Getting a new customer can be one of the best things to happen to a business, but having an existing one come back is even better.
Existing customers account for almost 65% of a company's revenue, making them an invaluable asset to a business’s long-term success. Keep your customers with these proven customer retention strategies in this first of a three-part series.
What is consumer retention and why it is so valuable?
Consumer retention refers to a business's ability to keep customers coming back. Customer retention strategies involve various techniques that foster customer loyalty and ensure clients remain happy with the company's products or services.
A customer retention plan aims to improve customer retention and maximize customers' lifetime value (CLV) or the amount of revenue that can be earned from a customer throughout their lifetime. CLV increases the longer customers remain loyal to a company. .
It’s important to note that consumer retention and lead generation are two different strategies. Customer retention strategies focus on customers who have already purchased from a company. While it may seem tempting to focus solely on acquiring new clients, increasing repeat customers is equally important to accomplish long-term success.
Implementing customer retention tactics means providing more value for your existing customer base while extracting more value for your business in return.
- Retain more, save more
Keeping an existing customer base can be more cost-effective than acquiring a new one. In fact, according to a study from Harvard Business Review, acquiring new customers can cost anywhere from five to 25 times more. On the other hand, it’s easier to turn existing customers into repeat buyers if you gain their trust and confidence from previous purchases.
- From satisfied customers to lifetime fans
Satisfied customers are more likely to become loyal, leading to repeat business and positive word-of-mouth recommendations. About 60% of consumers1 love to talk about brands they enjoy in their social circles. Incorporating customer loyalty strategies can significantly help expand your customer base.
- Better retention = better bottom line
Happy, repeat customers are more likely to purchase more and are willing to spend more when they do. Keeping repeat customers satisfied increases their CLV in the long run. You can grow your bottom line by 25% to 95%1 if you increase retention rates by just 5%.
How do you measure customer retention rate?
The customer retention rate (CRR) is the percentage of customers a company retains over a certain period. The measure is expressed as a percentage. To calculate the CRR, we need to use the CRR formula and the following elements:
Depending on your industry, it’s ideal to aim for at least an 85% customer retention rate. But if you’re hitting at least 75% CRR, it’s a good sign that most of your customers highly value your brand and enjoy the customer experiences you provide.
How to Keep Customers Coming Back for More
Successful customer retention techniques involve exceeding customer expectations to a Ridiculously Good degree. In addition to boosting brand recognition and enhancing industry authority, customer loyalty is instrumental in growing a business’s bottom line. Understanding the link between improving customer satisfaction and the retention of customers is essential in designing the right loyalty programs for your business.
Here are some of the most effective customer retention strategies that work for businesses across industries:
- Provide an excellent, quick, and personalized customer experience
Empowering customers with convenience and excellent customer experiences is vital to retaining more customers. Data has shown time and time again that prompt customer service directly improves customer satisfaction levels.
- Establish a trusting relationship with your customers
Consumer retention is all about creating strong relationships. Foster a sense of trust by being transparent and delivering on promises. This includes resolving issues promptly and even apologizing for mistakes. According to HubSpot Research, 96% of survey respondents would continue purchasing from a company they regularly purchase from if the company apologized and rectified a mistake.
- Let customers give you feedback and listen to them
Customer feedback is one of the most valuable tools that can significantly boost CRR. Any feedback, negative or positive, can be used to learn how to improve customer satisfaction. One of the best ways to collect feedback is through surveys, but it can also be as simple as offering a thumbs up or thumbs down button after customer interactions.
- Offer something your competitors can’t
Competition can be intimidating in today’s fast-paced environment. Nevertheless, competition is good as it offers plenty of opportunities for product and service improvements. Identify your company’s unique selling points and leverage this knowledge to differentiate yourself from the competition.
- Leverage digital tools to elevate the customer experience
A great way to keep customers happy is to incorporate digital customer experience solutions. There are many increasingly popular digital features to choose from, from mobile apps to subscription programs and even buy now, pay later options. You can offer customers more ways of engaging with your brand with this approach.
- Incentivize customer loyalty with loyalty programs
Customers appreciate it when brands give them ways to be even more engaged and rewarded beyond a single transaction. Effective incentives can include loyalty programs, unique discount codes, and exclusive offers. Offering fun rewards will give loyal customers more reason to purchase from your brand.
How to Maximize Customer Retention Strategies, the Ridiculously Good Way
For many businesses, implementing these strategies can be an overwhelming challenge. Fostering customer relationships can be a complex matter for the inexperienced, not to mention the amount of resources it takes to implement a single strategy successfully.
Fortunately, there’s a Ridiculously Simple formula to achieve your customer retention goals, and it only involves
At TaskUs, we’ve established proven and effective strategies to boost customer satisfaction across industries. From delivering excellent customer experience in healthcare to supporting the largest e-commerce brands to scale their growth—no strategy is out of our reach when it comes to customer experience.
Recognized by the Everest Group as the World’s Fastest Business Process (outsourcing) Service Provider in 2022 and highly rated in the Gartner Peer Insights Review, TaskUs is more than capable of supporting the most disruptive brands across the globe.
- 5^What is Customer Retention?