Winning Customer Retention Strategies to Keep Customers Coming Back

Imagine being in a fast-paced environment and having to choose from multiple options every single day as a consumer. It can be a bit overwhelming, right? Now, in a scenario where there is immense uncertainty and customers are heavily armed with choices and prefer personalized, valuable experiences, how would a marketer sustain their business’s customer loyalty?

Well, the answer is not too complicated. They can just switch towards adapting effective customer retention techniques—techniques or strategies that are strategically implemented to retain existing customers and incentivize them to increase their lifetime value.

Do you know why customer retention strategies are skyrocketing?

This is because businesses have over 60% higher chances of upselling or cross-selling an existing customer rather than a new potential customer (Source: Book- “Marketing Metrics”)

Look the customer retention metrics work on several factors, which we are going to touch upon later but first let’s understand the basic life-cycle or stages of customer retention which are all pervasive regardless of your industry type;

Life-Cycle Of Retaining Customers:

• Client Acquirement: A customer’s journey with any company begins with the acquisition process. When they come across a brand and interact with it for the very first time.
• Induction And Enlisting: Then comes the onboarding phase or the induction part. This is when the customer gets aboard and starts exploring the brand.
• Engagement: The next stage is to keep the onboarded customer engaged and hooked to the brand.
• Support And Retention: The last stage is providing adequate and consistent support to the customer to retain them.

Let us now delve into some of the most innovative and unique customer retention strategies businesses can adopt and update to improve customer relationships significantly. But first, take a look at why customer retention strategies are so important.

Understanding The Significance Of Customer Retention

As per a report by Bain & Company, a minimal increase of say even 5% in a company’s customer retention rate can be attributed to a huge impact on its profitability by up to 75%. And surprisingly this is just one reason why customer retention is so important, let’s dig deeper to know more about it.

• Increases Customer Lifetime Value: Customer retention majorly depends on the connection between the customer and the brands. And hence it eventually increases the customer’s lifetime value.
• Cost-Effective as Compared To Customer Acquisition: Many prominent business researchers have concluded that for any business the cost of acquiring a new customer will be much higher than retaining the existing one. This is why retaining customers can be very cost-efficient for the company.
• Assists in building Brand Loyalty And Advocacy: When Customer Retention Strategies are well received by the customers then it helps in building brand loyalty and recognition for the company.

Having seen why are Customer retention strategies important here are some of the the best customer retention strategies to follow in 2024 and stay ahead of the curve;

The Retention Revolution: Strategies to Keep Customers Coming Back

Be it any industry today from finance to eCommerce or from hospitality to media and entertainment they all have one thing in common, i.e. poor customer retention rates.

The most common reasons why they fail to retain customers is because of poor customer service, less or no personalization and lastly being price sensitive.

To cut it through businesses falling under various industries can follow these measures to retain maximum customers and boost their sales revenues to a new high;

• Personalization And Interaction At Scale:

To begin with, exploring the best customer retention strategies, the first step is to bridge the communication gap that exists between your business and its customers. Often it is seen that once a customer has made a one-time purchase with a brand, they tend to lose touch with them leaving space for a vague gap in between. This is also observed with the lack of Personalized experiences customers receive from their service provider’s end. Did you know that over 33% of customers are bound to move away from a brand that doesn’t offer them any personalized attention? (Nextiva)

Just sticking with the age-old and generic ways to communicate with your customers with no customization or creativity can hamper your customer retention rates immensely. The solution to this is automating workflows and communication processes by switching to a Customer Relationship Management platform. These platforms are designed especially for curating customized customer service experiences by sending follow-up emails or just giving real-time insights about the customer’s journey with a brand. One such popular CRM is Salesforce, it is trusted by thousands of businesses across the globe to foster customer engagement and personalization. Thus, you can utilize the capabilities of Salesforce to maximize your customer retention rates effectively.

• Leveraging User-Generated Content:

More than 81% of customers around the world make their buying decisions based on their trust in that brand. ( Forbes). Thus trust plays a crucial role in determining whether or not the customer will come back for more or not! So to instill trust with your customers, you can leverage User-Generated Content upon the different portals websites, or social media platforms for visibility and traffic. Encourage your customers to post stories and reviews about your products and services on their social media handles as well.

• Omnichannel Customer Engagement:

If your business is visible then you are bound to get more repeat business, and omnichannel marketing is one of the best ways to do that. Having an online and offline presence can massively make your business’s profitability quotient and customer retention rates leap forward.

• Vouch For A Bigger Purpose:

Customers like to stand by a brand for a longer time if they vouch for a bigger purpose that enhances their brand image in the market. The purpose can be a noble cause or even a small initiative to bring about some change for the public at large. Remember Ben & Jerry’s ice cream, they partner with the local dairies and work for their welfare and development in their program titled “Caring Dairy” partnerships.

• Opting For Loyalty Programs:

Do you know when your customers fail to consider your brand for the second time? When they feel their loyalty is not getting valued or incentivized. To curb this type of behavior try opting for a customer loyalty program. A loyalty program keeps your customers engaged and connected with your brand and provides them with good discounts and offers in return for their loyalty. There are multiple types of loyalty programs such as point-based, tier-based, and gamified loyalty programs. You can choose from a variety of them and keep your customers coming back!

