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Everything You Need to Know About Customer Retention
Why your customers leave and how to retain them.
What motivates you?
What motivates you- playing to win or playing not to lose? It is no denying the fact that you will perform better if you are focussed on winning rather than the fear of losing. Customer retention works on the same principle. In the world of business, we keep working towards not losing our customers rather than focussing on winning their hearts, so they never leave us.
In a layman language, customer retention is trying to keep more customers for longer time duration. Now, why customer retention is important is based on the fact that it is easier to sell your products or services to existing customers as they are already familiar with your brand, as compared to acquiring new ones. But today’s digital customer is more informed, connected and knowledgeable about the competing products and services. They can compare almost everything with a swipe of a finger. This has led to steady erosion in customer loyalty, as they ditch the brands that aren’t up to par. It is a bitter truth that you are going to lose customers, no matter what. But what you can try is- stop giving them reasons to do so! Here is some root cause analysis to identify reasons behind the ongoing exodus of customers.
What makes your customers leave?
- Lack of Interaction: By interaction, I mean both human and digital interactions with the existing customers. A flyer, an email, or social media engagement is not as impactful as compared to a real-time conversation with your customers. In-person interactions are the only way you get to know their real problems and whether your service meets their requirements; if not, where is it lacking. Remember, a customer never explains the reason for leaving, he just leaves.
- You promise more than you can deliver: If you can’t meet your commitments, don’t make them in the first place. Bad news travels fast. An aggravated customer will talk about his bad experience, and thanks to the digital world, the news will travel faster than light. Instead, under-promise and over- deliver. They will stay loyal their whole life. Domino’s said they will deliver in 30 minutes and when they don’t keep their promise they give it for free. It’s a great example of doing what you say you will do.
- Faulty mission and vision: What’s the motto of your organization? If you believe in ‘Profits First’ instead of ‘Customers First’, you will have to face the music. Believe you me; customer success defines the brand’s success. So make such business decisions that are not only lucrative but also favorable to your existing customers.
Why is customer retention vital to a business?
- A returning customer is more likely to try new offers promoted by your brand or buy new products because they trust you more as compared to a new customer.
- You need to spend more money and time to acquire new customers as compared to retaining current customers. The cost factor is vital to all businesses which make customer retention crucial.
- You will need a lot of time, maybe years to bring a new customer to the same level of profitability as a returning customer.
How to retain your customers?
- Generate Customer advocacy: Give them beyond the price you quoted for the service and make fans for life! Ongoing support service is a good example here. Your customers know when you go the extra mile. In the modern era of instant connectivity and networking, word of mouth marketing is still the best way to promote products and services. All your satisfied customers become your brand advocates, and they promote your brand among their friend circles and communities for free.
- Humanization of business: Make a heartfelt gesture by sending a box of chocolates, coffee voucher or a handmade card on Christmas or Easter day. These non-promotional contacts will stick in your customers’ minds. They will speak volumes about it. Humanization of business is a subtle way to incentivise customers in order to stop them from switching to other brands.
- Listen to your customers: All your customers are on social media. Follow them on Twitter, befriend them on Facebook and connect with them via LinkedIn. It’s where they are talking about your brand. You get to see their real feedback on your products or services and about their needs in general. So go ahead and hop on social media and use that insight to predict customer behavior and act accordingly.
Need of the hour
Customer retention is imperative in today’s competitive environment, as it is the most cost-effective business strategy. Contented customers evangelize your business and they keep returning for more services. Healthy and sincere loyalty efforts, stated above will surely prevent them from straying or switching to other brands. Patronizing has surely become integral to corporate success.