Which is the best way to grow your company?

It might seem obvious that you need to sell more to new customers. But that is just the tip of an iceberg. Convincing and converting people to your services takes more effort, time and money. It is your existing customers that are most likely to help you keep your business thriving in the future.

This childhood rhythm might be familiar to you

Keep the good friends you have, but make new ones. One is silver, the other is gold.

Are you focusing enough resources on your existing customers, the true gold of your business?

This guide will teach you everything about customer retention. How to calculate it, what it means, and how to foster it.

What is your customer retention rate?

The customer retention rate (CRR), is simply the company’s ability to retain customers over a certain period. It is the ratio of the number of customers that a company retains at the end to the number it had at the beginning of the period.

What is your customer retention rate?

CRR is a measure that shows whether marketing and customer service efforts are bringing in the right customers. You can build lasting relationships with customers who will become loyal to your brand by using the best customer retention strategies. You might hear them speak up in their circles of influence which could help you attract more customers to your brand.

How do you calculate customer retention rate

The following formula can be used to measure CRR:

CRR = [(E–N)/S] *100

You might find this formula a little complicated. Let’s break it down a little to make it easier to understand.

• E is the number of customers that you have at end of a time period (week, month, year or any other length).

• N = Number of customers that your business acquired or sold during a given period

• S = Number of customers that you had at the beginning of the period

You launched a mobile gaming app with 1000 users. You gained 500 more players over the course of one month, but only 200 people stopped playing your game.

Your time period = 1 month

• E = 1000+500–200 = 1300
• N = 500
• S = 1000 Your CRR = (1300-500/1000) * 100 = 80%

The Churn Rate is also an option. It is the inverse CRR. The Churn Rate is simply the inverse of CRR. Churn Rate, on the other hand, is the percentage that you lost. It measures how many customers have canceled their subscriptions, not returned to buy or closed a contract. The formula would then be:

CR = L/S 100

(L is the number lost customers)

As shown in the previous example, your Churn Rate would be CR = 200/1000 * 100 = 200%

It’s not difficult, but it is powerful. This formula shows how well you are forming relationships with customers and bringing them back for future purchases. It will require some math but it shouldn’t be a problem if you have a calculator.

What is the best customer retention rate?

2018 CX Benchmarks Report provides great information about the industry-specific customer retention rates.

Media and professional services lead the pack with 84% customer retention rates, while travel, hospitality and restaurants are behind at 55%.

The percentage you aim for will vary depending on each industry. However, it is important to consider the short-term as well as long-term goals of the organization.

If everything were perfect, our retention rates would all be 100%. But, the reality is that this is not likely due to forces outside your control. Because each company is unique, some companies have higher retention rates than others. Retention strategies differ from industry to industry.

To establish a high retention rate, it is best to compare your current CRR with your past performance. According to research from Frederick Reichheld, Bain & Company, a 5% increase in customer retention rates can boost profits by 25 to 95%. Even a small increase in retention rates over time can help you to grow your revenue multiple times.

Why is customer retention so important?

If you want to get a bigger picture of your company’s future prospects, tracking the percentage of customers that you retain each week, monthly, annually or over multiple years is one of the best ways to gauge its success.

There are several reasons why customer retention is so important for business growth and success.

• Predicting revenue: Invespcro shows that existing customers are 50% more likely than first-time customers to try new products and spend 31% less. Customer retention can be a reliable predictor of your business’ future revenue.

• Re-structure loyalty programs. Loyalty programs can have a major impact on customer retention. Your loyalty programs may not be working effectively if your CRR drops. To encourage repeat purchases and loyalty, you will need to make changes to your reward partnerships, promotions, gift certificates, coupons, and reward partnerships. Additionally, CRR can be used to measure how long your customers will stay loyal if you keep up with your loyalty programs.

• Referral programs can be improved: Loyal customers are more likely than not to praise a company and to refer friends, family and coworkers. This will bring in new customers and leads. If the customer retention rate can be taken into consideration, it will make this a seamless and efficient process.

You’ll be able to recognize potential problems and identify them. Your CRR may drop below the industry or target levels.

• Unwanted user experiences may result from a problem in your product or service.

• Dissatisfaction with customer service is a sign that your customers are unhappy.

• One or more competitors may have entered the market with a competitive advantage such as better technology, better customer service, or improved product quality.

11 great strategies to increase customer retention

Brandongaille states that 12-15% of loyal customers can bring in 55-70% of sales. You can’t underestimate how loyal customers are. Customers who visit your website accidentally should not be relied upon. They should place orders and then leave without thinking about returning.

Here are some customer retention strategies that you can use at your company if you don’t know where to start CRR programs.

Customer experience is everything

A recent report surveyed companies to identify the most exciting opportunity that their company could see in the next year. What is the most exciting opportunity for a company?

The single most exciting opportunity available to organizations 

Customer experience is the most important factor in business success. It doesn’t matter if your business is an online or brick-and-mortar venture, creating a great user experience is essential. These are the things you need to keep in mind when building a user experience.

• Understanding the wants and needs of your customers will help you to understand them .

• Make an emotional connection to them

• Surprise your customers every day!

Think of ways to make your customers loyal to your brand when it comes to improving their customer experience.

Send your customers gift certificates or handwritten notes. It shows customers how much they value them. They can spend time writing to each customer individually or offer creative ideas for the holiday season.

These kinds of amazing displays of appreciation can go a long way, especially in the social sharing world, for improving customer experience and keeping your customers loyal.

