Do you know the value of loyal customers? Have you ever created a strategy built around keeping those customers while maintaining and building your relationship with them? Have you explored a customer retention strategy?
If not, we encourage you to do so. Retaining your current customer base is often referred to as the low-hanging fruit. What do we mean by this?
The fruit that hangs low is easily reachable, and it requires minimal effort to pick it. The same can be said for your current customers. They can be won or persuaded to stick around with little effort. Now, that doesn’t mean no effort.
Because you have to invest a little to get a lot, and we want to help you with your strategy, we’re going to look at customer retention stats, a study and best practices for 2016.
Customer Retention Stats
To drive home the importance of customer retention, here’s a list of stats:
- It costs 500% more to acquire a new customer than it does to keep a current one. ~Destination CRM
- It costs 16x more to bring a new customer up to the same level as a current one. ~Marketing Tech Blog
- It’s cheaper to retain a customer than to get a new one. ~Econsultancy
- The average repeat customer spends 67% more in months 31-36 of their relationship with a business than they do in months 0-6. ~Bain and Company
- 47% of customers would take their business to a competitor within a day of experiencing poor customer service. ~24/7
- 97% of consumers said they are somewhat likely to become more loyal to a company that implements their feedback. ~Apptentive
- 81% of consumers are more likely to continue doing business with brands that offer loyalty programs. ~Bond Brand Loyalty
Customer Retention Study
Let’s look at a customer retention study concerning online and brick-and-mortar store giant, Sephora.
According to Meddalia, less than one year after implementation of their rewards program, their client loyalty index was up 3%. They also found that the average user logged on to their website two to three times more often than before the loyalty program was introduced.
Sephora has the leading loyalty program in the beauty industry with one of the highest levels of engagement.
How’d they do it? They offered three loyalty tiers with generous amounts of free samples, birthday gifts, exclusive events and promotions for the highest tiers.
Their system is easy to use, and once they’ve opened an account during checkout, their points automatically accrue. They don’t even have to redeem the points, as it’s done for them at checkout.
Sephora’s loyalty program increases customer retention because it gives rewards that matter in the form of free samples as well as promotions and gifts.
Customer Retention Best Practices
Now let’s talk about some customer retention best practices for 2016. Some of them are intuitive, but it pays to have a list to work from. Use these best practices to craft your customer retention strategy.
- Provide excellent customer service. It’s a competitive market out there. Your customer service must be top notch because this is what keeps your customers coming back again and again. If you don’t have a superb customer service policy, your customer retention efforts will seriously suffer. In fact, poor customer service is one of the leading reasons customers leave businesses.
- Provide a product that is of exceptional value. For example, if you sell pool chemicals, sell the very best products your customers can afford. Then, offer service to match the product. Your competitors may offer a great product or great service, but if you offer both, you’re ahead of the game.
- Get to know your customers. This doesn’t necessarily mean on a one-to-one basis, which is of course hard for an online eCommerce store. This means understanding their needs, knowing where they come from and finding out what they want. One of the easiest ways to find out what your customers think is through a customer survey sent through the email or hosted on your website. Another way is through social media. Find out what really matters and provide it to them. If they dislike something, change it. If they appreciate something, make it even better.
- Use segmentation to meet your customers’ needs. What does this mean? It means, for example that if you offer swimming pool and hot tub service that you send different communications (think email marketing) to each group of people. This shows your customer that you care about providing them something of value.
- Walk through the customer journey yourself. If you want to know how your loyal customer flows through your business, try it yourself. For example, do they come in from the website, social media or somewhere else? What do they find on each step of their journey? Is each step easy to navigate? Is your checkout process cumbersome? Are you meeting their customer service needs while engaging them with new and valuable content?
- Provide a loyalty or membership rewards program. Your customers have purchased from you once, maybe twice. Isn’t it time you rewarded their loyalty? Make it easy for your customers to shop with you by giving them a reward for spending money with you. They’ll be more likely to consolidate their shopping with you if they have an incentive to do so.
- Re-engage one-time shoppers. If you lost a customer, or they haven’t shopped with you for a while, reach out to them. You can use email marketing to do this. See if you can offer them something (coupon, reward, a listening ear) to encourage them to come back.
You may be a small company, mid-size or Fortune 500 company, and it really doesn’t matter when it comes to customer retention. Your company’s very survival depends on it no matter the size of your business.
Your marketing strategy should include customer retention as a core component. Allocate some dollars to it and create a workable plan to increase your retention rate.
Always keep this stat from the Gartner Group at the forefront of your mind when thinking about customer retention: 80% of your future business will come from just 20% of your current customers. In this little sentence you find validation for creating a customer retention strategy.
Don’t get complacent and think you can put your relationship with your current customers on autopilot. You have to work to earn their loyalty, and to keep it.
Invest in your loyal customers and watch your retention rates soar along with your bottom-line.
If you are ready to squeeze more profit out of your website by using customer retention tools to skyrocket growth among your current customers, that’s great! We’re here to help you optimize your landing pages to increase your retention rates. In fact, we promise you we’ll do just that.
With our guarantee, you can rest assured we will increase your profits through landing page optimization.
If you’re ready to work with the leader in landing pages and conversion rate optimization, contact us today.
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Image: Stijn te Strake