Bain & Co, in a joint study with a Harvard Professor found that it can cost up to 5X the cost of retaining existing customers to acquire new customers. In an entirely separate survey conducted by Invesp, it was suggested that a small 5% rise in customer retention rates could precipitate anything from a 25% to 95% increase in profits.
Regardless of which study you rely on, you’re likely to find this logic to be the common denominator—why spend more budget acquiring new customers when you can just keep existing ones happy?
With figures like these, it is no surprise that improve loyalty has emerged top of the agenda for companies and their marketers. Central to achieving this goal of customer retention is your customer churn rate OR retention rate.
Your churn rate is the percentage of customers who discontinue using your company’s products or services within a certain period of time. Customer churn can be costly for businesses, as acquiring new customers can be more expensive than retaining existing ones.
On the flipside, customer retention rate evaluates the percentage of customers who continue to do business with your company over a certain period of time. This metric is important for companies to track, as it can indicate how well they are retaining their customer base.
You may choose to see your cup half-full by monitoring and reporting customer retention rate, while some see their half-empty by keeping track of customer churn. In the grand scheme of customer relationships, both metrics examine the same thing.
In this article, we set about defining what customer retention is, and then we also highlight using CRM software alongside other techniques as a strategy for improving your loyalty.
What is customer retention?
This measure how well you can get already-converted customers to continue patronizing your business over a specific period of time.
B2B firms need to focus on improve loyalty in order to maintain a strong customer base. By keeping existing customers happy, they are more likely to continue doing business with the company and recommend them to others.
There are a few ways to keep customers satisfied, like providing excellent customer service, offering quality products and services, and having competitive prices. To calculate your customer retention rate, you need to subtract the total number of your new customers at the end of the period (CE) from the total number of new customers (CN) that you had over the period under review. You’ll then proceed to divide the sum by the total number of customers you had at the beginning of that period (CS), and then multiply by 100, as outlined below.
What are some customer retention strategies?
To improve loyalty is directly tied to customer satisfaction – the more content your customers are with your product/service, the more likely they are to continue to mainly ignore your competitors. Below, we outline a few customer retention strategies that you can apply to keep your customers coming back.
While the quality of your product or service does go a long way in determining customer satisfaction, the vastness of choices means the impact of the quality of your customer relations matters. It’s one thing for your products to deliver value. It’s quite another thing for your customers to be happy doing business with you.
Most people just want to do business with a company that recognizes them as an individual. And the best way to get that on the lock is to incorporate CRM software into your business. Among other features, CRM software like Efficy’s provides you with 360° customer view, interaction log, segmentation, interest management and many other tools that empower you to keep your business relationship with your customers intimate and personalized, regardless of the size of your customer base.
CRM data also gives you a blank cheque to personalize the user experience. There are a few ways to do this. You can target customers with specific offers based on their past interactions and purchases. Another way is to personalize the customer’s experience on your website or in your store. This could mean displaying different content or recommendations based on what you know about the customer. Using CRM data, businesses can create a personalized experience for each and every customer, which will lead to higher satisfaction and loyalty.
Be attentive to the triggers
Customers rarely just get up and leave; it’s an ignored complaint here and a bad product batch there before they mentally check out and finally make up their mind to get with a competitor. Catching these signs beforehand can greatly help businesses to keep customer churn in check.
Customers often show behavioural patterns that reflect their sentiment – delayed orders, reduced order volumes, and incremental changes in relations with customer service. However, it might be a nightmare to track all of these meaningfully.
To demonstrate, a trend of lower engagement is indicative of a lapse in a customer’s likelihood of doing business with you. Just before they head out the door, you could wade in with a survey or send a short email campaign to revive their interest from the cusp of cooling.
This is where CRM software is your eye in the sky, giving you an aerial view of the customer, with interaction log and other CRM tools harmonizing all interactions that each customer has with your business in one place. You can also access—in real-time—all the insights needed to detect downward trends that may precede customer churn.
Reward loyalty with special offers
Rewarding your customers’ loyalty is not just one of the best ways to nurture your business relationship with your customers and, by extension, improve retention rates, but also a way to ensure that ‘jumping ship’ remains an unattractive proposition to customers. You can grant special discounts, give gifts, or bonus products to commemorate loyalty milestones.
And with CRM, it’s never been easier. CRM data gives your insight into your most valuable customers—now over to you make them feel like it’s their birthday! Rather than create gift offers based on guesswork, you can make special, personalized perks, incentives, and promotional packages to individual customers, developed off customer profiles collected and streamlined by your CRM system.
Map out your buyer’s journey
You must then create a strategy to reach and engage customers throughout the customer lifecycle. Continuous communication and engagement are essential to building long-term relationships. Using CRM, you can tailor your communications according to each stage in the buyer’s journey, resulting in increased sales and loyalty.
When it comes to building a strong customer journey, there are a few key things to keep in mind:
First, it’s important to understand your customers’ needs and pain points. What are they looking for? What are their goals? What challenges are they facing?
Second, you need to provide a consistent, positive experience across all channels. Customers should be able to interact with your company in the way that they prefer—whether it’s through phone, email, chat, or social media.
Third, you need to make sure that your sales and marketing efforts are aligned. The messages you send out should be consistent with what you’re offering your customers.
Improve customer retention with Efficy’s CRM
While onboarding new customers always looks great on paper, recording new purchases from a pool of happy existing customers yields the most revenue and brand equity. It’s not just about the apparent vote of confidence in your product and customer service, but more importantly, it’s costs less in marketing spend, allowing you to increase revenue streams.
Regardless of the size of your organization, keeping an eye on all aspects of your business’s relations with customers so you can gauge their satisfaction while personalizing their experience might seem too much to take in all at once—but not when you’re using a CRM.
Upping your improve your loyalty requires a solution that meets at the crossroads of strategy and execution. Solutions abound. But which one gives you the functionality boost you need to ace your CRM? With Efficy’s CRM software, you can harmonize and manage all information about each specific customer in one place and then with these insights—whatever you need to nip customer churn in the bud and improve customer retention.
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