4 Practical Ways To Improve Customer Retention

Article Overview:

• Why customer retention matters & how it's impacting Australian companies
• 4 Ways to improve customer retention through your marketing
• Conclusion & customer retention formula

In 2019, Australian companies reported an average of 6-8% of their customer base churning, with some reporting up to 25%! (study)

(Churn = Percentage of customers who stopped using your product or service)

Another study found that 52% of sales leaders in Australia reported an increase in churn in the past year, with most of them not knowing why. (study)

What does this mean? Businesses can’t fix what led to customers churning and worst yet, they are wasting time, budget and resources on retention marketing that is not working.

Getting a prospect to say yes to become a customer is no small feat, however, getting them to remain a customer is becoming an even bigger challenge for businesses.

While the power is with the buyer in today’s day and age, you should see that as a HUGE opportunity. A customer's experience with your brand plays a key role in whether they are satisfied enough to continue using your products or services.

(NOTE: To calculate your customer retention rate, please scroll to the bottom of the article where I provide a formula and example)

Customers are the lifeblood of your organisation, so here are the four ways to help you improve customer retention and reduce churn;

Create a seamless, personalised and automated onboarding process

First impressions matter and once a customer purchases your product or service, they expect you to follow up with everything they need to know to get the most out of it.

Using a subscription-based software company as an example. They would need to set up key data fields which are automatically populated once a customer purchases one of their products. All subsequent emails that follow the purchase, will be focused on using that digital product to its fullest capacity.

A few emails would be sent prompting them to log into the platform to use one or two features at a time. Once they click the call to action in the email, there could be a few unique pop-ups displayed, showing them around the tool and how to use the key features.

You might even want to create a few how-to videos and articles which answer the most frequent questions asked by your current customers.

You need to ensure your customer's feel like you are doing everything you can to help them have a great experience and that you are readily available to address any queries or problems they experience.

Image source: omnicus.com

Consistently gain customer feedback

There are many companies out there that either do not gain customer feedback as often as they should or if they do, they fail to action any of the insights.

One of the simplest ways to do this is to ask on a scale of 1-10, how satisfied a customer is with your product or service. The important thing here is to always ask WHY they selected the rating they did.

If they answer 1-6, then they had a negative experience, 7-8 is a neutral experience and 9-10 is an incredible experience.

Your aim is to move your customers along to a 9-10 so they become advocates of your brand.

You can gain customer feedback through email or through a pop up / embedded form on a paid area of your website/portal.

Once you collect the data, make sure it is easy to interpret within your CRM and that it is available to all relevant departments.

Image source: hrtechnologist.com

Stay in touch with customers by sending contextually relevant emails

Make sure you have automated workflows set up that send relevant emails to your customers 2-4 weeks at the very least. These emails should contain content around topics and areas of interest for them.

For example, if you see that a segment of your customers are reading blogs on your website around a certain topic, then send them an extended piece of content which they wouldn’t have seen before which they will enjoy reading.

By making these communications personalised, your customer will know you care enough to treat them as if they were your only customer.

Image source: campaignmonitor.com

Set up a rewards program or at the very least show your appreciation

People love it when something is gamified. If you have ever been excited that today’s the day you get your free coffee after purchasing 9 others or that you got a new badge for completing a task within an app, then you have experienced gamification.

The reason why this concept is so powerful is that it triggers real positive emotions from us. We get excited when we reach a milestone or get a reward which triggers a bit of dopamine in our brains which makes us feel pleasure.

When we experience this pleasure, we associate it to what provided it to us i.e. the app or brand’s initiative.

By setting up a simple referral or rewards program for your customers, you give them something to work towards and a reason to continue using your product or service.

It can be as simple as $x off their next order or a free month’s access to your platform for every successful referral. Whatever it is, make it easily attainable for your customer and commercially viable to your business.

But don't make your loyalty or rewards program challenging to the customer to take part in

Image source: marketoonist.com

Conclusion

This all comes down to making your business truly customer-centric and the commercial benefits that come from you doing so.

By creating valuable and personalised automations, gaining customer feedback at every relevant opportunity and finding ways to show your appreciation, your customers will stay with your brand and your retention rate will increase.

NOTE:

Before you can improve your customer retention, you need to know what your current retention and churn rates are. Using the formula below which I found on delighted.com, replace the metrics with your own numbers.

(If you don’t know the numbers now though, don’t worry, as you can work these out later and use the formula)

Retention Rate = ((CE-CN)/CS)) X 100

CE = The total # of customers when the period ends

CN = The total # of new customers that you acquired during the period

CS = The total # of customers at the beginning of a period

Say you are calculating for the past 6 months (starting on the 1st of June to the 30th of November, it would look something like this

CE = Total customers at the end of November (e.g. 1200)

CN = Total new customers throughout the 6-month period (e.g. 400)

CS = Total customers at the start of June (e.g. 1000)

The retention rate would be 80% and your churn rate would be 20%.

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