adobe Summit. In 2018, the brand engaged popular celebrities to talk alongside their CEOs about the company’s future products,
The result: 800,000 live viewers. ????
There’s a great blog by Photoslurp explaining how Fashion brands are using social proof to improve their customer retention.
The best part? ✨
These tactics can work for ANY type of business. ❗❗❗
Use the power of User generated content for Social Proof.
Educate your customers to build advocacy
And don't forget to actively improve your Instagram following, if you already haven't!
A meta-analysis study from CoBloom further shows that the relationship with your customer is a vital part of improving your churn rates, especially if your business is subscription-centric.
Here are a few tactics you can use to improve your customer relationship while working on increasing your client retention scores.
All of the above can help your company increase its intimacy with its customers.
In a recent study from Salesforce Research, 80% of customers are more loyal to companies with good ethics.
Today, with the adoption of Social Media platforms, key employees of a business are often tracked, followed and judged by their digital actions.
You don’t have to dig deep to find more than a few examples of brands firing people, because of viral SM antics.
The reason? It can have a negative impact on the brand sales.
The intuitive marketer will tell you that the perception a customer has on your price can have a great impact on their purchasing decisions.
And as research shows, that’s completely true!
There are multiple ways to help you achieve this. Amazon for example often uses a “discount” tactic to improve the price perception.
You can use the same tactics in your client retention strategy.
Customer retention is a wild beast to tame.
However, by doing so you are set to increase your profitability by up to 75%
The best part? Everyone invests in Customer Acquisition, not knowing that Customer Retention should be where the money goes! ????
Have any other customer retention tactics you’d like to share with me? Ping me on LinkedIn!