What Is Customer Retention And Why It Should Matter?
Think of an online businesses revenue and customer base as a snowball atop a hill. When you first start your online business core is small, core meaning your customer base and total revenue. As each month passes your core should become a little larger while you retain customers who have made past purchases. After all think about all the hard work that was done to acquire each customer and earn their trust. Certainly a percent of them will come back automatically and make another purchase do you not think? If you think that you will automatically retain your customers without any effort then you might be in for a surprise.
It would seem logical to think your business should have a 50%+ customer retention if you are selling a commodity-based product should it not? Something like shipping supplies, eatables, or household product with a part that is consumed over time like a refrigerators water filter. Well even if your business is not a commodity business, your product is used up over time you have more than a single item, something that people would find interesting enough to make another purchase? Now this snowball, or core customer base, might grow slightly over time but not the way it should with some effort.
Unfortunately e-commerce business do not put enough focus on customer retention, as you will see. Matter of fact business are spending far more in acquiring a new customer than it is retaining an existing one, which is significantly more costly. Matter of fact acquiring a new customer is much more costly than keeping an existing one. In a Forbes study about e-commerce business it found that the cost of acquiring new customers is 5 times the cost vs. retaining existing ones. There are several additional studies that even push that number to 8-9 times the cost.
9 Tips To Improve Your Customer Retention
1. Listen to All Your Reviews Especially the Complaints and Bad Reviews: A customer complaint or a bad review online should be seen as a golden opportunity. Why do you ask? Just look at your cart abandonment rate. More than likely it is in the 50%+ range and you have no idea why. Too many customers will walk away from your business without ever letting you know what you did to turn them off from your company. Take it as an opportunity to improve your services and customer relationships. Chances are that if a person spoke-out then other customers are feeling the same way.
2. Pick Up The Phone & Give Customers a Call: Before the internet, the best way to retain customers was by using the phone. Sales staffs would call to check-in and see how things are going with your customers. You should look for customers that have not ordered in a while and one that often does just to let them know there is a person behind their computer screen. People do business with people, not companies. So by taking the time to call individual customers, it shows that you care and are taking extra time to keep them coming back.
3. Create an Exclusive/Rewards Program: Everyone likes building to a reward. So why not create a simple VIP program. In your program offered monthly promotions for “members only” such as discounted products, 1/2 off specials, free shipping on your birthday, etc., This makes customers feel like they are valued as a regular customer.
4. Engage on Customers On Social Networks: Go ahead and follow your customers on their social media accounts and look for opportunities to engage with them in their conversations. This helps remind them that it more than buying a product or service from you but rather you share interests with them It also serves as a subtle reminder about your business in very personal ways that emails and advertisements can not accomplish.
5. Reward Referrals: If customers are referring their friends and family, you want to make sure that you thank them for it. You can do this by having a referral rewards program, or simply by reaching out to thank them. There are also several online tools and services you can use to help make this happen.
6. Host and Attend Social Events: Similarly to our discussion on good old-fashioned phone calls, too much interaction focuses on the online world. The problem with this is that even if your online presence is really good and you almost exclusively interact with your customers online, they are still real people interacting in the real world. Take some time to create social events where people can come to interact with other customers and staff. Even taking a group of customers out to lunch once in a while really makes the claim that you will always go a step further for your customer base.
7. Send Thank You Cards: When a customer becomes a member of your business or makes their first purchase it is nice to send them a “thank you” card to show that you appreciate them. You can do this via email, but it is especially nice when you send a hand-written note. Even though a thank you card is such a small gesture, it really lets people know that you are willing to take things that extra step for them. I think these gestures also tend to stand out because sending paper mail is diminishing.
8. Send a Message of Integrity and Lifetime Value: Customer retention is about the small acts to make people feel valuable, but it is also about being a business with integrity and offering products/services that have lifetime value. Start by asking the question: why would a customer choose us over another company? Some reasons customers are particularly satisfied with the businesses they return to is that they are offered some type of guarantee that your business will be there to support and assist them after they purchase or sign with you. Make this visible and known. Make sure that you let customers know why they can depend on your business for years to come. Ultimately, think of every customer relationship as a life-long one from the beginning and let them know you think of them in these terms.
9. Remember: Quality > Speed: When you think about customer retention, you may think that there is an inherent sense of immediacy. While you do not want to lag too much at reaching out to customers, there is something to be said for quality over a speedy response. According to Help Scout, quality matters more than speed. They site a study by the Gallup Group that claims customers were nine times more likely to be engaged with a brand when they evaluated the service as “courteous, willing, and helpful,” versus the “speedy” evaluation, which only made customers six times more likely to be engaged. When you are entertaining the idea of “just getting to it” or spending more time and doing a quality time to retain a customer, always choose the latter. You will have more customers stick around and your retention rate will be far more likely to improve.