Customer retention - how to create long-lasting relationships with your customers
You’ve worked hard, gotten past the objections, and you’ve landed a customer. Whether they are your first customer or your ten-thousandth, what’s the most critical factor now?
Keeping them happy and retaining them for as long as possible.
If they walk away after one transaction, you have to begin the arduous process of finding a new customer to replace them. It’s tough for any business to grow this way, let alone even survive! You need to focus on building lasting relationships with your customers, every step of the way.
What is customer retention?
Simply put, ‘customer retention’ refers to what you to maintain a good relationship with your clients so that they continue to do business with you.[i] Ideally, you want your hard-won customers to feel that they have been well taken care of so that they want to deal with you again and again. Over time, you can increase the profitability of each of their transactions as time goes on, and they will recommend you to their network.
Four Strategies to help you retain and form lasting relationships with your customers
Every business is unique, but we can all benefit from the four proven strategies below.
- Survey your customers – You might think you know what your customers think, but without surveying them, you really have no idea.[ii] If you don’t know how they feel about your brand, service, and performance, they might slip off into the ether without giving you a chance to make changes and impress them. Don’t despair if you get negative feedback – the customers are doing you a favour. As the CEO of Evernote Phil Libin puts it, “complaints are great...they tell us where our product or overall experience is failing. Plus, they are the easiest form of feedback to get.”[iii]
- Ask for a reason for downgrades and cancellations – Carrying on from the point listed above, if you don’t know what is bugging your customer you can’t get in there and fix it. You also can’t fix the problem for future clients. Let your customers know that you genuinely what to hear why they are leaving, and make it mandatory to file a support ticket to do so. With compassion, friendliness, and good listening, your team might be able to rescue the account.
- Make it easy for them to remember you – Sometimes, customers end up choosing a competing company simply because they forgot you were out there. Or maybe they think they’re reaching out to you, but they accidentally get in touch with a rival business. You can prevent this by making it easy for them to remember you. Sign them up on your mailing list, send them branded merch from time to time, and use letterhead printing on all written communication.
- Measure your retention rate – This is undoubtedly the most tedious suggestion, but it really does work. If you don’t measure your retention rate, you are losing customers, and you don’t even know it. There are countless ways to measure retention out there, but we are partial to Jeff Harden’s method over at Inc.[iv] He recommends the following mathematical formula:
“Retention Rate = ((CE-CN)/CS)) X 100
CE = number of customers at the end of period
CN = number of new customers acquired during the period
CS = number of customers at the start of period.”
While it looks a bit intimidating, it’s simply a matter of plugging in the numbers and using a calculator. With this formula, you can calculate your retention rate as a percentage. Every industry has its own gold standard, but you should aim for as high a number as possible. Speak with others in your specific field to find out their retention rate target.
It pays to think about customer retention
When it comes to customer retention, there is no substitute for having a great product and doing your best for your clients. Talk with them, maintain contact on social media, and send them letters and branded materials on a semi-regular basis.
However, without explicitly thinking about your retention strategies, you might be losing customers without ever knowing why. It’s essential to ask them for critiques and negative feedback so that you can grow and change. As you implement these suggestions, over time you’ll see the improvement in your customer retention rates.
Reference list
Haden, J. (2013). Best Way to Track Customer Retention. [online] Inc.com. Available at: https://www.inc.com/jeff-haden/best-way-to-calculate-customer-retention-rate.html [Accessed 20 Jul. 2020].
Libin, P. (2013). Why I Love My Angriest Customers. [online] Inc.com. Available at: https://www.inc.com/magazine/201304/phil-libin/why-i-love-my-angriest-customers.html [Accessed 20 Jul. 2020].
Shopify (2019). Customer Retention 101: Grow Your Business by Selling More to Current Customers. [online] Shopify. Available at: https://www.shopify.co.uk/blog/customer-retention-strategies [Accessed 20 Jul. 2020].
White, R. (2013). Five Tips For Retaining Customers. [online] Forbes. Available at: https://www.forbes.com/sites/theyec/2013/08/23/five-tips-for-retaining-customers/#3d92635694ad [Accessed 20 Jul. 2020].
Sources
[i] https://www.shopify.co.uk/blog/customer-retention-strategies
[ii] https://www.forbes.com/sites/theyec/2013/08/23/five-tips-for-retaining-customers/#3d92635694ad
[iii] https://www.inc.com/magazine/201304/phil-libin/why-i-love-my-angriest-customers.html
[iv] https://www.inc.com/jeff-haden/best-way-to-calculate-customer-retention-rate.html