How to Drive Customer Retention: 8 Secrets That Work

Customer retention is critical to the survival of your business. It’s thus important to develop strategies to ensure that your current customers remain loyal to your brand.

Not sure where to start? No worries. 

This article reveals 8 secrets to drive customer retention for your business.

Come with us.

What is Customer Retention? 

Customer retention is simply the process of converting one-time buyers into repeat customers. It’s how well a business can keep its customers over a period. Customer retention aims to ensure that customers are satisfied with a company’s services, make repeat purchases, and do not switch to competitors.

Why Customer Retention Matters

These are some benefits of customer retention:

  • Increased profits: Besides making repeat purchases, existing customers are more willing to try out other products from a brand they trust, boosting sales and increasing profits.
  • Better brand ambassadors: Your longtime customers are likely to recommend your company and products to their families, friends, and colleagues, thus acting as your brand ambassador.
  • Higher customer lifetime value ( CLV): The longer customers stick to your brand, the more they are likely to spend on it, which increases their value for your business.

The following are 8 strategies you can use to drive customer retention for your business.

Establish life-long consumer trust with social proof. 

The most successful businesses are built on trust. Most customers report that trust influences their decision to buy or not from a brand. You should thus make conscious efforts to promote trust between your customers and your brand. In every encounter with new or existing customers, you should allow them to trust you. 

Gathering customer feedback is an important step in your customer retention strategy. Customer reviews provide the much-needed social proof necessary for building trust. Gathering and highlighting reviews, and visual user-generated content can help keep your customers engaged, build trust, and make it easy for them to become repeat customers.

Customer retention strategy example

Some companies like Classy Curlies have used this strategy successfully. Through its website, this company provides DIY kits and tutorials that show its customers how to take care of their skin and hair using readily available home or grocery store products. 

It has been easy for Classy Curlies to gain and keep customers by putting their needs first and providing solutions to their problems at no cost. Thus, a new customer will likely discover something at Classy Curlies that will keep them returning for more.

Build a legitimate community.

To convert one-time buyers to loyal repeat customers. A business will need to do more than just being a store. Customers need to be emotionally invested in your business if you need to build your brand’s loyalty. 

Every brand has a reason for its existence. Clearly define the reason for your business’s existence and build a community of customers and people who share your business objectives, values, and beliefs. You can utilize forums and social media platforms like Twitter, Instagram, Facebook, and Linkedin.

Research has shown that 44%  of consumers feel more connected to a brand that creates, participates, or hosts relevant online conversations. 

Customer retention strategy example

Through an app that predicts analyzes, and tracks individual health data, Flo has created a community by providing a platform for people who wish to manage their reproductive health. The app provides a calendar so users can see when their circles start and end simply and also provides daily health insights to help them make sense of all those forecasts. 

Flo provides prompts for users to discuss, pairs users with health assistants, and offers spaces for anonymous chat rooms where users can confidentially discuss their health.

Offer a personalized experience that sets you apart. 

Successful brands don’t rely only on price strategies. They also offer exceptional customer service, distinguishing them from their competition. In addition to quality products, today’s customers desire unique experiences that move their view on a brand from being a transaction to a destination.

The experience you offer determines if a customer will return for more or if they will move to the competition. You will thus need to offer outstanding and unforgettable experiences that not only clearly differentiates you from your competition but also keeps your customers engaged and coming back.

Give your customers a good reason to stick to your brand and see you as the obvious change over competitors.  

Customer retention strategy example

One company that has been able to adopt this strategy effectively is Apple. In its Mac vs. PC ad, the brand utilized humor in demonstrating why Mac was a better choice over PC. This ad divided the market and set Apple apart from its competitors by clearly identifying the type of customers who should purchase its products.

Start and encourage loyalty point sign-ups

A loyalty program is an effective strategy for customer retention. These programs are designed to reward a brand’s loyal customers by giving them incentives that encourage them to come back and make repeat purchases from you.

By implementing loyalty programs, brands can influence desired customer behavior, including repeat purchases, social media following, and subscription sign-up, among many others. You should design your loyalty program in such a way that it offers a high perceived value to your customers. 

Loyalty programs help keep customers happy and satisfied as they gain more than just products from your business.

You’ll need to ensure that your customers know about your program. You can use social media, emails, or texts for advertising your program. Come up with exclusive offers to encourage your customers to sign. 

Customer retention strategy example

Sephora has successfully adopted this strategy in its BeautyInsider program, which offers discounts and gifts without spending any money. However, the perks get better as customers spend more on the company.