• Add Value And Educate Your Customers:

To retain customers ensure that your brand adds some sort of value to their lives. This can be done by educating your customers or keeping them up-to-date about various upcoming products and services. This will make your customers feel validated and empowered throughout their lifetime with the brand. You can create YouTube tutorials or conduct comprehensive training sessions or webinars to add value to the lives of your customers.

• Feedback And Listening Strategies:

Lastly, don’t ignore the suggestions or feedback your customers have to offer. Focus on building listening habits so that your customers feel obligated and valued. Apologize if there is any mistake from the end of the customer service experience and improve the overall customer satisfaction to retain them.

How Are Different Industries Utilizing Customer Retention Strategies?

Here’s how different industries are utilizing customer retention strategies to increase their customer’s lifetime value and sales;

Banking And Financial Services

When it comes to Customer retention strategies for banking services the most viable option becomes opting for techniques that help in building customer trust and loyalty in the long run. A study by CGI shows that a whopping 81% of bankers today find incentive programs appealing. This highlights the growing importance of loyalty programs in the banking sector. Many leading institutions, like JP Morgan with their point-based loyalty programs and cards, aim to build long-term relationships with their customers. Also providing a hassle-free financial experience to their customers can act like a magnet to retain their existing customers. Along with running loyalty programs and providing a convenient first-time user experience bankers can follow these customer retention practices:

• Switch To Provide Personalized Customer Attention.
• Built A Strong Community.
• Provide 24/7 User-Friendly Support Via Chatbots.
• Enable Mobile Banking For Convenience.

Hospitality Industry

In the hospitality industry, everything revolves around the customer experience. The better customer’s experience the higher will be the customer retention rate. For that reason, many businesses today in hospitality like Airbnb are offering personalized customer services and experience. This includes comfortable stays, unerupted support services, and discounts. Apart from this, businesses can also do the following to keep their customers coming back.

• Ask for feedback.
• Offer upgrades and perks through loyalty programs.
• Give customizability options.
• Automate Communication for ease.

E-Commerce

The businesses that operate on subscription models also somewhere face customer longevity problems as their customers are frequently switching between different models out there. Plus there’s a whole lot of threat from the competitors who are ready to lure your customers in a bit.

However, amidst all of this subscription businesses like Amazon and Netflix are flourishing. Wonder why? Here is an answer. To begin with, they offer ‘freemium’ models to their customers which lures them to buy the paid plans later on once the free trial expires. The next strategy they use is to provide exclusive content while streaming, exclusive discounts while shopping and exclusive personalized emails to keep the interaction going.

Retail Industry

Lastly, talking about the customer retention strategy for the retail sector, it can start by offering great in-store experiences to their customers. This will increase the footfall as well as the customer retention. The things retail businesses can do to boost in-store experiences are:

• Having polite assistance.
• Personalized recommendations.
• AR/VR technologies integrations for trials.

Along with heightened personalized customer in-store experiences brands like Sephora are creating relevant engagement in all channels of operations. They are everywhere online and in brick-and-mortar stores. They have greatly utilized the power of social media platforms and created a strong niche of their customers to inform them about upcoming events, sales, and discounts.

3 Mistakes To Avoid While Implementing Customer Retention Strategies

Here are some of the common mistakes that businesses should avoid making irrespective of their industry type and size;

Having A Poor Budget Allocation:

Many businesses today fall into the trap of neglecting customer retention strategies, and eventually end up allocating no budget to carry them out. Whereas the scenario should be different. Businesses should have a properly allocated budget for carrying out customer retention tactics like investing in CRM or automated email systems.

Loosely Tracking The Behavior Of Customers:

Next up is the fault of loosely keeping track of customer behavior. This is like a gold mine for your business as customer behavior is directly related to the changing trends and patterns in the market. If your business keeps track of your customer behavior

Completely Ignoring Inactive Customers:

It’s important to focus on active leads and customers for the profitability and growth of your business. However, neglecting inactive customers can have negative consequences. While it can be overwhelming to keep track of inactive customers, effective customer retention strategies can improve the chances of winning them back.

Customer Retention Metrics And Factors:

If you want to assess how well your customer retention strategies have worked for your brand and how successful they have been in keeping your customers engaged, then it’s important to understand customer retention metrics and factors. These metrics are influenced by both internal and external factors. Here’s a breakdown to provide clarity:

Internal Factors:

• The Quality Of The Products And Services Offered
• The Overall Experience Of The Customer
• The Price Quotient
• Brand Communication And Perception

External Factors:

• The ongoing trends in the market and economy
• Any upgrade in the existing technologies

Customer Retention Metrics:

• Customer Churn Rate: This rate is directly related to and affected by factors such as product quality, pricing strategy, and competition in the market.
• Customer Lifetime Value (CLTV): This metric takes into account the total revenue a customer brings over in their lifetime of association with the brand.
• Net Promoter Score (NPS): The NPS measures the extent of customer loyalty to a brand and is affected by customer experience, satisfaction, and communication.

Remember to look for these metrics and ensure that your customer retention strategies remain effective. You may also want to review a case study where we assisted a finance industry business in addressing a customer retention issue with our team of experts.

Key Takeaways:

The dynamics of the consumer market are changing. There are going to be new changes, technologies, and competitors at every corner of your business. The only way to survive through the competition is by focusing on retaining existing customers along with acquiring new ones. For retaining customers there are some of the best strategies mentioned above like providing proactive customer services or taking the feedback route. Follow these steps to enhance your customer’s retention rates and eventually reap more profits.