It’s way cheaper to retain a current customer than it is to attract a new one. According to a survey, acquiring new customers costs five to 10 times more than selling to a current customer. Also, current customers spend 67 percent more on average than those new to your business!
As a result, it’s important to focus on how to improve customer retention. How do you get your first-time customers to keep buying from you? Here, we’ll cover 10 strategies to keep customers engaged and transform one-time buyers into loyal advocates!
What is Customer Retention?
Customer retention refers to the strategies and actions a business takes to reduce customer churn and increase customer loyalty.
Customer retention rate measures how many customers continue to purchase your product or services over a period of time.
Unlike customer acquisition, which focuses on gaining new customers, retention is about maximizing value from your existing customer base. It means more purchases without the need to guide the customers through the top of the marketing funnel.
Effective customer retention tactics lead to higher lifetime value (CLV) and better profitability. In short, customer retention is about keeping customers coming back and engaged with your brand long-term.
Four Stages of Customer Retention
There are 4 major stages of customer retention, and it’s important to provide the best customer services at each phase.
1. Acquisition
This stage focuses on converting prospects into customers. It’s the first step in building a customer base that you can nurture over time.
2. Onboarding
Onboarding is about making sure that customers have a seamless and satisfying initial experience. This stage is critical for setting expectations and building trust.
3. Engagement
Engagement involves creating ongoing, meaningful interactions with customers. It can include everything from personalized offers to regular updates, all aimed at keeping customers interested.
4. Retention
This stage is focused on long-term loyalty and includes tactics to turn satisfied customers into brand advocates.
How to Calculate Customer Retention Rate
Your customer retention rate (CRR) is a valuable metric for gauging customer loyalty. Here’s how to calculate it:
- Choose a time period (e.g., quarterly or annually).
- Use this formula
CRR = Customers at the End of Period−New Customers Acquired)
_________________________________
Customers at the start of the period
- Multiply the results by 100
CRR =
Customers at the End of Period − New Customers
————— X 100
Customers at the Start of Period
For example, if you started with 200 customers, gained 50 new ones, and ended with 220, your CRR would be:
220-50
—————– X 100 = 85%
200
A high retention rate is a sign of satisfied, loyal customers that you have regained over the period.
10 Ways to Improve Customer Retention Rates
A high customer retention rate doesn’t happen by accident. It’s usually a result of different strategies and efforts to keep a first-time buyer into a loyal returning customer. Here are some of the most effective customer retention strategies that top companies implement:
Acquisition Phase: First Impressions Matter
1: Personalise Customer Experience
Personalization at the first point of contact can make a huge difference. To build a strong relationship with customers, you need to come across as authentic and relatable, which means adding a human touch. Address customers by their names in emails and provide recommendations based on their browsing history. Speak directly to customers and use customer data to tailor communication to specific customer needs. You should also keep in mind that customers not only want to be treated like humans but also want to see the humanity and personality behind your brand.
2. Offer Unique Services
Set your business apart from competitors by offering something unique- a service, a freebie, or an exceptional product feature. Customers remember brands that offer them something valuable, leading to repeat business and referrals. A top customer retention strategy in 2024 is to offer value-added services to customers who have purchased.
Onboarding Phase: Ensuring a Smooth Start
3. Ensure Seamless Onboarding
A customer’s journey starts with the onboarding process, so it’s important to make a positive first impression. This might mean providing an easy-to-navigate website, user-friendly interfaces, or clear instructions on how to use your products. A smooth onboarding process reduces confusion and frustration, helping new customers feel confident in their choice to buy from you.
4. Educate Your Customers
Providing resources such as blog posts, webinars, and industry insights can add value to the onboarding process. A well-informed customer is more likely to be satisfied and understand the full benefits of your products or services. Content marketing, such as a blog with “how-to” guides or industry insights, can help educate your customers and strengthen their ability to use your services.
Engagement Phase: Keeping the Conversation Going
5. Send a Company Newsletter
Newsletters are an effective way to keep customers engaged and informed. Regularly share updates, new products, or exclusive offers. Make sure to keep the content relevant and useful to your audience to maintain their interest. This engagement strategy helps keep your brand top of mind, leading to better retention rates. Use email automation to stay connected with your customers without overwhelming them. Automate a welcome email series, follow-ups, or periodic offers that are personalized based on past interactions. Automated workflows let you engage with your customers in a timely manner, promoting both brand loyalty and return purchases.
6. Speak to Your Customers
One of the best strategies to increase customer loyalty is to build a close relationship with them. Engage with customers on social media, respond to comments, or follow up with emails. Showing customers you value their input not only boosts loyalty but also makes them feel part of your brand’s journey. You can also follow up with customers post-purchase or post-service to encourage future purchases. Another way to keep customers coming back is to reach out to them after they haven’t interacted with your brand for a while.
7. Form a Strong Community
Creating a community for your product or service can attract more customers and drive customer loyalty. Social media groups/communities, online forums, and events are some customer loyalty and retention strategies that you can implement to build a community around your product.
Retention Phase: Building Long-Term Loyalty
8. Collect Customer Feedback
Your company should make it a culture to seek feedback from customers about their experiences, pain points, and potential issues. Surveys, feedback forms, social media polls, or a simple email asking for a review can uncover valuable insights and show customers you care about their experience. You can also curate and showcase positive feedback to attract new customers and influence existing customers to stay loyal. Additionally, addressing feedback helps improve your services and lets customers know that their opinions are valued, encouraging them to remain loyal.
9. Offer Support on the Right Platforms
Different customers have different preferences when it comes to customer support channels, be it email, live chat, social media, or phone. Part of doing customer retention strategy right is understanding where your customers spend most of their time and how they like to get customer support. By offering support on various platforms, you show flexibility and improve customer satisfaction. Make sure customers know where and how to reach you easily.
10. Implement Customer Loyalty Programs
Loyalty programs are a marketing strategy aimed at encouraging repeat purchases by offering points or rewards to customers. Incentives keep customers coming back and show them that you appreciate them, making them feel valued and helping foster long-term loyalty. This also has the potential to attract new customers who are interested in loyalty perks. You can also provide incentives before customers can terminate their free trials and subscriptions.
By offering rewards—whether it’s through a points-based system, exclusive discounts, or access to special events—you can increase customer satisfaction and retention.
Key Takeaways
Improving customer retention requires a comprehensive strategy considering every stage of the customer journey, from acquisition to long-term loyalty. When implemented, the strategies listed here can create stronger relationships, boost customer satisfaction, and improve your retention rate.
As we’ve seen, how to improve customer retention isn’t just about reducing churn but about building value and trust that lasts.
Astract9 is here to help small businesses build and execute strategies that boost customer loyalty. For more support, reach out to us at hello@astract.com to connect with an expert who can guide you in optimizing customer retention through digital marketing.
