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Customer Retention: 7 Proven Strategies To Learn From In 2024
Existing customers are 3-14x more likely to buy again compared to new prospects.
If you still don’t have a concrete customer retention strategy in place, this post is for you. We curated 7 of the most conversion-centric strategies you can implement so you can start turning one-time buyers into loyal customers.
Let’s get right to it.
3 Core Customer Retention Metrics To Track
Before we jump into the 7 strategies, make sure you understand these 3 core metrics because you’ll use them when applying the strategies.
It might be tempting to skip calculating these metrics when the formulas seem overwhelming, but here are 3 reasons why you have to:
But now the question is:
What core metrics should be your North Star? Consider these 3:
- Customer Retention Rate (CRR)
The CRR is the percentage of customers who become your brand advocates over a period. The formula is:
Here’s what each part of the formula means:
- E: The number of customers you have at the end of the period you’re measuring ( month, quarter, year).
- N: The number of new customers you acquired during the period.
- S: The number of customers you had at the beginning of the period.
Let’s say you generate 100 customers/month; you lose 5, and gain 10 new ones.
Your CRR would be (105 / 100) * 100% = 105%. (Yes, it can be above 100% if you acquire more customers than you lose)
A good CRR is typically around 80% or higher, while a bad CRR would generally be below 20%.
- Customer Churn Rate
This is the flip side of CRR, showing the percentage of customers you lose. The formula is:
Going back to our example, if you lose 5 customers out of 100, your churn rate would be (5 / 100) * 100% = 5%.
This rate is ok. A good CCR is ideally below 5%-10% and a bad CCR would be above 20%-25%.
III. Repeat Purchase Rate (RPR)
RPR is about how often customers come back for more. The formula for RPR is:
Let’s take an example of a company that generated 200 customers in their first month and 80 of them visited them again.
The RPR would be (80 / 200) * 100% = 40%.
This would mean customers love your offer. You are looking at 20%-25% for a good RPR and 5%-10% for a bad RPR.
By tracking these metrics, you will see what’s working and what’s not and know better when you need to start implementing a loyalty program, a special thank you email, or a fun customer appreciation event.
7 Tested Customer Retention Strategies With Proven Results
Don’t feel like you have to implement every strategy on the list all at once. Pay close attention to how each strategy is implemented and pick out the easiest for you to implement, start from there.
1. Make Your Customers Feel Like VIPs
90% of customers expect brands to listen to them and at the same time, 60% of customers leave a brand because of bad customer support. Here are things you can do:
1. Address customers by their names in emails and messages. Use their purchase history to recommend related products or services.
2. Give them special discounts, early access to sales, or exclusive products/services as perks.
3. Assign dedicated support channels, faster response, and dedicated time software solutions where Sixgun leaves an excellent example of making their clients feel they have something exclusive.
4. Acknowledge their milestones and special events like anniversaries or frequent purchases with personalized thank-you notes or small gifts.
5. Actively ask for feedback, implement their suggestions, and let them know to show their opinions matter.
6. If you can, occasionally surprise VIPs with unexpected rewards like free upgrades or limited-time offers.
7. Create a sense of belonging by inviting VIPs to exclusive events or online communities where they can connect with your brand and with your other customers.
8. Plot out a lead funnel system that tracks your VIP customer’s journey so that you can quickly fix any issue as soon as you see them move in another direction.
2. Consistently Improve Your Product
Companies that listen to their customers grow faster than others, at least 4-8% more each year.
When you listen to what customers are saying, you pinpoint exactly what’s working well and where there’s room for improvement that you can address. The more tailored your customer experience is, the more reason your customers have to come back to your brand.
Here’s what you can do:
- Establish a consistent feedback system. Set up a survey that customers receive after each purchase or interaction with your service. For example, send a short email survey asking about their experience or include a feedback form on your website’s checkout page.
- Look for recurring themes. See if several customers mention difficulties with your website navigation in their feedback. This indicates that you need to simplify the layout or improve search functionality.
- Prioritize changes. If multiple customers suggest adding a certain feature to your product like a mobile app option, prioritize this over less frequently mentioned enhancements to meet widespread demand.
- Keep customers informed. After updating your software based on feedback, send an email newsletter highlighting the changes made and thanking customers for their input. This transparency strengthens their trust and loyalty.
- Test changes. Before rolling out a major update or changes in service, release a beta version to a small group of customers and gather feedback on their experience so you can identify and address any issues before a full release.
Maintain a feedback loop. Keep on communicating with your customers in social media polls, customer forums, or periodic follow-up surveys.
