What is customer retention?
Customer retention is a business term that defines the active strategies companies use to retain customers. In its simplest form, customer retention is about maintaining an ongoing relationship with customers so that they continue to choose your business. However, it can go well beyond that, particularly in the digital age.
A good custom retention strategy will focus on ensuring that customers continue to choose your company. To start, it is important to make sure that your customers have a good experience with your business or brand. In order to make this possible, it is necessary to work on providing high quality products or services. More importantly, this is about ensuring that your brand or business is able to receive feedback about your content or services and adapt to it. If your products are breaking within two months of purchase or your services are subpar, it is unlikely that clients will continue to have an interest in your brand. Responding to feedback and mitigating custom concerns are important parts of a customer retention strategy since this can stop people from viewing your brand in a negative light.
In addition to simply focusing on providing good products or services, customer retention strategies focus on maintaining customer interest. Even if you provide a great experience, customers are known to drift away naturally or forget that your business exists at all. For some companies, it can feel like you have done everything right and are still losing customers. This is why customer retention is such an active area of focus in business strategies. Focusing on how to keep customers interested and engaged so that they remain customers or visitors over time is crucial for business success.
The Importance of Customer Retention
There are many reasons that good customer retention is so important, but the first one is easy: revenue. Whether you are actively selling products or making money on website ads, customer retention is a direct contributor to your revenue. If you have poor customer retention, you will fail to maintain an ongoing customer base, which limits your business almost exclusively to new sales or visits. While this can still turn a profit, it is generally a much smaller profit than what you would receive with both new and returning customers.
Customer retention is also important for brand loyalty. The reality is that today’s consumer is met with a constant onslaught of advertising content, and many of them will be in direct competition with you. This is true even outside of your industry for the simple reason that consumers only have so much time and money to give. It is very important for your business or website to remain an active choice among your supporters, which can only be accomplished with an active customer retention strategy in most cases. With a good retention strategy, you can hold their attention, even when other brands attempt to capture it.
Creating a sense of brand loyalty goes well beyond simply maintaining current customers or visitors. In today’s media driven world, your current customers can play a large role in advertising. If your fanbase knows that they can count on you to provide good products, services, or content, they will generally talk about it. Sharing praise for brands on social media is becoming just as common as sharing negativity. With good customer retention, you will have advocates for your brand that can create more interest around your business and convert other visitors. On the other hand, poor customer retention can result in some of those negative brand sentiments online depending on where your strategy failed.
At the end of the day, focusing on customer retention is important because your competition already is. When your competitors have a strategy in place and you do not, you will find yourself losing customers to them. In the modern world, it is important to maintain the interest of customers and continue to impress them so that your brand can grow. If you don’t, someone else might very well take your place instead.
What "Retention Rates" Means
Depending on your business, retention rates might show themselves in different ways. However, the key factor will always be the number of customers that you are able to maintain after that initial point of contact. Your retention rate might be measured in traffic to your website, repeat customers for your subscription service, or active users in your online game. Ultimately, your retention rate will show how many customers you are able to keep as active customers.
In addition to simply understanding how many customers are returning, retention rates can tell you a lot about your overall business strategy. For the average business or website, customer retention rates will change over time. This is actually not a bad thing. In fact, understanding your retention rates can help you to learn how your new business changes, products, or content are being received. In many instances, retention rates will change in response to changes that you are making on the business side. Fortunately, this can help you to tailor your business approach to your customers to ensure that they stay happy.
No business will have a perfect retention rate, but that doesn’t mean you should not aim for it. When designing your customer retention strategy, your goal is to keep your retention rate as high as possible. This will involve adapting your strategy to target different groups, generally starting with the largest group. The factors that determine these groups will vary depending on your business, but ultimately the goal is to effectively target as many customers as possible with direct customer retention strategies that have been designed specifically for them.
Customer Retention Strategies To Employ With Your Online Business or Website
Given the benefits of customer retention, every business will want to have strategies in place that allow them to maintain their customers for the long term. Though the nature of your business or industry might differ from someone else’s, there are many core retention strategies that you can use to boost your retention rates. These strategies can help you to adapt your own custom retention strategy in order to benefit your business.
Know Your Customers
The most important part of an effective customer retention strategy is that it is based on your customers. Consider your customers and what interests them. Collect information based on their shopping habits and popular purchases. Understand what your customers are looking for so that you can give them more of what they want. This is as effective for content creators as it is for product makers.
Employ Effective Customer Service
Poor customer service is known to ruin retention rates for businesses and websites alike. When your customers have a need, you will want to address it quickly and professionally. Whether it means outsourcing the service or simply ensuring that you have satisfying solutions when your company is at fault, make sure your customers feel supported.
Listen To Feedback
When your customers talk, listen. Customer feedback can explain where you are falling short of expectations, but it can also offer new ideas. If you see multiple customers talking about how a certain topic or service would benefit them, see if you can find a way to make it happen. Customers stay with companies that hear their needs and act accordingly.
Make Them Feel Special
There are few things more frustrating for customers than impersonal experiences. On one hand, they can lead to unsatisfactory solutions. On the other, they can simply make customers feel like your brand is hollow. Customers like brands that are relatable and treat them like individuals rather than just as a transaction.
Use Targeted Marketing Approaches
In today’s world there are so many technology options available that can tell you about your customers. There are systems that can show you how your customers are finding you. They can tell you about your customers or create profiles based on their shopping habits. All of this information can be accessed and used to create targeted marketing efforts. Your customers are not all the same and will need to be addressed differently. By tailoring email campaigns or greeting offers based on certain customer attributes, you can convince them to keep visiting over time.
In the same way that people become frustrated when someone does not respond to a text message, they are known to become frustrated with poor response times. If your customers or visitors have a need, it is necessary to respond as quickly as possible. Faster response times contribute to customer retention by building trust and showing that you are reliable.
Establish Brand Credibility
It is now easier than ever for a company to produce content or make products, but not everyone does so equally. If you want to stand out from the businesses who are simply jumping on a bandwagon, you will need to show your customers what sets your brand apart. Use your website to demonstrate your credentials and what makes you a prominent voice in your industry. Take every opportunity to share knowledge, offer your experience, and establish yourself as a professional and trusted brand.