6 tips to improve your customer retention rate
Strong customer retention is just smart business.
According to Harvard Business Review research, acquiring a new customer can cost 5 to 25 times more than retaining an existing one. Customer retention is about maintaining your current customer base and increasing loyalty by offering better products or services and other benefits. Customer retention tactics include loyalty programs, discounts, special offers and targeted marketing campaigns.
Simply put, just a 5 percent increase in customer retention can lead to a 25 to 95 percent increase in profit, according to research popularized by Bain & Company. Existing customers also tend to spend about 67 percent more than new customers, on average.
You want to keep your customers purchasing from you once you acquire them. But as important as it is, customer retention is a big challenge for many businesses, especially as acquisition costs have climbed roughly 222 percent over the past five years.
The following are six tips to improve your customer retention rate and keep your business strong.
| What the data shows | Why it matters |
|---|---|
| Acquiring a new customer costs 5 to 25 times more than retaining one | Retention is consistently the cheaper growth lever |
| A 5% increase in retention can lift profits 25 to 95% | Small retention improvements compound into large financial gains |
| Existing customers spend about 67% more than new customers | Your best customers are your most valuable ones |
| About 85% of churn is preventable through better service | Most lost customers didn't have to leave |
Invest in great customer service
Clearly, bad customer service can lose you customers. In fact, an estimated 85 percent of customer churn is preventable through better service. But what's needed to deliver great customer service that will increase your customer retention?
Start by understanding your customers' needs. What platform do they prefer to contact you on? What other insights about your customers could help you?
You'll also want to set and communicate customer service standards with your team. These standards should not just promote a positive customer service experience but also a consistent one. AI-assisted tools can also help here: many support teams now use AI to speed up response times and triage routine questions, freeing up your team to focus on the more complex issues that most affect retention.
Check out our five ways to improve your customer service.
Communicate with your customers in multiple ways
Regularly sharing information about product or service updates is imperative, but the more ways you can do this the better.
Your target audience can be reached across multiple platforms. So, consider how you can best communicate through webchats, social media, text messaging, email and so on. This is also the essence of omnichannel marketing, which companies with strong engagement use to retain about 89 percent of their customers, compared to just 33 percent for those with weak cross-channel engagement.
Of course, personalization can make your content that much more effective.
Check out our seven tips to level up your content marketing for inspiration.
Regularly collect customer data
Data can help you understand the needs of your customers. Surveys are an effective way to encourage customer engagement and learn more about them. You'll also be able to identify dissatisfied customers before they decide to never purchase from you again.
Besides collecting this data, it's important to act on it. How can you improve? What do your customers need from you? A CRM can make this significantly easier to track and act on at scale.
Check out our eight tips to create a successful customer survey for your business, as well as six benefits of using CRM software for small businesses.
Over-deliver on customer expectations
Offering decent quality at a reasonable price is not enough these days. Consumers do expect more because they have more choices than ever before. If you don't meet their needs, they'll purchase from someone else.
How can you personalize your customer's experience and be proactive throughout their purchasing journey? It all starts with knowing what your customer wants. Getting feedback through surveys and reviews can help you identify areas that can be improved.
Just remember that you never want to over-promise in any way to your customers. But whenever you can, you want to surprise and delight by over-delivering. Go above and beyond.
Celebrate and reward loyalty
There are many ways that you can acknowledge, celebrate and reward brand loyalty among your customers.
Brand loyalty involves more than just retaining your customers, though. It's about providing an experience that your customers won't find anywhere else that will keep them coming back.
Check out our six tips to create brand loyalty for your business, and take your customer retention to the next level.
Share your company values to build trust
How your business operates, the quality of your products or services and how you treat your customers should all be a reflection of your company's values.
And while your values may be completely intertwined with how your business operates, the more you can share your values with your customers, the better.
Shared values between businesses and customers help build trusting relationships. The relationships you can build with your customers directly impact your customer retention.
Check out our six ways to grow consumer trust.
In conclusion
While attracting new customers will always matter, you can't forget about your existing customers. Customer retention not only saves you money on new-customer acquisition, it also generates larger profits for your company.
As you're developing a strategy to boost brand loyalty for your business, consider leveling up your digital marketing with DailyStory. Features include automating various marketing tasks, dynamic audience segmentation and more. Schedule your free demo with us today.