The What & The Why

Customer retention strategies involve initiatives and processes that aim to improve the lifetime value of your customers to the business. Given the costs associated with the acquisition of new customers, and the loss of profits to competitors, when customers churn, turning customers into returning, loyal and long-term customers has always been a valuable business strategy. But why then is it still so difficult to execute effectively, and why still do most businesses struggle with and prioritise customer retention in their annual goal setting?

 

Key Features in Retention

A common misconception is that customer retention can be boxed off into a specialist area or department within the business. Responsibilities and actions towards improving customer retention must be acknowledged and applied across the business. This includes, but is not limited to:

  • –  Your business marketing
  • –  Pricing models, and the transparency of what your pricing includes and excludes
  • –  Simplicity and ease of experience in the sales cycle, be it digital or traditional
  • –  The quality of your products and services in serving your customer’s needs and expectations
  • –  The ease, convenience, and effectiveness of your customer support

 

Improving Retention Rates

The bottom line when it comes to improving customer retention rates is first, to ensure accurate measures are in place for assessing your baseline statistics. Secondly, acknowledge your starting points on these measures, and work toward incrementally improving them. The trick to achieving this is to centralise the focus on meeting customer expectations. This will differ from business to business, but will typically involve:

  • –  Remedying common customer complaints with simple and fast solutions
  • –  Ensuring desired accessibility to preferred channels and inclusivity in design (digital layouts, store access etc)
  • –  Offering self-help for low-level support
  • –  Personalising experiences as much as possible
  • –  Providing adequate data protection and privacy

 

Strategies to Consider

Customer Voice

A direct line to your customer’s thoughts, feedback, challenges, and enjoyment of your brand is vital to understanding what to change, and what not to change. It’s not always a matter of needing to improve every aspect of an experience – sometimes changing a positive aspect of the customer experience can cause friction. So, start by ensuring you are only changing those aspects of the experience that require improvement, and to do so iteratively. To understand where to start, a means of capturing, recording and collating customer voices is vital. This can be in the form of face-to-face interviews, feedback forms, and surveys…. there are a number of different ways that businesses can incorporate customer voice into their decision-making that works for them.

 

Community

Building a wider community within your customer base is a hugely powerful way to develop and improve customer loyalty and retention. This involves providing them with a space to engage with each other on a shared interest. The important point to note here is that though the business can be involved in this community building, its job is not to ‘run’ the community – but to allow the community to take its own form. It might require encouragement from time to time, but the activity should come from the community members themselves, and often these communities can shed the most valuable light on what the communities’ needs, wants, interests and true feelings really are.

 

Personal Over Transactional Relationships

Customers will always value positive interactions with people over purely transactional relationships. This is under the assumption that personal relationships are still effective, efficient, and pleasant. Faces behind the business are key here. For example, if you deal with the same contact at a shop every time you buy there, you are more likely to engage in other conversation with that person, get to know each other, build a relationship beyond the value of the transaction itself, and customers are much more likely to stick with a brand and forgive a brands mistakes when they adopt this kind of service approach.

 

Proactive Experiences

Customers generally prefer when brands they interact with are seen to be up to date with their business practices. So, when new trends are emerging, take the opportunity to show you can adapt to the changing landscape by surprising your customers with a proactive experience that ties into the trend. But pick your battles here – you can’t be everything to everyone, and you can’t respond to every emerging trend. So, ensure it aligns with your business, brand and product/service line. If these boxes are ticked, then consider doing something a bit left-field and having fun with your customers. From time to time, they do tend to enjoy a positive surprise, and it serves to make you more memorable.

 

Communication Channels & Speed

It’s increasingly important to offer access to appropriate channels of communication for your customers. Potential customers, and even loyal customers can run out of patience quickly in today’s market if these needs are not being met. Consider channels for transacting, communicating, and receiving goods and services and how communications return to the customer. So, if a conversation begins on an online chat, but times out, does the conversation get picked up and concluded via email or phone? Or does the customer have to go through it all again another day with another chat support or bot? Speed and effectiveness in dealing with a support query through to its conclusion are very important. Businesses must ensure these are first measured, reported on, and monitored for potential optimisation.

 

The Customer Experience

The overall customer experience is the biggest predictor of success (or failure) in customer retention. This is because the customer experience accounts for every interaction, perception and experience that a customer, or potential customer, has with a business. It tells the whole story from a customer’s perspective from start to finish. Nothing can be more telling when it comes to their moments of joy, or frustration in dealing with a business than their individual experiences. Again, measures of customer experience are crucial and can be complex depending on the size and scale of the business. The first step in achieving this is a central point of truth within the business, often taking the form of a CRM system. From there, as businesses and subsequent customer experiences can differ so dramatically, it can be best to seek expert guidance.

 

Charity

Values-led businesses are more profitable and more recession-resilient than non-values-led businesses. This can be attributed to a couple of key factors. Firstly, when a business is aligned with a relevant cause, it allows it to form a community of loyal customers who also associate with that cause. It educates others on the importance of the cause and can grow the business network via the charity itself, in a similar way to a referral channel. Being values-led also opens up the market for customers actively seeking to support specific causes, who can then find a business via its charity association. The ways in which businesses can decide upon a charity or value that they care about can differ. Sometimes a business is established purely to promote improved outcomes to world problems – in which case the cause is central to the business from day one. For other (most) businesses, it is about finding a good retrospective fit. For example, businesses in retail or fashion may choose to support a cause linked to the impacts that their industry contributes to – clean water in its factory towns, living wages in the supply chain etc.

 

Referrals, Rewards & Loyalty Programmes

When businesses usually consider customer retention strategies, this is normally the piece of the puzzle that rises to the top and becomes the focus. But, as has been demonstrated in this article, referrals, rewards, and loyalty programmes are not the beginning and end of customer retention. But they are a valuable aspect of the bigger picture. These tools have been applied by businesses for generations with varying degrees of success. The key takeaway for each of them is to consider if they offer true value to the customer. Many just pretend to – and that becomes quickly obvious to the customer and is not viewed positively. An example of this might be offering a ‘gift’ to your customers for a referral, but the gift being a discount code requiring them to first make a purchase. Discounting is not a gift – it is a discount. So, this method can and does backfire regularly in businesses. The bottom line is to be clear about what you are offering from the outset – a discount, a gift, a loyalty scheme that a customer can work toward over a series of purchases to achieve something tangible at the end – it all comes down to setting accurate expectations and then delivering on them. If the schemes you are offering as a business are more about clever wording than giving back, then it is time to rethink the approach.

 

Summary

Improving customer retention is not the responsibility of one team or department within a business, but a collaborative and ongoing business objective. This article has covered various components of customer retention for businesses to consider and delved into some top strategies to apply to improve upon retention metrics. These have included the customer voice, community, personal relationships, clear and fast communication, the overall customer experience, charity or cause, and referrals and rewards programmes. For more information, or to talk to an expert about your current customer experience and how it can be optimised, feel free to contact me at shelley.wilcken@eclipsegroup.co.uk