Tips for Increasing Client Retention Rates
Customer satisfaction plays a big role in business growth. The happier your clients are, the more likely your business will succeed. With that said, how do you keep your customers happy? Let’s explore the different ways you can boost your client retention rate.
When it comes to making your business succeed, you can’t overlook the value of client retention. Repeat customers are more likely to bring in sales than new ones. On top of that, it’s five times more expensive for a company to attract new customers than to keep existing ones. Increasing customer retention rate is a more effective strategy in increasing profit.
However, businesses often make the mistake of neglecting their client retention strategies. This ultimately leads to a loss of customers and a bad hit on the brand’s reputation. Hence, if you want to succeed in the long run, you’ll have to take customer retention seriously. Let’s begin by looking at the important metrics used for it.
Customer retention rate is the percentage of customers a company retains over time. It measures and quantifies the efficacy of a business’s sales strategy and customer programs. This is observed together with the company’s churn rate.
Churn rate refers to the rate at which customers defect from doing business with a company. The count may include customers switching to a different brand, or just the ones terminating the service entirely. A high churn rate will adversely affect a company’s growth and profit. Some industries, such as telecommunications, naturally have a high churn rate without any drastic consequence. However, for other sectors, it’s potentially threatening to revenue.
Common Causes of a High Churn Rate
One way to lower the churn rate is to identify the possible causes. These are some of the common reasons why customers defect:
Bad customer service
Did you know people are more likely to share bad customer service experiences over good ones? On average, an American customer will share with about 15 people about poor customer service. Yes, little mistakes leave a lasting mark.
Poor product quality
When a product can’t deliver on its commercial promise, it’s usually a deal-breaker for customers. Most shoppers won’t give second chances when they end up with a faulty item. This is why quality assurance is a critical part of business operations.
Nothing turns off customers more than unresponsive or unprofessional communication. Brands that don’t respond properly to customer concerns will have a hard time keeping them. On the flip side, overcommunication will also push customers to unsubscribe. Blasting too many irrelevant emails to shoppers will put them off.
No brand loyalty
Unless it establishes brand loyalty, customers will always see a brand as a dispensable vendor. It is interchangeable with competitors unless it offers something worthy to gain patronage. Loyalty programs drastically help in creating a brand following.
Improving Client Retention Rate
In today’s competitive trade, you’ll have to adjust to what the modern market wants. You have to take certain initiatives to boost your client retention rate. This could mean offering bonuses and customer perks or holding big sale events. The goal is to keep your existing clients happy to ensure repeat business with them.
Here are some of the most popular client retention strategies you can practice:
Upselling is a form of sales method that aims to convince customers to buy the premium or an upgraded version of a specific product. This includes offering add-ons, upgrades, and other purchases that will make the total sale higher. It often employs the use of comparison charts to show customers the potential value of the offered products. When done right, upselling gives customers a better idea of how premiums can better benefit them.
Often used interchangeably with upselling, cross-selling is a sales technique that offers customers complementary items to their purchase. It is the act of offering products that provide additional value to the original item. Examples are offering life insurance with a new car purchase or a credit card when someone opens a savings account. A great sales pitch is to point out that the customer would inevitably buy those complementary products in the future, so they might as well save time and money.
3. Loyalty Programs
A loyalty program is a reward system for customers. It incentivizes repeat purchases through gifts, discounts, and exclusive offers. This is one of the most powerful methods of customer retention, given that 75% of consumers prefer brands that offer rewards. It’s important to take note, though, a reward program should align with the target market’s preferences. For example, the younger market likes innovative and interactive types of programs. However, this won’t appeal to the older market. So, you have to consider your demographic accordingly.
4. Personalization strategies
Most companies pursue a personalized strategy for customer retention. This is because customers are usually willing to spend more when they receive custom-tailored service. With the onset of tech trends like AI and data analytics, there are now several ways to personalize the customer service experience. With online transactions, you can suggest products to existing customers based on their purchase history or what’s in their cart. On a ground level, you can train personnel to be proactive in upselling or cross-selling. It’s just a matter of paying close attention to what customers want.
Grow your Business with Full Scale
Keeping clients happy isn’t easy. It means taking the extra effort to get to know their likes and dislikes. Additionally, your business model has to stay relevant to the consumer’s lifestyle. This is why most startups are getting ahead by leveraging the latest technologies. With today’s tech-savvy market, forward-thinking companies get an edge.
At Full Scale, we specialize in helping startups grow their services. We offer a wide range of software development services that can scale your operations. Whether you need help in data analytics or your business needs a website, we have the talents for you! We have a team of talented data analysts, software developers, and project managers ready to help out.
Our goal is to help you get ahead by providing you all the necessary resources to grow. We’re passionate about entrepreneurial success.
Ready to scale your business? Get your FREE consultation today!