July is Customer Retention Month at AllProWebTools. So far we’re shared the importance of retaining customers, types of retention campaigns, and lots of specific strategies from small business owners.

But how do you go about deciding what strategy is right for your business? Customer retention is all about your customers—how do you make sure your tactics appeal to them?

Customer retention is a big priority here at AllProWebTools. We love to do business with people we have a relationship with, and many of our users are fiercely loyal. Here’s the process we followed to find a strategy that keeps our users coming back for more.

Step 1: Know Where You’re Starting From

In order to formulate a new strategy, you need to know where you stand and where you want to be. To find your starting place, you need to calculate your customer retention rate. First, decide what period of time you want to consider.

Then use this formula from Jeff Haden at Inc.com to get your retention rate for that period:

((CE-CN)/CS) x 100

CE = Total number of customers at end of period
CN = Number of new customers acquired during period
CS = Total number of customers at start of period

Here’s an example. Suppose start the period with 200 customers. If you lose 20 customers, but gain 40 customers, at the end of the period, you have 220 customers.

So, subtract the number of new customers you acquired from the total number of customers at the end of the period. Then divide that number by the number of customers you started with.

220 — 40 = 180

180/200 = .9

.9 x 100 = 90%

It’s a good idea to calculate retention for several different time periods, so you can get a sense of the big picture, without losing the detail of the month-to-month. Then, it’s time to decide where you’re going.

Step 2: Collect Customer Feedback

To build a strategy, you need to find out where the holes are. Where are you losing people? And why?

Don’t rely too much on your intuition here. You need data to back up your suspicions about why customers are leaving. The scariest, hardest, but most rewarding way to learn how customers feel about your brand is to ask them for feedback.

You can use the phone, email, or talk in person, depending on what’s appropriate for your business, but make sure you leave space for your customers to be honest.

• Don’t ask leading questions—free response and open-ended questions are best
• Accept criticism gracefully so your customers know feedback is encouraged
• Ask for specific examples when possible

We do this constantly at AllProWebTools. We strongly encourage anyone with a suggestion for a new feature to submit their thoughts, and we always seek out feedback. Then we build what people ask for. Our users understand that we get our best ideas from their needs and desires, and they love that.

Step 3: Gather Behind-the-Scenes Data

Now it’s time to dive into the subconscious of your customers, and access the data behind their decisions. This means taking a look at the data behind your website, communications, and customer service to look for problems.

• Analyze the user experience of your website, especially anything related to ecommerce. It needs to be dead simple to buy from your site if you want loyal repeat customers.
• Analyze clicks and open rates in the emails you send to re-engage existing customers. Are people even opening your messages? Are they interacting? If not, that’s a great place to start.
• Check your CRM to look for data around why customers leave. Your CRM should track every interaction with a client, digital or personal. What’s different about the way customers who left were treated? Were their issues dealt with less speedily? Did they get an email instead of a phone call? Only the record can tell.

You’d be amazed how many business owners don’t make any effort to discover what makes a customer stay or leave—they assume it’s out of their control! But there are tons of tactics you can employ to keep your customers happy and coming back for more.

Step 4: Define Success

Now that you have a very clear understanding of where your business stands and why, it’s time to decide where you want to be. Customer retention can be a slippery thing to define, but with a clear understanding of where you lose people, addressing the problems gets much easier.

Choose a few Key Performance Indicators (KPIs) to help make customer retention more tangible. These should be measurable, objective factors you can use to get a sense of customer retention as a whole.

Here are some general KPI examples—you’ll want to narrow them down to be specific to your business:

• Increased engagement and feedback
• Faster response time
• Increased referrals and brand advocacy
• More repeat purchases (number or $ value)

Choose a few KPIs to focus on, and set yourself some deadlines. Make sure the whole team is on board, and encourage transparency, so everyone understands how things are progressing.

Visit the original blog post to see step 5!

Sometimes, it’s easy to find the magic formula of emails, content marketing, phone calls, and special offers to revitalize your relationship with your customers. But sometimes it takes a long time. Don’t give up—the results are absolutely worth it.

How did you discover what tactics help you retain customers? Let us know in the comments!