What Your Business Needs To Know About Client Retention
Customer retention is how well a company keeps their current clients. If you want your business to grow, you have to keep current customers while attracting new ones. Your loyal buyers are the ones who return and buy more each time, refer others and help build your business into a powerhouse in your industry.
If you don’t have good customer retention, you’re spinning your wheels. It’s almost like you’re trying to collect sand but you have tiny holes in the bottom of the bucket and the grains keep escaping. Keeping your current clients is worth the effort.
According to Statista, Cable has the highest churn rate of any industry, followed by retail, financial institutions and online retail. The highest churn rate was 25% for 2020. The rate varies by industry and year knowing some averages gives you goals to strive for.
You can use a customer retention formula to see how well you're doing compared to competitors. Retention rate equals customers at end of fiscal period divided by customers at beginning of fiscal period times 100.
While it’s good to have a strong customer retention rate, don’t just keep a client to not lose one. If you have a particularly troublesome one or they don’t pay invoices in a timely manner, it’s okay to let one go occasionally to make room for a better match.
What can you do to ensure you retain your clients and eventually scale up due to keeping old customers while bringing in new ones?
Take the time to analyze your current churn rates. How many customers did you lose last year? Have you improved retention rates over time? You can’t fix a problem until you know the root cause.
Look back at any complaints your customer service department received. Do they correlate to a loss of clients? Have you fixed any reasonable issues and improved in those areas?
Customer relationship management (CRM) is one of the most important parts of keeping your clients happy. They should have a central point of contact if something goes wrong.
For example, if you run an independent K through 12 school, you may struggle to keep students enrolled all 13 years. Improving relationships and making families feel part of your school through activities and outreach can increase retention.
Nearly every industry can benefit from better CRM and improved communications.
Send out a company newsletter to update clients on big wins or new features added to your services. Mail a card on the person’s birthday or anniversary. Send them a thank you note when they refer someone new to you.
Look for little ways to let them know you aren’t just there when they want to spend money. The customer should feel you care about them as an individual. They’re much more likely to remain loyal to you if they feel a personal connection.
When you create your marketing campaigns, consider your current customers as well as ones you’d like to attract. A dynamic ad looks at whether the person already visited a page on your site or clicked on a link.
Someone who regularly orders might be more interested in an ad for a new, related product rather than seeing the same ad as when they first bought from you.
Send your best customers a surprise gift. In one loyalty report, researchers discovered about 61% of people feel the best experience they have with a brand is when they're sent a free gift they didn't expect.
Do you have a customer who sends multiple referrals a year and shouts your praises on social media? These clients are gold to your word-of-mouth marketing efforts. Invite them to lunch with you. Send them a free item similar to ones you know they like. Deliver flowers or fruit to them as a thank you.
Make sure you keep your most loyal clients so they don’t bounce away to a competitor. They are worth more than a small gift or two in the promotional value alone.
Choose something you care about and stand behind it. If you want to improve the local environment, start your own nature preserve or cleanup program. Look for ways to improve the world around you based on what you care most about and what matters to your clients, too.
It’s probably best to shy away from highly controversial topics, as you don’t want to risk polarizing half your customer base. However, there are some things nearly anyone can get behind, such as protecting natural resources or feeding the hungry.
One sure way to improve your products or services is by surveying your current clients. Ask them what they’d like to see you do differently. If you want complete honestly, let them submit the surveys anonymously.
When you get the reviews, try to look at them unemotionally. It can be hurtful to hear bad things about a company you’ve poured sweat and time into. However, if there is even a nugget of truth to any criticism, you can use it to improve what you do and keep your customers happy.
Happiness is tied into customer satisfaction. Train your employees to go above and beyond to keep a client happy. You’ve likely heard stories about brands that go out of their way to solve a problem for their customers. Repeat their efforts in your business.
It might require a bit of extra work but can result in loyal fans who sing your praises. Track your retention rates, make changes as necessary and watch your profits rise steadily.