3. Close The Feedback Loop
Closing the feedback loop shows your customers that you hear and value their voices. Doing this improves their experience and cultivates stronger relationships seeing how transparent and responsive you are to their needs. In turn, this builds their trust because they feel acknowledged and appreciated for their input.
Here’s how to do it:
- Respond to feedback. Always reply to customer feedback, whether it’s good or bad. This shows you care about their thoughts.
- Say thank you. Show that you appreciate them sharing their feedback. Thank them for their positive words. For those with negative sentiments, thank them for sharing their thoughts and helping you pinpoint areas you can do better.
- Share updates. Keep customers in the loop about what you’re doing with their feedback. Send them emails or post on social media.
- Make changes: Use the feedback to improve your products or services. Make sure customers see you’re making things better based on what they’ve said.
Check back. Follow up with customers who gave feedback to see if they’re happy with the changes
4. Opt For Targeted Customer Communication & Personalized Experience
On a birthday party, not everyone likes to be served with pepperoni pizza—some are vegans, others love the cheesiest pizza. Know their preferences and serve them what they like so they will remember how fantastic your birthday party was.
This personalized approach makes them feel valued and understood. Companies that make things personal for their customers earn 40% more and 71% want companies to remember their likes and dislikes.
Here’s what you can do:
- Divide your customer base into groups based on characteristics like demographics, behaviors, or purchasing habits.
- Craft messages that resonate with each segment. Use their preferences and past interactions to customize your communications.
- Tailor your offers based on purchase history or browsing behavior, and incentives they will want to get.
- Implement CRM systems and automation tools to streamline personalized communications and scale your efforts efficiently. Use Salesforce or HubSpot to centralize customer data, track interactions, and segment audiences based on behavior and preferences or Mailchimp or Marketo to automate personalized emails, messages, and campaigns based on customer actions.
- Organize community events that make your audience feel like part of an exclusive group or let them try your offers in a ‘VIP’ way. A great example of this is how Chisos, a boot manufacturer offers boot fitting experience when you invite them for corporate events.
Serve with their “sought after” options.
5. Make Purchasing Easy, Reduce Friction
Making purchasing easy and reducing friction limits the reasons for customers abandoning their purchases. By simplifying the buying process, you remove barriers that could prevent potential customers from taking action.
Here’s how to implement this:
1. Simplify the steps required to complete a purchase on your website or app. Minimize form fields (3-5 fields only if possible), offer guest checkout options, and give them a clear guide on what to do at each stage.
2. Make sure that product information is easily accessible and that the navigation is intuitive. Use clear categories, filters, and search functionalities to help customers find what they need quickly.
3. Be transparent on shipping costs, return policies, and any additional fees upfront. This reduces uncertainty, making customers more comfortable completing their purchases.
4. Offer multiple payment methods to accommodate their preferences. Include credit cards, PayPal, digital wallets, and installment options to cater to different needs. Here’s an excellent example from Infraredi Body Wrap where they use the Afterpay platform to split the bill into 4 parts.
5. Send them order confirmation emails, shipment tracking, and support for any inquiries or issues that may arise after the purchase.
6. Make sure your website or app is mobile-friendly and responsive. Mobile users should have a smooth experience browsing, selecting products, and checking out on their devices. Offer them accessibility options like what Main Clinic Supply does here.
6. Make a Difference Through Loyalty Programs
75% of customers choose a store based on their loyalty program – that’s a lot of happy customers walking through the door!
Implementing loyalty programs rewards customers for coming back, and helps keep them coming back. When you offer rewards to loyal customers, it makes them more likely to stick with your brand instead of going to other options so you can build strong, lasting connections with them.
To create it:
- Define your rewards. Know what makes them tick: discounts, exclusive access to products, or points redeemable for future purchases.
- Make it easy to join your loyalty program. Give them clear information and a straightforward sign-up process both online and in-store.
- Use customer data to personalize offers and rewards based on individual preferences and purchase history so that it appeals to them better.
- Promote your loyalty program in your email, social media, and in-store signage. Regularly communicate benefits (weekly or bi-weekly), new rewards, and exclusive offers to keep members engaged.
- Implement tiered membership levels based on customer spending or engagement. Offer increasing benefits as customers move up tiers, to move them to spend more to unlock higher rewards where Vitamart exhibits an excellent example. They made the first tier easy to achieve with $0 requirements so customers get motivated to move up to the next tier.
6. Make a Difference Through Loyalty Programs
This helps you avoid potentially damaging your brand’s reputation or alienating your customer base. Carefully selecting partnerships and affiliations, make sure they align with your brand values and resonate well with your audience.
Here’s how to approach this:
- Choose affiliations that reflect and enhance your brand’s values. If your audience values eco-friendliness, highlight how you apply this to your products or services.
