Customer retention the ability of a business to convert customers into repeat customers is an important aspect to consider because product and pricing alone are not enough to keep customers happy. The question to ask is how do you keep people coming back after the first initial contact? The answer lies in implementing a strategy focused on customer retention. If you make customer retention a priority your business may find increased business profits.

What Is Customer Retention?

Customer retention is simply keeping your customers happy enough to stick with your company and not jump to your competitors. Your business may be good at attracting new customers but if they’re ready to leave soon after being introduced that’s a major problem.

Maintaining loyal customers is more than just delivering an impeccable buying journey and a great product or service. You must build relationships with clients the same way you have relationships in your personal life – by building trust active listening and being consistent communicate.

The ultimate goal of retention is to foster a dynamic long-term relationship which requires you to actively ensure that your client’s needs are met.

How Customer Retention Can Benefit Small Businesses

Many businesses may not realize that even a 5% increase in customer retention rate (CRR) can significantly improve profits. For example in financial services a 5% increase in customer retention yields more than a 25% increase in profits according to research by Bain & Company.

Depending on your industry attracting new customers can cost anywhere from 5 to 25 times the cost of converting existing customers into loyal ones.

Creating a customer retention game plan is one of the most overlooked business strategies despite how rewarding it can be. Only 18% of businesses are focused on retention while 44% admit to spending more time and money on customer acquisition efforts. The latest data from consulting firm Invesp.

How Do You Calculate Customer Retention

Calculating your business’ CRR is relatively simple. The formula for customer retention rate is ([E-N]/S) x 100 = CRR. Record and collect these metrics to run calculations:

  • Number of customers at the end of the period (E)
  • Number of customers acquired during the period (N)
  • Number of customers at the beginning of the period (S)

Subtract the number of new customers (N) acquired during a specific time period from the total number of customers (E) at the end of the period. Divide this total by the number of customers (S) at the beginning of the period. Multiply by 100 is your current CRR.

While the goal is 100% customer retention measuring a good CRR depends on your industry. According to software company ProfitWell.5 if your CRR is hovering around 15% no matter what industry you’re in you should start implementing a customer retention strategy.

How can businesses improve customer retention?

Improving a business’s CRR is closely related to customer relationship management (CRM) – a combination of techniques and techniques that companies use to further nurture their relationships with customers. To build and maintain relationships with customers use these six customers retention policy.

Streamline the Buying Journey

It’s important to consider the emotions you want customers to experience when they first visit your brand and when they consider buying with you. If it’s mostly confusion or frustration you probably won’t keep customers. If it is liberation or satisfaction You are on the right track. According to a 2018 PwC report one-third of consumers (32%) admitted that they did abandon their favorite brands after just one bad experience.

Focusing on customer experience (CX) and user design (UX) from the beginning to the end of the customer buying journey is critical to improving customer retention.

Make sure customers get what they want quickly and they keep coming back. The PwC report states that customers are willing to spend more on businesses in exchange for a “friendly welcome experience”.

Focus on Employee Job Satisfaction First

The best advocates and marketers for your business are those who already work for you: your employees. Unfortunately according to 18 years of Gallup research only 34 percent of U.S workers are actively engaged at work. Not building employee loyalty according to Gallup estimates is a failure Growth opportunities for many businesses cost the U.S economy an estimated $45 to $550 billion annually.

By focusing on employee satisfaction through non-monetary or low-cost incentives and perks and committed communication you can increase customer satisfaction which in turn increases your business’s CRR.78

Cultivate the perfect customer service experience

You can earn the trust of your clients by showing dedication and initiative and things like following up and listening to them. Don’t wait for them to take the next step – show appreciation for loyalty whether it’s through a social media campaign or when they visit you in person shop. The most important thing is to resolve issues with your service or product quickly and thoroughly as speed and efficiency are key aspects to keep customers coming back. By outpacing clients you may get a higher CRR.

Providing excellent service to your customers increases the chances of them leaving a positive review or testimonial about your company. These suggestions will have greater value than advertising leads and go into your business with more built-in trust and personal investment.

The Power of Customer and Influencer-Driven Marketing

Word-of-mouth marketing (WOMM) from employees and customers can increase customer acquisition and retention numbers.

Influencer marketing has become an integral part of WOMM over the past few years according to the Center for Influencer Marketing’s 2021 Benchmark Report. Check out the numbers:

  • Influencer Marketing Industry Expected to Grow to $13.8 Billion in 2021
  • Nearly half of businesses have a dedicated influencer marketing budget
  • 90% of respondents said they believe influencer marketing is an effective form of marketing
  • Instagram is the most popular social media channel for influencer marketing9

Email marketing social media and referral marketing are some other effective ways to increase customer retention. They can be useful tools for keeping your customers engaged and understanding what’s going on with your business as well as helping you get direct feedback on how to improve your business Business.

Reward Customer Loyalty

Incentivize brand loyalty from new and existing customers by rewarding them for continually choosing your business. According to a 2017 report by Segment 54% of consumers want a personalized discount from a business within 24 hours of brand recognition.

Consider offering email coupons after a purchase or visit to your website to thank them for choosing your business and encourage future interactions by offering discounted rewards for referring freebies or post-signup beta testing.

Key Takeaways Customer retention is the ability of a business to convert new customers into repeat loyal buyers. Employee happiness comes first: happy employees increase CRR and unhappy employees lead to massive churn. Make sure your customer service is responsive compassionate and easy to use Because customers who are frustrated with the experience tend to leave and not return. Think like your customers consistently engage and prioritize feedback and reward them for continued loyalty.