4 Customer Retention Strategies Any Business Can Use
04 May 2017
One of the major factors in choosing any marketing strategy should be the cost of customer acquisition. While common knowledge shows that new customers are 4 to 8 times more costly to acquire than existing customers are to retain, only 30-40% of business focus on retention at least as much as new customer acquisition. On its face, this makes little sense, but when you take the profitability of existing customers into account, it becomes evident that more attention should be paid to keeping them.
- Existing customers are 3 to 10x more likely to buy than a cold lead.
- They are 50% more likely to buy new products and spend ⅓ more than new customers.
- A 5% increase in customer retention can lead to a 25-95% increase in profits.
Establish Customer Relationship Management
Whether you purchase a CRM system that automates your tracking, messaging and monitoring of customer actions, or use your existing tools, establishing a method for keeping track is the first step. By knowing exactly what actions a customer has taken in relationship to your brand, you can know what messaging is best to further that engagement.
- Allows for segmented lists that make sure the right messaging gets to the right customers, at the right time.
- Automate the process so that messaging is delivered on time, every time.
- Stay in contact with all of your customers, with a minimum of time and expense.
Your CRM program then becomes the foundation for your entire remarketing effort. By creating a database, and a way to measure results, you make an effective retention process possible.
Strategy #1 Prioritize for Retention
With most businesses spending time and resources on finding new customers, over retaining existing customers, it requires a shift in mentality to change things. You’ll need to set new goals and priorities based on keeping your customers engaged, and this may mean taking away from marketing to potential new customers.
- Create the same kinds of goals and incentives for keeping existing customers as attaining new customers.
- Set a budget, similar to your new customer efforts, for working with existing customers to keep them engaged.
- Make it apparent to everyone working on marketing in your organization that this shift has occurred. Don’t just assume they’ll understand.
Strategy #2 Focus on service
This one may seem like a no-brainer, but often returning customers don’t get the same attention as a new buyer might. It’s important to make sure you extending your best to those who have already decided to do business with you. By making each customer feel valued, you help to build loyalty, which is a key factor in remarketing.
- Maintain contact with existing customers to make sure you are meeting their needs, whether this means checking to be sure that consumable goods have been resupplied, or reminding them of warranty and service benefits.
- Extend offers for new products, or upgrades to existing customers as soon as they are available. Make sure they know what you have to offer.
- Take the time to thank customers for their business at regular intervals. Use occasions such as birthdays and holidays to make contact.
Strategy #3 Communicate intentionally
Engage your customers on platforms such as social media. Work to build deeper relationships with them to establish loyalty. Engage them in conversations around your brand and industry. Involve them in product testing and developing new goods and services. Ask their opinion.
- Use every available opportunity to strengthen your connection. Even complaints can be turned into great opportunities to remarket.
- Communicate frequently through email to keep your customers up to date on new developments. Work to provide value with each message.
- Encourage communication between customers on your blog and in social media. Establishing a sense of community is a great way to retain customers.
Strategy #4 Reward Customer Loyalty
Most of us are familiar with loyalty reward programs, from grocery to hardware retailers, many businesses extend discounts and special offers to their returning customers. You can do the same thing. The added value of maintaining a customer statistically more than makes up for the added cost. There are some things to keep in mind when implementing your program.
- Make sure benefits are simple and easy to understand.
- Establish an automated system if possible, to track points and purchases to make rewards easy to claim and keep track of.
- Balance rewards to offer real value, without being cost prohibitive. If it takes too long to earn a discount, customers lose interest, if discounts are too frequent, or too large, the cost of your retention program can outweigh the benefits.
The goal in customer retention must always be tied to the bottom line. By carefully tracking the cost and time spent on implementing retention efforts, and the sales that come from them, you can ensure your business remains profitable.