Customer Retention: Strategies for Keeping Customers Coming Back

BY QDegreesPUBLISHED
Mar. 20, 2024

A brand’s relationship with the customer can never be limited to only one transaction. Otherwise, you'll be left with a total of seven billion people only to sell to. "But I know how hard it's to capture the whole world,” the unsaid thought of Alexander the Great. That's why a customer stays with you and keeps purchasing from you, which is important for continuous growth.

In the business world, it's called repeat purchases, and keeping a customer for a long lifetime where he/she keeps buying products from you is called customer retention.

It is paramount because that's how you create a business whose product or service demand never ends. But how exactly do you make it possible to retain and keep customers returning to your business? You'll know it and everything else about customer retention in today's blog. So, let’s get started!

Understanding Customer Retention

As its name refers, a business can retain customers over a certain period. It's not just about gaining new customers but keeping those who already are your customers.

The repeating rate can be found with this simple formula:

((Number of customers at the end of the duration - number of new customers obtained during the period) / number of customers at the start of the duration) × 100.

With this formula, you can calculate its rates using percentages. Now, it depends on various factors, but from a broader perspective, it is linked directly to the customer experience. But How?

The reason is that when a customer onboards a brand, the brand's perception by the customer is created with every event and transaction in the customer's journey.

Hence, the way that customers experience every transaction, like purchasing, contacting customer support, etc., shapes the customer's likelihood of remaining loyal to the brand and retaining as a customer.

So, it's important for a brand to keep the customer experience positive throughout the customers' journeys for a good customer retention rate. Now, let's look at why retaining customers in a business is important.

Importance of Customer Retention

It is important for many reasons. As long as a customer retains, there are multiple areas that a business can benefit from. Let's look at the three main reasons why repetition is important for any business.

● Revenue Growth

Revenue growth has a direct link with customer retention. When you retain customers, selling to them is easier than selling to a new customer. A quote from the book Marketing Metrics, says that the chances of selling to an existing customer are 60-70%, while for a new customer, it's 5-20% only. Moreover, for a new customer, brands have to spend on customer acquisition costs, which are mostly lower or even zero for repeat customers. Hence, you can sell more and profit by retaining your customers.

● Brand Loyalty

It is crucial for increased brand loyalty, which gives a business many opportunities. A loyal customer is more likely to make a repeat purchase, but that is not what makes them special. The best thing is that they look at your products and services beyond their actual value because they feel special when they are cared about by a brand. So, being loyal comes as a gesture of goodwill from their side, which greatly benefits a brand. Also, these customers promote your brand with word of mouth.

● Long-Term Success

It fosters stability and predictability in business growth, which is why it is best for a brand's long-term success. It helps brands to keep themselves immune from economic downturns and fluctuations because of the reliable customer base.

These are the three reasons why retaining your customers is important for brands. But what are the key elements of it that make it possible? The key elements that constitute improved retention are the quality of products and services, customer service, loyalty programs, Etc. These are the elements that matter, and in our next section, we will be learning about strategies built around these elements to improve it.

Strategies for Improving Customer Retention in 2024

1. Improving Quality Products or Services

If you give great quality products and services to your customers, it will retain them. It brings them trust in whatever you sell, so they continue doing business with you. Continuous improvements in your product or service are crucial to maintaining the good quality of your products and services.

2. Providing Exceptional Customer Service

Customer service is as important as the quality of your products or services. While good quality products or services bring trust, exceptional customer service makes customers feel valued and a priority for the brand. So, you should invest in acquiring technology and training your customer service department to improve your customer service.

3. Invest in Loyalty Programs and Bonus

Since brand loyalty benefits customer retainership, efforts to retain your customers to the point where they turn loyal are also important. Thus, loyalty programs and bonuses are important for customer loyalty and satisfaction. You can run loyalty programs to reward your customers for shopping with you. Moreover, giving lucrative offers also works in the same way.

4. Gather Feedback and Take Action

Feedback is like a gem to any business. The reason is that people mostly leave brands without talking about the problem. It makes the improvements hard to make, but thanks to those customers who care about your brand and send feedback. So, if a customer has invested his/her time giving you feedback, you should extract the value of it and act upon it accordingly. You can use various feedback-based metrics, which we'll discuss in the next section.

Measuring and Monitoring Customer Retention

You have employed the customer retention strategies; what's next? What to do now? Now, you should measure and monitor it. But you can't do it by just finding retainership rates from time to time. To do it effectively, you need to go multi-dimensional.

Going multidimensional means that you should look at metrics like customer churn rate, repeat purchases, NPS, and CSAT. These metrics will let you dive deeper into understanding the result of efforts made for it and make data-backed decisions.

For example, by looking at the Net Promoter Score, you can see if your brand is getting enough promoters. Similarly, the churn rate helps you understand how many people are moving away from your brand.

Additionally, you can monitor customer satisfaction with quantitative metrics like CSAT. Collectively, these metrics give you a detailed picture of how good your retention is and what potential gaps to fill to maintain it.

Continuous Improvement and Adaptation

To sum up, customer experience and retention strategies are at the heart of customer retention. So, evolving them continuously according to your customer's expectations is crucial. Your customers' expectations and evolving CX and retention strategies according to market trends and feedback are also important. While you can look at your CX with the help of the metrics mentioned above like NPS, customer satisfaction, etc., monitoring the market trends helps you be ahead of the curve.