What's better than getting a new customer? Surprisingly, the answer isn't "getting two customers.”
It's keeping a customer.
If you want your business to succeed, you need to focus on customer retention. Loyal customers are your best customers because:
they are the best advocates and referrers for your business;
it costs 5x more to acquire a new customer than to keep one;
the success rate of selling to an existing customer is 60-70%, while the success rate of selling to a new customer is only 5-20%; and,
loyal customers typically make up 55 – 70% of sales.
If you want your business to succeed, here are some sure-fire tactics to help you boost your customer retention.
Understand why customers leave
As soon as a customer decides to leave or terminate their service, you should send them a personal email with a survey or some simple questions that ask why they decided to end the relationship.
Not everyone will provide feedback, but those who do will provide some valuable insight into what you need to be doing better to keep your customers happy, and coming back for more.
“Your most unhappy customers are your greatest source of learning.” — Bill Gates
Set clear expectations
Angry, upset customers are usually a result of miscommunication and misaligned expectations.
It is so, so important to ensure your customers’ expectations are met. This means setting deadlines, outlining clear deliverables and communicating regularly. When in doubt, under-promise and over-deliver.
“The key is to set realistic customer expectations, and then not to just meet them, but to exceed them — preferably in unexpected and helpful ways.” – Richard Branson
Most of us love surprises, and they’re a great way to build customer loyalty. This could be as simple as sending a nice handwritten note with their purchase, or offering your customers free gifts and discounts when they aren’t expecting them. You could also try hosting a pop-up sale. Whatever the surprise, it will definitely improve the way customers see your business.
“The way to a customer’s heart is much more than a loyalty program. Making customer evangelists is about creating experiences worth talking about.” – Valeria Maltoni
Personalise when possible
93% of consumers indicated they would provide retailers with detailed information if they received meaningful and customised offers in return.
Customers are starving for personalisation. So get to know your customers at every touchpoint and find ways to infuse customisation into your emails, web content, and live chats.
“If your message is irrelevant to them, people not only tune it out, but think less of your brand for not understanding their needs. ” – Kerry O’Shea Gorgone
Measure Customer Lifetime Value (LTV)
Do you know what the value of a customer is to your business? If you don't figure it out… fast!
LTV is so, so important for growth, marketing and budgeting. Your LTV can tell you how much you should be spending on marketing to acquire a new customer and how much you should be paying to keep customers.
How to calculate LTV:
Calculate average order value (AOV): Total revenue in a year / # of orders in a year
Calculate average purchase frequency rate (f): # of orders in a year / #of customers in a year
Calculate customer value (CV): CV = AOV x f
Calculate average customer lifespan (t): Calculate this number by averaging out the number of years a customer continues purchasing from your company. This is often difficult to do, so many experts recommend choosing a number between 1-3 years.
Then, calculate lifetime value (LTV): LTV = CV x t
If you want to really dig into the data, we recommend calculating LTV by customer segments.
Educate your customers
Sending email newsletters is still the best customer retention strategy. Utilising your newsletter as a way to educate your customers on how to use your product or service is a great way to incentivise them to buy. Examples of this could be styling an outfit if you’re a clothing company, or showing them hacks they can use to get the most out of your products. Videos and influencer marketing are a another great way to do this.
“You don’t earn loyalty in a day. You earn loyalty day-by-day.” – Jeffrey Gitome
We hope these tips help jumpstart your customer retention strategy. We think you’ll be able to see some positive results by implementing these, such as a boost in brand loyalty, more customer referrals, better social media engagement and stronger customer relationships.