Treat VIP customers like actual VIPs 

Customers who are devoted to a brand expect the brand to recognize them as VIPs and go the extra mile for them. This could be via offering expedited shipping, exclusive access to products, extremely fast customer service, waiving of minimum order requirements, free returns, gifts, personalized experiences, or providing the after-service call.

Customers who join your loyalty program expect you to give them special treatment. This is because they make the highest percentile of your client base and spend more on your business. Since they bring more sales to you, you can’t afford to accord them the same treatment you give to one-time customers. 

By providing tailored, VIP experiences at every point of contact, you can keep customers returning to your business. Recognizing VIP customers and treating them correctly is key, whether you’re sending them texting or emailing them about a loyalty update.

Customer retention strategy example

Amazon is a perfect example of a brand that utilizes this customer retention strategy. Through its Prime program, the brand goes the extra mile for its loyal customers who are members of the prime program. The brand offers free, two-day delivery, free trial memberships of other streaming services, access to exclusive movies, and exceptional customer service.

Collect customer feedback 

One of the best methods to identify issues with your sales process, products, or services is through customer feedback. Get to know how the customers feel about your products and services. Obtaining direct feedback from your clients is an excellent way of strengthening the relationship between them and your business. It can assist you in creating personalized content that keeps them engaged.

You can send out a follow-up email or text to your customers once they make a purchase from your business, asking them to provide feedback. Find out why they bought from you first, what they like or dislike about the product, your customer service, and what they think you should improve.

Customer retention strategy example

Mackweldon is one of the brands that has embraced this customer retention strategy effectively. The brand has created a system to send email feedback to its customers after purchase. The product they bought is placed at the center and front with a “click to rate” widget below it. 

Offer a subscription service.

Subscriptions force people to make regular purchases. They can help your company generate ongoing revenues while retaining your existing clientele and keeping them engaged. Additionally, tying people a subscription can help you deliver exceptional experiences that engage your customers. 

What’s better, you don’t need to base your entire business plan on a subscription service. You can just think about a separate subscription box that allows you to sell the smaller versions of your bestselling products.

Encourage customers, especially those who make regular purchases like skincare products, cosmetics, food, and drinks, to subscribe. 

Customer retention strategy example

Using its Crystal Candle Club, the Jill and Ally brand has convinced its customers to make repeat purchases. It offers significant discounts based on subscription frequency designed to encourage first-time customers to buy more often. It also uses first access to the brand’s new products, unexpected gifts, and special discounts as an enticement.

Maintain a customer communication calendar 

Frequent communication makes your customers feel valued and keeps them updated on your progress. Brands that maintain regular communication with their brands are more likely to increase their profitability than those with no contact.

A communication calendar can help you keep in touch with your clients regularly. A calendar is a pre-programmed series of communications, including events, calls, offers, and notes you deliver to your customers using automation software.

Maintaining a communication calendar simplifies interacting with your clients, as regular communication eliminates any post-purchase uncertainties, boosts confidence levels, and encourages repeat business.

You can find various communication calendar tools online to send your customers cards, letters about events, phone calls, special offers, and appreciation messages.

How do you calculate your customer retention rate?

Before developing a customer retention strategy for your business, you should find out and fully understand your current customer retention rate. This figure shows the percentage of customers sticking with your brand at any time. This is important as it indicates how effectively you can keep your customers returning for more purchases.

To calculate the customer retention rate, you’ll need to divide the total number of customers from the new customers by the number of customers acquired at the beginning of the period.

(Customer retention rate =Number of customers at the end of the period – number of customers acquired during that period)/ (number of customers at the beginning of the period) * 100.

You’ll need to define the period and your desired timeframe. This can be weekly, monthly, quarterly, or yearly. This is totally up to you to decide. Remember to consider the churn when calculating the number of customers at the end of the period.

Which Customer Retention Strategy is Right for Your Business?

Customer retention is crucial for the sustainability and survival of any business. Retaining customers can help you boost your profitability, sales, and brand loyalty. It’s thus essential to come up with effective measures to ensure your customers keep coming back for more.

Now that we’ve equipped you with proven strategies that work, which one do you think will work for your business?

No matter the choice, what matters most is identifying and meeting your customer’s needs sufficiently. Note that none of the above strategies will work overnight and deliver instant results. While they are effective, they may take some time to pay off. Thus you will need to exercise patience.

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