A business works to serve a customer and earn profits. Therefore, every business aims to have as many customers as possible. Every business uses a lot of effort and resources to get new customers. It is not easy to find new customers. However, things get a little easier if you have a few loyal ones. This is possible through customer retention. Who are loyal customers? These are those people who like the experience your brand provides. They are your repeat buyers. In addition, they are also your most cost-effective way of marketing.
For instance, the brand Apple is an expensive brand. We all know and agree that Apple’s products are not affordable. However, the brand has been able to create a position for itself in the smartphone industry. Despite several other options available, Apple continues to shine. This is primarily because of its high customer loyalty and experience. The experience that Apple continues to provide its customers is worthy of mention. This is what has led the company to have such good customer retention too.
Therefore, retaining customers is an important part of any good business. These are your set of best customers. These customers don’t look at your brand just for the product. They look at your brand for the value it provides. This increases your brand’s value and name.
In pochi punti:
What Is Customer Retention?
A lot of people confuse customer retention with getting new customers. However, both are very different in nature. Retaining is a metric by which brands measure loyalty. It is how many customers a brand can keep over time. Therefore, this is not just related to a customer’s first buy. It is about all the later interactions too. This is the reason why such customer relationships are not just a transaction. It is way more. It is a relationship that a brand creates with its customer.
The cost which goes into getting new customers is way more than keeping your old ones. Therefore, you must keep making efforts to not let your customer lose attention. There are anyway too many competitors. A customer can easily find your product someplace else. However, You must give them a reason not to. Be it your pricing or your customer service. They must have a reason to keep coming back to you. This helps you improve your customer lifetime value too.
Therefore, customer retention is a process. It is not a single step. It is a relationship-building process which goes beyond the purchase. Your brand has to keep its old customers happy to keep them loyal to the brand.
Why is Customer Retention Important
Retaining your customers has a lot of benefits. You become cost-effective as well as increase your brand loyalty. Here are some reasons why customer retention is so important:
- Brand Ambassadors: Everyone has heard about word-of-mouth marketing. You like something so much that you can’t stop talking about it. We do this often. We tend to influence others to buy from a brand as well. A loyal customer is like a company’s own brand ambassador. The best part is that it is free of cost. This kind of promotion is way more effective. It comes from people around and is therefore trustworthy. We all buy products because we have heard good things about them from others.
- Profit: Your retained customers are loyal to the brand. Therefore, they are your repeat buyers too. They are more likely to spend more on your brand than others. Therefore, repeat customers also mean more profit.
- Cost-effective marketing: Marketing is very costly. However, you don’t need to put in extra effort to market to an existing customer. Loyal customers already know your brand and its service. They will anyway mostly purchase from you. You end up spending more on getting new people on board. Therefore, a good existing customer base helps decrease the marketing budget and cost. It saves your money.
- Willing to spend more: Loyal customers start becoming more attached to your brand than the products. This is why they are willing to spend more if prices are hiked too. These are those people who believe your brand is superior. Therefore, they also don’t mind buying at premium prices. This is exactly like the Apple example. Some People keep buying new models of apple despite its premium pricing.
- Get good feedback: Loyal customers are also much willing to give feedback.
The Best Strategies to Measure Customer Retention
Customer retention is not so easy. Companies use different strategies and tactics. Some of them are:
- Good customer support: Providing good customer service is very important for any company. You want to solve your customer’s problems as early as possible. You also want this to be a good way of improving their experience. Today, there are so many channels to provide customer service from. Be it live chat or 24*7 WhatsApp customer support.
- Provide incentives: Customers must feel that their loyalty is being paid off too. Constantly receiving points or rewards for your loyalty can help with it. Be it discounts or credits.
- Trust: Be transparent with your customers. This helps build their trust in your brand. It also helps build a better relationship with your customers.
- Social media: Social media has become a great platform for customer interaction. Make full use of it. It is also a great place to know about things that might be troubling your customers. You can respond to a few comments too. Make them feel like they can connect to you better.
- Personalise your services: Personalising services can make your customers feel really special. Use the data that you have about your customers to cater better to them.
- Surveys: conduct a lot of surveys and take a lot of customer feedback. These surveys will help your company work on things that the customers might be upset about. On the other hand, customers also like it when they are asked for their suggestions.
Pros and Cons
The advantages of customer retention are very much the reasons for its importance. Therefore, the advantages of customer retention are:
- Less costly than finding new customers. Therefore it is economical.
- They bring in more profit for the company and are willing to pay more too.
- They get new customers along with them too by referring to your company.
- Having a loyal customer can also help easily up-sell and cross-sell your products.
The disadvantages of customer retention are:
- They can become a costly investment too. A lot of time and effort goes into offering different programs and discounts too.
- This also requires a lot of commitment from the brand’s end. Every person in the company must be willing to provide that kind of service. Even a single rude employee can cause a lot of damage.
- A brand may forget to get more customers because they might be too busy working on keeping the old ones.
The Best Customer Retention Examples
Some companies understand the knack of keeping their customers. Here are a few good examples of companies with good customer retention:
Well, a lot of people think Uber in itself is enough for people to come back to it. However, that’s not so. They did use a lot of different ways to ensure customer retention. Uber used a referral program in the very beginning which had benefits for both sides. Back in 2018, they also began a reward program where its customers will be placed in different tiers based on their points. Also, concepts like uber cash made things only smoother for its customers.
Nike offers its customers multi-channel customer service. Good customer service is always a good customer experience. However, it is tough to keep up with your customers’ expectations. It is even tougher when you have customers all around the world. Therefore, you need to build a presence wherever your customer is. Nike, in fact, offers its customer service on Twitter too. Its app offers a lot of features and helps users find nearby outlets too.
Apple has great customer retention. How? Honestly, the look of Apple products and the way Apple markets that experience is a big reason. Almost everyone knows that Apple products have at least one feature different from the rest. Apple also offers excellent customer service. In addition, Apple knows how to make everything about them special. Be it their events or big launches every year.
Ikea makes buying easier for you. Apart from being low in cost. This famous furniture brand helps you visualise how a product might look in your place. It also has videos to show you how to assemble its products. Therefore, Ikea ensures providing its customers with ease of buying.
All in all, every business needs a loyal customer. Be it a few or more. You need people that show faith in your brand and its ethos. Therefore, customer retention is a metric every company should measure because customer satisfaction is important.
What are your thoughts about customer retention? Is there any company you are loyal to? Let us know in the comments section below.