Loyal customers sustain your company’s long-term success through repeat purchases. It’s more expensive to get new clients than to keep clients, so existing customers deliver more profit per transaction. Satisfied, long-term customers can become small marketing centers for your business as they talk about your products and services and share your posts and offers. Even for larger, less-frequent purchases like cars and furniture, investing in customer retention increases ROI and aids steady growth.
Selling to new customers costs between five and 25 times more than to an existing customer. A 5% increase in customer retention can increase revenue between 25% and 95%. Ongoing customers purchase more often and spend more than newer customers because they already know your product or service’s value.
Most businesses work so hard at acquiring and converting new customers that they overlook strategies to transform them into loyal buyers and advocates for their products and services.
The result is a “churn and burn” effect with valuable new leads. Depending on the industry, the average company loses 20% to 70% of their hard-won new customers in the first 100 days after the sale.
When was the last time you tested opportunities to re-engage customers? Low customer retention is like filling a leaking bucket. It stays full as long as you keep adding, but you’ll hold more with less effort if you patch the holes.
Customer retention is a balancing act. You give existing customers value and extract more sales and consumer loyalty. Your retention strategy will vary by industry, frequency of purchase, and the size of your business. Here are 11 tips for converting new customers into lasting fans.
Case studies from current and past clients help buyers determine if your company and the product or service are the right fit for them. Testimonials and past success stories expose the company’s communication style and the kind of results you can achieve.
A consumer who knows if and how your product or service will solve their problem before they make a purchase is less likely to regret buying. Case studies and testimonials establish the foundation for realistic customer expectations and set up buyers to be happier with their purchase experience.
An absence of communication breeds misunderstanding. Suppose you don’t set expectations and communicate them. In that case, customers may have their version of what is supposed to happen and then be disappointed when your company doesn’t follow their unspoken assumptions.
You spend every day working in your business, but your customers come from many different industries. What is standard and routine for your company may not be what customers have experienced before.
Knowing deadlines, the customer’s progress toward their goal, what’s included in a purchase, your process, and your communication style go a long way to make sure customer expectations are realistic and that they are happy with the experience.
In business, as in personal relationships, we may be sure we communicated effectively while the other person remains blissfully ignorant of what we wanted them to know. Onboarding is a function of customer success that teaches new customers how to use your product or service. The personalized attention and support of an onboarding program build on the developing customer relationship. It’s an opportunity to reinforce the company’s values and how the purchase meets the customer’s needs and helps achieve their goals.
If a new customer doesn’t bother to learn how to use your product or engage with your service, they may get frustrated and stop using it without ever knowing how it can improve their lives. Onboarding ensures customers know how to get the most from their purchases to complete their goals on time.
When a customer purchases your product or service, they have results they expect from the experience. If you leave them to understand the benefit you provide and track their progress toward their desired outcome, they will likely miss ways to deliver results.
What do your customers want from a purchase? A reliable system for tracking and reporting metrics that matter to the customer empowers your company to celebrate successes and keep clients engaged with noticeable progress toward their goals.
Systematic client communication tracking allows your team to identify customers who haven’t interacted in a while and reach out to re-engage them. A communication calendar avoids losing clients through neglect and keeps your team consistently on track. Consistent follow-through manages customer engagements and creates regular opportunities to up-sell and cross-sell.
A communication calendar tracks the last time a customer reached out and can alert your team if there is no communication for a specified period of weeks or months. Targeted promotional offers and proactive customer service renew the relationship.
What do people think about your products and services? Clear feedback from your target audience paves the way to real business improvements. A customer feedback loop is a process of obtaining customer feedback and sharing that information with relevant teams.
Surveys, user testing, and focus groups are standard methods of gathering relevant customer feedback. Once you have the input, your team can sort through it to focus on customer behavior and user experience trends. Feedback trends that apply to products can be shared with engineering and development, and feedback trends in onboarding can go to customer service to improve that process, and so on.
It’s important to test regularly because the market and customer’s expectations can change. Collecting, analyzing, and distributing customer feedback helps keep your company relevant and competitive.
A customer loyalty program engages customers with your business. With each purchase, they are earning their way toward a goal. An effective plan rewards customers for their continued loyalty and motivates them to shop more.
A loyalty program can encourage newer customers to behave like a company’s most loyal enthusiasts, but only if implemented as part of a loyalty-management strategy. An effective program finds ways to provide value for customers in proportion to the value their loyalty creates for the company. Members must be consistently informed about the rewards of loyalty and motivated to earn them. A long-lasting customer relationship that sustains for years is built through careful strategy.
Reciprocity is a universally accepted social rule in psychology. Acts of kindness and generosity create a feeling of obligation in the recipient who instinctively wants to repay the kindness. Naturally, in business, these acts to inspire reciprocity should be targeted and well planned.
Examples of using the reciprocity principle in business include:
- Give away a loss-leader
- Make customers feel special
- Provide first-class customer service
- Contribute to popular causes with each purchase
- Provide free resources that support your product or service (car maintenance with a car purchase or recipes with a kitchen appliance)
- How-to videos showing customers creative ways to use your product or service
- Provide more easy-access or virtual experiences
A company newsletter or regular emails that add value to your customer’s experience are simple and cost-effective ways to increase customer retention. Newsletters remind customers of your company every time they open their inbox.
Email marketing is widely used because it is effective. On average, companies make $42 for every dollar they spend on email marketing. Email marketing is vital for companies that rely on purchase frequency since they are cost-effective to stay in front of customers.
Newsletters and regular emails continue to build a relationship with your customers before and after their initial purchase. Welcome emails, in particular, have a high open rate near 50%. Each message must add value to your customer’s experience, so they continue to welcome and open them.
Emails are a great place to include customer reviews to either validate the buyer’s purchase or increase their desire to buy. In all post-sale marketing communications, help customers remember why they bought from your brand in the first place. Each email is an opportunity to build up your company’s brand credibility.
If your customer is confused or frustrated and cannot get through to your company, you’ve lost an opportunity to resolve a complaint and win a loyal customer. You may have the best customer service department in the industry, but if customers cannot get answers when they need them, you will lose repeat business.
Every customer service interaction represents your company. A live chat feature or even a chatbot for simple queries helps your business be present for customers exactly when they need you.
Discounting is a risk and should not be overdone, but
for customers who have been silent for a while, a compelling offer can nudge
them back into activity.
If you think about the discount as an investment in repeat
business, it can be an efficient marketing expense. Offers can be a dollar or a
percentage, such as $20 off a product or savings of 20% on any purchase.
However you must remember… if you were continuously offering discounts and coupons that your customer ignored when they left you… odds are good they will continue to ignore future discounts and coupons.
When this happens you must offer people something of higher perceived value.
If you know the cost of acquiring each new customer to your business, you know how expensive it is to churn and burn new leads. A powerful customer retention program protects and grows your initial marketing investment.
At J&L Marketing, we help your company stay in front of customers before and after the purchase. Contact us and find out how we can help.