Customer Retention: An overview and strategies that can improve retention rate

Customer retention is the process of retaining old customers. It is to persuade existing customers to continue buying your products and/ or services. Customer retention is an important process for every business as these customers are the ones with the experience of your products. Their recommendation and reviews can be the driving factor behind any business's growth. 

It is also known as customer loyalty. CRM software online such as Optimiser provides you with all the tools you require to improve the customer retention rate. 

 

Many businesses lose out on loyal customers due to inactivity and lack of communication. The customer retention rate can be effectively cultivated by offering incentives and personalised communication. 

These customers will continue to be loyal to your business and become brand advocates who will bring new customers to your business. 

 

It is also an advantage that customer retention is cheaper than acquiring new customers. With the right strategies in place, you will be able to ensure that your customers are able to get the full experience of your products/ services and continue purchasing from you.

 

 

How do we measure customer retention?

 

The customer retention rate can be calculated using the following formula:

 

((Number of customers at the end of a period - number of repeat customers) / (number of customers at the beginning of a period)) ×100

 

Taking an example of company A records 1000 total customers at the beginning of the fiscal quarter and 1100 customers are recorded by the end of the fiscal cycle. 500 of them are retained customers. The retention rate of company A will be:

 

((1,100 - 500) / 1,000) × 100 = 60%)

 

Customer acquisition v/s customer retention 

 

While both are focused on bringing in customers for the business, retention is concerned with keeping old customers and acquisition focuses on new customers. 

 

Customer acquisition is far more expensive than retaining customers. You spend a lot of resources in both time and finances to keep the leads nurtured and persuade them into purchasing from your business. 

Both have very different strategies but working on both acquisition and retention can improve the overall customer experience that you offer. 

 

Cloud based CRM for small business allow your sales and marketing reps to keep all the interactions, customer records, past purchases, and transactions within a single platform.

 

Customer retention strategies

 

1. Communication calendar

Maintaining a communication calendar can keep you in constant contact with the customer, ensuring that they do not feel left out and ignored. You will be able to prioritise every customer without overseeing one over the other. Inactive customers can be engaged with incentives and promotional offers. 

 

2. Email newsletter

Email newsletters remind your customer about the existence of your brand. Email marketing, an easy to use and inexpensive, can improve the ROI as well as the engagement rate. 

 

3. Customer education programs 

Customer education programs aim to provide valuable guides to your customers and allow them to trust your brand. The subject material can be focused on the product and/ or service. But this information can provide value to your customers with data that they will take under consideration when they have the chance to renew their subscription or purchase your product again. 

 

4. Omni-channel customer service system 

Emails, live chats, and call-in customer service with a well-detailed FAQs section can make it extremely easy for your customers to get their queries resolved. 

Many customers are hesitant to initiate contact with the companies or are too impatient to wait for answers.

 

5. Deliver and accountability 

Delivering your promises establishes the trust the customers have started to feel for your brand. Once the customers know that you are reliable, they will appreciate your services and will be more open to purchasing from you. 

On the other hand, taking accountability for your mistakes can be just as effective. While many businesses believe that accepting mistakes can cost the business, that is a myth. Customers appreciate honesty.

 

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6. Feedback 

CRM software company like Optimiser allow you to send feedback forms that can be used to collect data on customers and work on how to offer more personalised services. These customers can leave feedback or testimonials on websites. 88% of people trust online reviews and the referrals they get from their acquaintances.  

 

7. Customer loyalty 

Customer loyalty should be rewarded with incentives so that they have the motivation to return to your brand. If the customers are getting something back in return, they will be more interested in spending more on your business.

 

Summary 

Customer retention is an important undertaking that should not be sidelined over customer acquisition. Acquiring new customers is important but retaining old customers is less expensive and just as important. These customers can be enthusiastic brand advocates. Loyalty programs and the help of trusted CRM software like Optimiser can be used to increase the customer retention rate.