Personalization added to the experience

Frequent consumers are constantly bombarded by marketing and advertising channels and demand tailored experiences, products and offers from brands that they support.

Customers want to see offers and products that directly address their interests and needs. Customers may not be able to see all of the products or services you offer.

Many people will leave your website or store confused and uneasy before making a decision. It is imperative that your company examines this situation and devise ways to personalize every touchpoint with customers.

You can ask yourself:

• Is your landing page and product pages flexible based on website traffic?

• Are retention campaigns tailored to each customer using data insights and segmentation?

• What can you do to improve your offerings based upon the different interactions a user has with your site?

No longer are keywords the only way to target users. Marketers can now target their audience personalization in a variety of ways, including by demographics and live events, purchase intent, behavioral patterns, or other criteria.

Leverage email marketing

In order to maintain customers, it is essential that you have success in your inbox. Email marketing is still the most popular and effective way to market despite the rise of social media. It is actually the most powerful channel for marketing, returning $44 per $1.

Retention emails must be precise. Your emails must be specific and reflect your customer’s needs.

Personalizing your customer’s email marketing experience is a great retention strategy.

• Identify yourself using your name and company

• You can address them by using their names as subject lines

• Emails can be used to collect information about the customer’s shopping history

• Include a call-to-action button (CTA).

Retention emails should show customers that you took the time to get to know them and their journey with your product. You want them to return to your business with deep satisfaction.

To help you with this, professional email extensions can be used.

Special customer loyalty programs

Everybody wants to feel valued and appreciated. Therefore, you can create a customer loyalty program to give customers an incentive to shop in your store. Customers can earn points by offering a reward point system. You can reward or trade points for discounts.

You should also create loyalty programs that are tailored to different customer groups. This will reward VIP customers with the best benefits. Customers will be happier and less likely to churn if they have more experience than your product or service.

You’ll also want to ensure that the top 10% spend 3 times as much as the rest of your customer base.

Create an engaged community

Engaged brand communities bring customers and businesses closer together. This creates many benefits:

• This forum allows you to share all the latest information about your brands, products and services.

• Customers can ask questions and business owners can answer them. This increases interaction.

• Contests, shares, and other content

• Advertising or word-of-mouth marketing can reduce business costs.

• Brand loyalty increases

It is easy to create a brand community by using online platforms such as Facebook groups or LinkedIn groups that encourage engagement.

Incentivize social media

Social media is more than a way to reach new customers or promote new products. It can and should be used for retaining existing customers. Your strategy should include building trust and loyalty with customers who follow you on social networks.

Social media is more than a way to build relationships with current customers. It can also be used to connect potential customers by allowing existing consumers to spread the word about your brand and product. This social sharing seems to be a great way to help your business achieve its goals.

Offer stellar customer support

Many businesses assume customer service is a secondary part of their business.

Excellent customer service can make all the difference in your business’s success. Chatbots and advanced artificial Intelligence tools are available to help you handle customer interactions and enhance your customer service.

Chatbots can save users time when they need information from a database. Your live customer service staff can also focus on other important issues.

These are the key aspects to consider:

• Every employee should be dedicated to customer satisfaction
• You must immediately respond
• Ensure consistent on-time delivery
• Promise what you can deliver BEFORE and AFTER the sale
• Zero-defects, error-free delivery

Customer feedback is a powerful tool

Customers who are satisfied will stick with you while those who aren’t will leave and look for a better service. Customer Feedback allows you to see if clients are satisfied with your service, and pinpoint areas that need improvement.

Asking customers for reviews will allow you to keep an eye on what’s happening. You can quickly respond to a customer’s dissatisfaction and offer a solution.

This is the perfect time to “tow” your client and increase his loyalty. To gather customer feedback, you can use email automation to send personalized content, surveys to customers, or a direct conversation to listen.

Develop customer education programs

Online education can be a way to show customers that you care about them and are willing to offer something for no cost. This could help you position yourself as an expert in your industry and show customers why they should choose to shop with you. Through your blog, your customers will trust you and be more loyal to your brand.

There are many ways to educate and train your customers about how to use your product or service.

• Online Academy of Training Tutorials
• Create a network of product experts
• To guide them, send a series emails
• Blogs can be updated and written for sharing knowledge
• Live webinars and social media channels are great options.

Establish lasting relationships

It takes a lot of effort to build a lasting relationship with existing customers.

“It’s important that we remember that relationships are a two way street,” said Taylor Fulton, senior manager marketing services at Allen Press to business.com. To build meaningful engagements, brands should listen to and communicate with their audience. This involves talking to people and not just talking at them.

You need to make content that is valuable and useful to your audience in order to build relationships. As a way to express gratitude to customers, you should also say “Thank You”.

You can send a Thank You note, give a gift, or host an event. It may be expensive, but it is well worth it. You can also simply thank them.

Employee base Leverage

You must promote your most valuable assets, your customers. Engaged, passionate employees will be inspired by company goals and strategies. They will also feel compelled by customers to share their passion by providing excellent customer service. This is how the company’s brand story is created from the inside out, from employees to customers.

Companies are increasing their employee base through caring for them and clearly defining their values, mission, and the roles each employee plays in keeping their customers happy.

Conclusions

Customer retention is about keeping current customers happy. Customers will not switch to other businesses if they are treated well. You can make it easier for customers to stay with your company than to shop at a competitor.

These strategies should give you new ideas about how to approach retention. These strategies are not meant to be a panacea. Customers will be loyal to your product or service, so there is no shortcut.