5 Important Techniques for Effective Customer Retention
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The Pareto principle, when applied to the context of business, proposed that 80% of your sales can come from 20% of your customer base. This highlights the importance of retaining that 20% and making sure that they are continuously engaged. Customer retention is the subject of many sales improvement discussions. And it is increasingly becoming more relevant in a business environment where competition is becoming cut-throat and customers’ loyalty can easily wane. In fact, one study proposes that increasing customer loyalty just by 5% can lead to an increase of profits by 25% to 95%, especially when the internet is involved.
In this article, we will discuss the five essential techniques to keep your customers loyal and engaged. But let us break down the basics first.
What is Customer Retention?
Customer retention is the process of ensuring your previous and current customers are continuously engaged with your business – meaning, they keep on buying your products or availing your services. Customer retention is concerned with making customers return for another business transaction. It is also concerned with giving the impression to customers that the business cares about them and their needs and interests.
The art and science of keeping customers engaged has a lot to do with customer loyalty. Loyalty is what makes customers remember your business when something comes up (or when a need arises). It is also what encourages customers to recommend your business to others.
In the context of modern businesses, customer retention has been dealt with using technology. These days, monitoring and tracking the effectiveness of your customer retention techniques has been made easier using technology. Tools and software have also been developed to boost customer loyalty among the customers as well as generating leads to convert them into paying customers.
5 Customer Retention Techniques You Should Know About
Here are five of the many techniques you can employ for your customer retention plan:
1. Ensure that your customers are satisfied with your products and services
It does not take a genius to figure this out but this is a fundamental principle that you should not forget about. Cliche as it may sound – customers are the most important people in your business and they are always right. Hence, it is important to continuously gather feedback about your products and services.
Are your customers satisfied with the quality of your products? How about their cost? Are they happy about the way you delivered the products? What about how your company is handling the complaints? These are important questions to know and determine whether or not your products need to be changed. Or whether your services need to be improved.
When customers are satisfied with your products and services, it increases the chances of a repeat purchase. That means they will do business with you again because their previous need was satisfied and should another need arises – they will come to you for another business.
This is what keeps customers coming to your business and this is what will help maintain a steady stream of income that will fund the operations of your business. In conclusion, keeping your customers satisfied is essential and you can do this by constantly gathering feedback to improve your products and services.
2. Personalize your interactions with your customers
Personalization of interactions requires a deep level of understanding about your customers’ unique individual needs and interests. This is difficult to do especially when we are talking about customers who are sensitive about giving out personal information. This is understandable as recently cyber crimes are on the rise as identity theft and internet fraud are growing rampant.
Marketing teams are faced with the challenge of “how do I get to know you better without making you afraid of giving me personal information?” To deal with this challenge, some companies have been successful in making customers fill out forms in exchange for an incentive – a PDF, an eBook, a research report, or even money.
Make sure that your customers have a genuine interest in your products and services before making this exchange. When your customers feel that you know them so much like a close friend would, doing business with them becomes smoother and easier. There are also software and systems developed to make information gathering easier through automation. An example of this is a CRM software designed to capture customer information by sending leads and customers forms to fill out with.
3. Hype it up and build a community around your brand
Humans are social animals and are easily persuaded to do things or buy things when they see others do the same. It is in recognizing this innate need to belong that companies become successful. Big brands have been forming communities around their brand and rewarding them. Sometimes, when you feel like you are in a group, the brand becomes exclusive and you get to have a sense of identity.
Successful companies have recognized this and has formed a marketing plan around these identities. Create a theme that fits your community – prestige, privilege, exclusivity, luxury, simplicity, elegance, speed, power, portability, durability, and so much more.
4. Reward your loyal customers
There is nothing much more rewarding than the feeling that you are recognized as a loyal customer and are rewarded for it. One thing that can keep repeat purchases from going is by giving people an incentive to do repeat purchases. Reward your customers for their loyalty – and this will make it easier for them to recommend your business to their spheres of influence. Future customers will also be enticed to join your community as they feel that your business has a genuine interest to keep your customers engaged in the long run.
The reward can take in any form appropriate to your marketing plan. It can be offers of discounts to future purchases, freebies after several purchases, actual cash back, or free upgrades. There is a caveat to this, however. When rewarding your loyal customers, make sure that your business can afford to spend on this.
5. Be active online – especially on social media
Doing business these days is significantly different than how you would in the past decades. Sure some principles still apply like the importance of a customer’s feedback or the importance of loyalty. But dynamics may be different especially when you are engaging with (or targeting to engage) customers online.
The internet community, especially on social media, created so many opportunities for businesses to grow. The interconnectivity that marks the online community allows businesses to quickly grow in popularity and recognition. This is why engaging with your potential and existing customers online becomes extremely necessary.
When you interact with your leads and customers online, it becomes easier for them to share the story of how your business changed their lives for the better. When you can provide actual value to your customers, this narrative can quickly spread like wildfire among the internet community. Potential customers will become curious as to how your products and services can change their lives – creating a wider window of opportunity to turn them into paying customers that can last a lifetime.