Having a great product is key to business. But, if customers only buy your product or use your service once, then your business won’t be sustainable long-term. Encouraging customers to come back and develop an ongoing relationship with your brand is essential then.
Grabbing customer attention and gaining trust may seem like an uphill task, but it pays off in the end. Repeat customers trust your business, invest more in it, and are willing to test your other offerings. This illustrates the importance of customer retention to your business. So, how can we begin to cultivate ongoing customer relationships?
What is customer retention?
Customer retention refers to a business’ ability to sustain customer interest and relationship by fostering brand loyalty and convincing the customer they don’t need to consider buying elsewhere.
It’s the natural step after lead generation and customer acquisition, aimed at getting customers with one foot in the door to commit fully. Customer retention strategies help build customer loyalty, which is critical to a business’s profitability.
Many top global brands have built their success around effective customer retention is. For example, Uber has some of the most loyal customers of any brand. Their strategy for customer retention focused on creating a unique customer experience in a well-established industry, then aiming for sustained customer interest through a great referral program and delighted customers by introducing another much-needed service, Uber Eats.
Coca-Cola, a global behemoth that has been operational for over 140 years, understands its customers well. In 2014, Coca-Cola’s Share a Coke campaign revitalised customer interest and made the company’s #shareacoke hashtag the number one trending topic on social media. Putting customers’ names on the soft drink bottles and cans, a move that taps into customers’ need for recognition, enabled the company to sell all those drinks.
Of course, several companies have failed at customer retention, approaching customers with the wrong idea.
An example is MoviePass, which acted in a way that broke the golden rule; customers come first. The company had many tribulations, such as basing its business model on how people treat their gym memberships without realising that people tend to find watching movies more appealing than going to the gym!
The final nail in its coffin was poor customer service, with some cases receiving a lot of negative attention.
Stats on customer retention
There are many good reasons for a business to focus on customer retention, here are just a few ways that such a strategy can positively impact the bottom line. It is estimated that it costs around five times as much to attract a new customer as it does to retain an existing one. This makes sense, considering new customers require a fresh introduction for each sale, unlike customers who are already familiar with your business.
More importantly, a 5% increase in customer retention boosts business revenue by 25-95%. Retained customers remain so because they understand your product or service’s value.
How to build customer retention in your entrepreneurship venture
You need customer retention to transform your entrepreneurial beginnings into a successful business. As such, you’ll need to take specific steps:
• Provide excellent customer service: The first step in retaining customers is making them feel valued and promptly handling any complaints they have.
• Conduct customer surveys: Next, stay in touch with customers. Surveys are a logical way of doing so while finding out their pain points so you can devise effective solutions.
• Positively impact their community: You want to build customer loyalty? Go where they are and do well for them. Customers are increasingly conscious of how businesses conduct social responsibility campaigns.
• Improve your customer acquisition process: Constantly eliminate customer onboarding glitches. Remember, your competition is also getting better, and so should you.
• Reward loyal customers: A loyalty program is one way of showing your appreciation for the support from customers. In addition, it locks customers in while attracting the undecided ones when they see how well loyal customers are treated.
Customer retention is critical to business success, especially for start-ups and similar entrepreneurial journeys. It reduces business expenses while significantly increasing revenues and growing the customer base. Virtually no business can survive without the backing of loyal customers, and this is why retention matters.