It’s no secret that a cohesive customer retention strategy is a much more cost-effective way to increase your business’s revenue than solely relying on obtaining new customers. Here we examine the what, why and how behind mastering customer loyalty.
What is Customer Retention?
Customer retention refers to a set of operations that a company undertakes in order to increase the quantity of repeat customers and the profitability of each existing client.
Through a strong customer retention strategy, businesses are able to provide and extract more value from their existing customer base. Fundamentally, customer retention strategies seek to reduce customer attrition (customer churn) and instead, provide benefits for both the customer and the business.
How Do You Retain Existing Customers?
Depending on your business type, there are a number of ways to retain your existing customer base. However, there are a few fundamental and guaranteed strategies that will assist you in your business’s customer retention mission.
- Track and analyse churn metrics
- Empower customers with convenience
- Build trust with your customers
- Implement a customer feedback loop
- Educate your customers
- Capitalise on social proof
- Thank your customers for their loyalty
- Maintain a customer communication calendar
- Communicate with your customers
- Use gamification and referral programmes
Why is Customer Retention so Important?
Whilst business growth is an imperative element of your business model, taking care of your existing customer’s requirements is just as crucial as new acquisitions. A study conducted by Bain and Company uncovered that as little as a 5% increase in retention rates can increase profitability by 95%. This is a clear indication of how much value can be generated through clients already on your business’s books.
Investing in customer retention means that the audience you’re tapping into, already understands your business’s services and capabilities, as well as offering the ability to gain insight into how you can improve your business for existing and new customers.
What are the Major Benefits to Customer Retention?
Customer retention allows businesses to save on marketing costs, with customer recommendations much more credible and lucrative than some marketing campaigns. Yotpo highlighted that 60% of loyal customers will discuss their favourite brands with people in their social circle. Consequently, promoting a good relationship with existing customers can allow for often free and credible marketing referrals that lead to new acquisitions.
Other customer retention benefits include:
- Further brand exploration
- Make your brand stand out from the crowd
- Loyal customers are more profitable and forgiving
- More engagement with marketing materials and campaigns
- Improved employee health
How to Improve Customer Loyalty
Customer loyalty allows businesses to measure the likelihood of existing customers to repeat business with your company. Customer loyalty and customer retention go hand in hand, so it’s important to understand how customer loyalty can be improved as part of an effective customer retention strategy.
1. Reward your Customers
When it comes to customer loyalty, a strong rewards scheme is one of the most effective solutions. By rewarding your customers for spending their money with you, they are much more likely to want to return. The best customer loyalty scheme for your business will depend on a variety of factors, such as whether you’re a B2B or B2C, as well as what service or goods you sell.
2. Increase your Responsiveness
Excellent customer service is key to your customers trusting your business or organisation. If you’re looking to yield customer retention, you must show your commitment to providing customers with the best, in order to create a positive customer experience with your brand.
In the 2015 Aspect Consumer Survey, three out of four customers believed a business’s customer service reflected how they viewed their customers.
3. Listen to Customer Feedback
Taking on board customer feedback is paramount when it comes to customer loyalty and customer retention. Providing customers with an exceptional service will motivate them to provide positive feedback which can then drive new acquisitions.
Build Customer Retention with a Strong Direct Debit Service
One key aspect of any business is offering a trustworthy payment service so that people know their payments are secure and will be delivered on time.
FastPay has over 10 years of experience in secure Direct Debit payments and works with a wealth of businesses of all model types, across a range of sectors.
To find out more about how FastPay can help your business, get in touch with a member of our team today by calling 0161 737 5290 or alternatively, you can contact us online.
