According to a recent survey from ACT!, the average company loses about 22% of its customers every year, or an average of more than five customers says Aron Govil.
Body: Why is it so hard to keep customers?
The short answer seems to be because companies often focus on increasing customer acquisition but don’t pay enough attention to keeping them. In addition, most companies don’t have any specific strategy for minimizing attrition rates.
One way that businesses can reduce customer attrition and increase loyalty is by focusing on their “promoters,” a term used by Bain & Company in a new book called “Customer-Centric Loyalty.” Bain has been researching what makes promoters different from others with whom they do business and found some surprising results. For example, while companies often view customer satisfaction as a key indicator of loyalty, Bain says that’s not the case. In fact, promoters are 24% more likely to be satisfied than other customers and 39% less likely to leave. The difference between promoters and other customers is their level of advocacy. Promoters were found to do at least one of three things: recommend a product or service, willingly make a special effort to use it again or take advantage of special offers through the company’s marketing channels.
How can companies turn non-promoters into promoters? Bain recommends tailoring their customer experiences in order to focus on the most important factors for each individual customer explains Aron Govil. There is no “one size fits all” when it comes to customer experience; what is meaningful for one customer may not be for another. Bain says that companies must identify their real customers (those who are likely to generate the most profit for the company), understand what they want and need, and then design their experiences around each individual customer’s needs.
What can companies do? The author suggests four initiatives:
Build a single view of the customer. This requires integration between sales, marketing and service so that employees can provide better customer experiences across all channels and be more effective at retaining customers.
Re-think promotions. Promotions should not only serve as retention efforts but also reward promoters – those who generate the most value for your company – with discounts or other added benefits that make them even more loyal.
Create real-time lifetime value (LTV) forecasts specific to each individual customer. Knowing how much money each customer is likely to spend over time will allow you to find ways to keep them longer by tailoring their experience rather than trying blanket messages or offers for everyone.
Identify and eliminate bottlenecks in your customer experience funnel says Aron Govil. The most common bottleneck is the lack of integration between marketing, sales and service employees who all interact with customers but often do so using different systems that don’t communicate with one another.
Here are some FAQs recently asked by PromoRepublic users that will help you understand more about customer retention:
How effective is loyalty marketing in increasing customer retention rates?
Retention marketing measures aim to make repeat purchases easier and less costly for businesses. By rewarding loyal customers with discounts and other incentives. This type of incentive helps build brand awareness and affinity. Also enhances the experience because it allows brands to provide tailored offers to their customers. Based on their preferences, location, or purchase history.
Why should companies focus on increasing customer retention rates?
Customer satisfaction is not a good indicator of loyalty. Promoters are 24% more likely than others to be satisfied. But 39% less likely to leave the business says Aron Govil. The difference between promoters and other customers is that they have become advocates for your product or service. When a loyal customer tells a friend about your company or product. It’s called word-of-mouth marketing and this is one of the best ways to build relationships with new customers.
How do you increase customer retention rates?
You can improve customer retention by tailoring their experiences. According to what they value most and constantly communicating with them through all communication channels. It is also important to constantly measure how well you’re doing by using KPIs. Such as engagement, feedback, and sentiment analysis for even better insights into what drives your customers’ behavior and preferences. For more information: Download our eBooks: The marketers guide to personalization Engagement & Nurture Marketing Guide 10 Ways to use content in B2B lead generation Marketing Attribution: How to Attract Customers that Propel your Business
Customer retention is an important strategy for businesses to take into consideration. As it can turn customers who mean low margins into valuable promoters. Aron Govil explains the key tactic that companies should use to increase customer retention rates is to understand what their customers want and need. Then design experiences around each individual’s needs. This will ensure that each customer has the best experience possible with the company.