Taking care of your customers is not just a saying, but a truly crucial strategy to reduce customer defections and increase the profitability of your business.
What is customer retention?
Customer retention is an expression that indicates a company's ability to retain its customers over a given period of time, through a series of long-term relationships. This quality indicates, therefore, the ability to preserve and retain customers already acquired, preventing them, for example, from buying from the competition on subsequent occasions.
Customer retention includes those strategies that aim to encourage continued purchasing of products and services over time and attract customers to increase their level of spending. Therefore, these strategies aim to increase the return in terms of sales (ROI) of each customer already acquired. Very often, these are inexpensive techniques, which makes their implementation easily sustainable and definitely advantageous from an economic point of view.
Marketing promotion techniques, often also making use of digital channels, are of great importance to improve and increase ties with the audience in order to stimulate emotions and considerations useful for loyalty processes. A satisfied customer can contribute, in addition to directly through purchases, to producing positive signals about the brand, such as reviews and word of mouth, which ultimately increases the company's turnover. On the contrary, a customer who feels neglected tends first to not buy repeatedly and possibly to externalize negative judgment about her. Therefore, taking care of customer satisfaction is essential to both preserve and increase business volume.
Examples of customer retention activities:
- associate a gift with a sale
- check that the delivery of the order arrives within the agreed time
- spontaneously propose solutions such as discounts or free purchases to respond to delivery problems
- stay in regular contact with emails and newsletters to communicate news and opportunities
Why customer retention is essential
In fact, retaining new customers is more expensive than retaining existing ones. Therefore, improving your company's customer retention is an objective that allows you to increase overall turnover and that of each individual customer.
Customer retention activities make it possible to increase customer lifetime value (CLV), the value of each customer over time, and to revitalize normally inactive customers who, therefore, do not contribute to overall turnover. In this way, your loyalty to the brand increases and the profitability of each commercial offer made increases.
It is essential to ensure customer satisfaction, since when it fails, the customer feels the incentive to turn to other suppliers.
Activities that aim to generate an emotional or economic bond with the customer encourage their loyalty and increase the possibility of continuing to do business with them. Even simply thanking a customer for a purchase is a good, inexpensive way to make them feel close and special, not just a number on the balance sheet.
Maintaining existing relationships is an objective that involves customer service and psychological practices. That is why it is very important to monitor customer satisfaction with questionnaires, reviews, quizzes, online forms, emails, asking for feedback on your services, to have data on the quality of your services and make customers always feel followed.
What are customer retention activities?
Among the main customer loyalty activities we have cross-selling (advising the customer on products that integrate the value or functionality of those already purchased) and up-selling (recommending a higher-end product or service to the customer in exchange for a greater benefit. ).
Discount programs and 3X2 offers are examples of initiatives aimed at awakening in consumers the idea of the convenience of always buying from the same supplier. A customer who is satisfied with the conditions reserved for him and the quality of the products and services obtained can most likely speak well of the brand to others, generating positive word of mouth.
Therefore, customer retention activities must be repeated over time so that they produce results not only in the immediate period. An example could be discounts for the purchase of a certain amount of products.
We must also aspire to build loyalty among our customers so that they have the perception of being treated in a more advantageous or appreciable way than the competition, to create someone special for the brand, which aims to reward the loyalty received.
How to increase and improve customer retention?
Obviously, each company, depending on the type of products it offers, its tone of voice and the type of sector, can use different channels to retain its audience. For example, you may find it more advantageous to use newsletters to inform about special offers and occasions, as well as to encourage engagement on the Facebook page.
For example, we can use the company's CRM to track each customer's birthday, the date of the first purchase, to offer a discount on each date on products that we know are appreciated by the person in question. Thanks to the specific information of each customer, for example, obtained through surveys carried out in connection with the provision of loyalty cards, we can develop personalized communications that take into account the specific preferences and purchasing tendencies of each one.
More generally, all activities aimed at increasing consumer satisfaction can be part of customer retention, when they contribute to increasing the scope and frequency of purchases by acquired customers. Improving the user's browsing experience, for example, encourages consumers to continue using the same site and not turn to competitors. If they are problems that affect ecommerce navigation, solving them from a technical point of view increases the chances that the user completes their purchases and makes others.
Customers treated with respect can also become brand ambassadors, individuals who spontaneously spread news about the company's activities and produce content that amplifies the visibility of the brand.
Providing all the information relevant to your products allows you to dispel the potential customer's perplexities and direct them on a path of satisfied purchases. Especially in the case of new customers who do not yet know our brand, we must ensure that all the information needs underlying a trust link are met, such as:
- VAT number and registered office (to prove that it is a trustworthy company)
- clarifications on return and warranty methods
- contact methods (phone, email, etc.) to ensure the possibility of contacting us in case of problems
It is also important to monitor the success of these customer retention activities to know if we are going in the right direction.
For example, we may track clicks on links contained in emails and newsletters to determine whether they lead to additional purchases compared to what would normally have occurred. In this way we can estimate the returns attributable to specific customer retention activities.
The customer retention rate (CRR) is one of the most used indicators in customer loyalty analysis, to give an idea of customer loyalty in a given period. Indicates the percentage of customers who buy several times in a certain period of time.
It is indicated as the percentage relationship between the number of clients acquired at the end of the period examined, deducting those acquired in said period.
