Here’s an interesting fact: Increasing the customer retention rate by just 5% can increase profits by 25-90%. Acquiring a new customer, on the other hand, can cost up to 25 times as much as it does to retain an old one.
Yes, you read that right. Customer retention and loyalty drive more revenue than new customers do. Therefore, having a plan in place to ensure customers stay loyal can increase profits without having to invest a lot of capital on making it happen.
What is customer retention, and why is it important?
Customer retention is the process of engaging existing customers so that they keep coming back for an organization’s services. It’s different from customer acquisition and lead generation because the customer an organization is trying to retain has already been converted, at least once. Organizations must have a proper customer retention strategy to ensure long-lasting relationships with their clients. Customer retention leads to loyalty and they soon become the organization’s brand ambassadors – generating new customers through word of mouth.
Customer retention is measurable, and this useful formula from Hubspot is a quick way to determine an organization’s customer retention rate:
Once the customer retention rate has been determined, the organization can then investigate the reasons for customers leaving, and try to determine if there were similarities in the reasons for them deciding to go. If it turns out that the reason is a gap that can easily be filled, the company would have already taken a massive step towards retaining current and future customers without having spent a penny on the process.
Increasing customer retention
Now that we have a firm grip on the importance of customer retention and the profitability it can bring to a company, let’s explore how customer retention rates can be improved.
A roadmap for customer relations
As in any other relationship, the one between the company and the customer needs to have a direction – both parties need to know where the journey is heading and have a clear vision of the milestones and goals they hope to achieve together. It makes sense to chart out this journey in the initial stages of the engagement with a customer. If a roadmap for the different milestones that need to be achieved with them and the different ways the company would be able to continue offering services to them can be devised early on, companies will find that retaining customers get much easier than they imagined. As time goes by, the plan will need to be revisited and revised to ensure they are still relevant and aligned to the customer’s evolving end goals.
Consistently delivering good experiences
Consistency equals trust, and nobody likes surprises in a business setting. Customers like to know what they can expect and be able to trust that organizations will consistently deliver the results they require. One important way to ensure consistency is to build processes for all important customer-centric events: onboarding calls, kick-off meetings, project planning, etc. Make all social media channels consistent, so that no matter where the customer goes, they see the company projecting the same message, and are able to reach out through different channels. Having processes makes the company predictable and reliable – both qualities that really hold value in the world of business. Organizations will be far more efficient and will have insight into what needs to be addressed when with each customer.
Customer retention cannot be improved until companies understand why customers choose to stop using their services. Once the reasons have been figured out, they can work on reducing your customer churn rate, and proactively deal with potential issues.Gathering feedback is crucial to understanding how well companies are serving customers and understanding why they might choose to leave for the competitors. When companies can identify and rectify the errors they’re making as early as possible, they increase the chances of being able to serve the customer to their best potential, thereby winning their loyalty. It is important to reach out to people across the customer’s organization – from decision-makers to members of the team that the organization interacts with – to ensure the company gets a complete picture.
Memorials for every milestone
Make a big deal out of every milestone reached with the customer – when the anniversaries for these milestones come up, remember to celebrate it again while thanking them for their patronage. Research shows that people remember bad memories over good ones, and they’re more likely to share the negative experiences they had online than share the positive ones. This means it’s always worth the extra effort it takes to remind the customer that something great happened – emphasize all the wins, big or small, and make the customer central to the celebrations.
Regular updates on results
When companies consistently update customers on the progress they’re making and the ROI being generated for them, it makes it much harder for them to decide to leave, as they would have tangible results to prove the company’s efficiency and reliability. This means organizations need to put a system in place to track results and report on the metrics they find that are relevant to the customer’s goals. Always be transparent about the numbers and results found and discuss opportunities for improvements.
Experion’s customer retention success story
A fledgling in the industry when it started out 14 years ago, the story of Experion’s success is the proverbial story of the success of the underdog. Built on sheer hard work, perseverance and a brilliant talent pool from an Indian State known as “ God’s Own Country” – Kerala – Experion has today proved the worth of putting the customer first in everything it undertakes.
This year, Experion celebrates ten years of engaging with some of our most loyal customers. From across sectors like transportation, retail, and education, they are proof of our consistent effort to stay customer-centric and deliver consistent results. You don’t have to take our word for it – you can read what our clients have to say about us here.
Some of our most satisfied, long-standing clients say this:
“We believe we will use them for updates in the years to come.” – Manager, Food Product Trading Company, Bahrain
“I was very pleased with our results and wouldn’t hesitate to use them again if I was given the opportunity.” CTO, Mobile Development Startup, Phoenix
Experion has over 14 years of experience in delivering software solutions to early-stage enterprises, start-ups, and Fortune 500 companies. If you’re looking for a reliable IT partner to assist you on your journey towards digitization, drop a mail to email@example.com.