Six Ways to Increase Your Customer Retention Rate
When we ask our clients what their ultimate business goal is, their answer is usually centred around growth: company growth, exponential growth, etc. This forward-thinking and planning are, of course, part of why they decide to engage with a HubSpot partner and invest their money and time into Inbound Marketing efforts. In this blog, let's look at one of the key growth elements – customer retention.
When you consider business growth and the means to achieve it, the most obvious is to grow net new names – converting to new customers. And yes, getting new customers is crucial, but setting out to acquire them in order to grow a business is not necessarily as cost-effective or as beneficial as you may initially think.
The entire buyer’s journey from awareness to consideration and then decision stage and converting to paying customers requires significant resources. Moreover, identifying, qualifying, and nurturing leads takes time.
The most cost-effective and quickest way to hit your growth goals is to invest your time in retaining high-value, low-effort assets — a.k.a. existing customers.
Studies show that depending on the factors that make your business stand out (industry, size, brand awareness, relevance among the target audience, etc.), acquiring a new customer can cost you anywhere between 5 and 25 times more than keeping the customer you already have.
Here are a few more reasons why customer retention is SO important to the overall success and potential growth of your business:
- Remember the 80/20 rule: about 20% of your customers produce 80% of your sales.
- Repeat purchasers spend more and generate larger transactions.
- Repeat customers refer more people and bring in more business.
- Customer retention lends itself to customer loyalty — and with loyal customers comes word-of-mouth marketing which is a highly effective way to gain referrals to qualified leads from existing customers.
- Reengaging existing customers saves you resources — once a customer converts, you simply need to tempt them to return and convert again (and again ... and again) through engaging and delightful content and experiences.
The following six ways to boost customer retention are applicable for virtually any type of business. Some experimentation may be required to see what tactics your customers will respond best to.
1. Pricing adjustment for returning customers.
This can be done via email with discounts for “your next purchase”, free shipping and returns, or additional price-related perks for frequent shoppers. For B2B companies offering service packages, it might be useful to align pricing with long-term customers expectations. Focus on the value you can provide your customers with.
2. Cross-selling and upselling strategies implementation.You can increase the chance of a shopper putting an additional item to their cart by having cross-selling and upselling content throughout your website, social media, emails, etc. For online purchasers, you will need to look at the data and see what your customers often buy together, or what products complement each other naturally, and when an upgradeable option makes the most sense.
3. Developing a customer loyalty program.
Implementing a program to reward your most loyal customers is an easy way to build on existing relationships and offer regular incentives for them to return to your business.
4. Buyer's journey personalization.
Customer loyalty and retention are always connected to customer experience and delight. You can add additional value to your customer’s experience by “personalizing” as much as possible. Something as simple as a smart form that will greet a returning client with a “Welcome back [Name]”. For B2Bs, it’s a bit more complicated, but they can use personalization and contact owner tokens for email campaigns, for example. What’s more, personalization for B2Bs also means a deep understanding of client’s pain points and goals and how your business can help them overcome current challenges and grow.
5. Recurring subscription.
Offering a subscription is an easy way to boost retention since it caters to shoppers' need for convenience and flexibility (as you can offer monthly, quarterly, or annual subscriptions). Even if you don't have the type of products that can easily be sold using a subscription model, consider selling add-ons such as on-retainer customer support or insurance.
6. Know your customers.
When you know who your customers are, what they need from your business, what their pain points are, and where they spend their time — you'll be able to meet them where they are. Which translates into the type of content they are interested in and need. In doing so, you will remain top of mind as you have shown how much you understand and value them.
If you have more thoughts on customer retention strategies that worked for you, feel free to reach out and share them! We'll be glad to hear from you.