- Do a thorough research on potential partners or affiliations. Evaluate their reputation, ethics, and how they conduct business to avoid any conflicts or controversies.
- Be transparent about your affiliations with your customers. Let them know why you chose to partner with certain organizations or brands and how it benefits them.
- Stay attentive to customer feedback and reactions about those affiliations. Address any concerns or negative perceptions in 24 hours if possible.
- Consider your affiliation’s long-term implications on your brand reputation and customer loyalty. Make sure they contribute positively to your brand story and customer relationships.
Periodically review your affiliations (2x a year or yearly) to make sure they continue to align with your brand’s values and objectives. Make adjustments when needed to stay consistent with your values.
7. Don’t Hurt their Feelings—Be Strategic About Your Affiliations
This helps you avoid potentially damaging your brand’s reputation or alienating your customer base. Carefully selecting partnerships and affiliations, make sure they align with your brand values and resonate well with your audience.
Here’s how to approach this:
- Choose affiliations that reflect and enhance your brand’s values. If your audience values eco-friendliness, highlight how you apply this to your products or services.
- Do a thorough research on potential partners or affiliations. Evaluate their reputation, ethics, and how they conduct business to avoid any conflicts or controversies.
- Be transparent about your affiliations with your customers. Let them know why you chose to partner with certain organizations or brands and how it benefits them.
- Stay attentive to customer feedback and reactions about those affiliations. Address any concerns or negative perceptions in 24 hours if possible.
- Consider your affiliation’s long-term implications on your brand reputation and customer loyalty. Make sure they contribute positively to your brand story and customer relationships.
Periodically review your affiliations (2x a year or yearly) to make sure they continue to align with your brand’s values and objectives. Make adjustments when needed to stay consistent with your values.
6 Challenges When Implementing Customer Retention Strategies
Using these strategies can be tricky at times. But if you think ahead and deal with any problems as they come, you’ll be in good shape. Take note of these challenges and the fixes you can apply.
1. Lack Of Data Integration
Consolidating and integrating customer data from CRM systems, and sales platforms can complicate executing your strategies smoothly.
To fix this, implement a unified CRM system that centralizes all customer data. Do regular data audits and cleaning processes (monthly or quarterly) to maintain its accuracy. Use a lead funnel solution to see what tools you can use for other stages of the journey.
2. Inconsistent Customer Experience
Customers can feel let down when they encounter different service levels or messages across your touchpoints. This mix-up can confuse them and make them doubt your brand. So make sure each interaction with your customers feels consistent and reliable, so they trust you and want to keep coming back.
To do this:
- Hire an experienced customer rep to handle the task.
- Develop and enforce standardized customer service protocols.
- Use journey mapping to identify and address gaps in the customer experience.
- Implement omnichannel strategies to make sure consistent messaging and service delivery.
- Implement post-purchase and post event strategies to keep your customers engaged and keep your brand top-of-mind.
3. Lack Of Personalization
When there’s a lack of personalization, customers don’t feel that your brand understands them. This won’t help build a strong connection enough to make them loyal to your brand.
Counter this by implementing automation tools for personalized email campaigns or social media ads and working with SEO experts to target the right terms to resonate with your customer’s behavior and preferences. Train customer service teams to use CRM data effectively during interactions so they can provide personalized support.
4. Difficulty In Measuring ROI
Without clear metrics, it’s hard to know what’s working and what needs adjusting.
So define specific KPIs (Key Performance Indicators) for retention efforts like customer churn rate, repeat purchase rate, and customer lifetime value. Most analytics tools can track and measure these metrics over time. Then do A/B testing to check what gets you better results.
5. Limited Resources & Budget Constraints
This can restrict how much you can invest in customer retention strategies. This can mean fewer tools, less staff, or less time to focus on keeping customers happy.
What you can do is prioritize your retention efforts based on the potential impact and how much you can spend for it. Explore cost-efficient automation tools and CRM systems with scalable pricing models. Focus on allocating your resources to high-impact retention initiatives with measurable outcomes.
6. Customer Resistance To Engagement
This usually happens when customers find it inconvenient or don’t see the value in participating.
To fix this, make sure your customer fully understands the benefits. Offer them incentives or rewards for participation in surveys, reviews, or loyalty programs.
Conclusion
When thinking about what to implement first, weigh between what’s fastest to act on and what drives the most results for your business. If it feels overwhelming, start with the easiest and apply more strategies as you build more confidence.
It can be challenging to pick what to do first unless you plot out the whole journey. Once you do, it will be easier to see where the critical points are and where should deep-dive your efforts. Funnelytics can help you with that. With our visual funnel platform, you can easily identify touch points you need to prioritize. Check out how it works and get started for free.
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Burkhard Berger
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