Organisations that have a high customer retention rate admit that excellent customer service is a key factor for a high retention rate. Retaining customers is not just about keeping them engaged with your products but also about building a loyal customer base. In this blog post, we will discuss what is customer retention, how to prevent customer churn rate and the importance of multi channel retention.
What is Customer Retention?
Customer retention is the ability of a business to maintain its existing customer base by fostering loyalty and satisfaction. This also includes offering an exceptional customer experience, reducing customer effort (CES scores) and understanding their overall satisfaction rate. Onboarding a new customer can induce greater expenditure but targeting retention rates can prove more beneficial. It can be more cost-effective than acquiring new customers and can involve personalized communication, customer loyalty programs, and exceptional customer service.
How to calculate customer retention rate?
To find your customer retention rate, deduct the number of lost customers from the initial number of customers in a time period. Divide this outcome by the initial number of customers and multiply it by 100 to obtain the percentage.
Metrics That Matter for Customer Retention Rate
Metrics that matter for retaining customers and keeping them loyal include monitoring repeat purchase rate, churn rate (percentage of customers who stop doing business), customer lifetime value (total amount expected to spend on your business over their lifetime), net promoter score (customer satisfaction and loyalty measure based on recommendation likelihood) and leveraging customer feedback. There are some of the factors that can influence retention rate or CRR.
Repeat customer rate
A great way to measure customer loyalty is through the repeat customer rate. This metric indicates the percentage of customers who return for another purchase from your business. Given that acquiring new customers can be costly and time-consuming, it is beneficial for businesses to focus on retaining their current customers. A high repeat customer rate indicates that your company is meeting customer needs and expectations. To boost this metric, try providing personalized experiences or implementing a loyalty program that incentivizes repeat purchases.
Purchasing frequency
Tracking customer’s purchasing frequency is another metric that measures how often they make purchases (repeat customers). It plays an important role in retaining loyal customers and helps businesses understand their customer’s behavior and needs. Analyzing metrics like purchasing frequency not only ensures high customer retention but also helps in identifying loyal brand ambassadors. Happy customers can be seen promoting the word of the brand via social media mentions on Twitter or Facebook.
Average order value
Tracking the average order value (AOV) is essential for improving customer retention rate. Higher AOV indicates satisfied customers willing to spend more money on repeat purchases resulting in increased retention metrics. Implementing a well designed upselling and cross-selling strategy is an effective way of boosting the AOV. However, be mindful of balancing it with providing additional value to retain loyal customers.
Customer lifetime value
One can measure the lifetime value of each customer by tracking metrics like acquisition cost and purchase value over time. CLV or customer lifetime value denotes the total net profit a company can generate from a buyer’s relationship with that company. This includes their first purchase, the repeated purchase , their total customer journey and the duration of relation shared between the customer and the organisation.
Churn rate and how to improve it
Regularly monitoring and analyzing churn rate can help businesses identify potential problems and opportunities to improve customer retention. To reduce churn rate, effective customer retention strategies such as improving customer service, increasing engagement, offering rewards or incentives, implementing a loyalty program can work wonders. Enabling automation in the onboarding process for first-time customers is also a great way to increase customer satisfaction. Listening to feedback through channels such as Whatsapp surveys, web based chat bot , social media channels can give insights into customer expectations. In the long run, high customer retention rates lead to profitability and brand ambassadors who refer new customers.
Strategies to Improve Customer Retention
To ensure high customer retention rates, it’s crucial to build strong relationships with your customers. Providing excellent customer service is just the beginning; implementing effective customer retention strategies can lead to loyal customers who will recommend your brand to others. Some great ways to improve customer retention include offering personalized content that keeps your customers engaged and creating a loyalty program with incentives that encourage repeat business. Actively gathering feedback, building customer relationships via incentives and loyalty cards are some of the commonly used retention strategies.
Rewards and loyalty programs
Retaining customers is critical for any business’s long-term success. Rewards and loyalty programs offer a great way to achieve this. Personalization of rewards and incentives can incentivize repeat purchases and boost customer loyalty. An effective loyalty program should differentiate your brand from competitors, leading to new business through referrals. Constant analysis and updating of the rewards program based on customer feedback are crucial in retaining buyers. Communicating the benefits of the program effectively can also improve customer retention.
Surveys and feedback
Organisations can actively collect customer feedback via various forms of survey. There are multiple ways to target post purchase surveys by means of NPS survey, customer satisfaction score or customer effort score or CES. Including open-ended feedback can bring more contextual or nuanced responses. Using Merren, you can also launch surveys via Whatsapp survey, Meta messenger or AMP emails. Create your own customer mapping journey with Merren’s robust facilities.
Memorable customer experience
CX expands beyond attending to a feedback and closing the loop. It involves feelings of empathy and offering a human touch to problems. This also includes understanding their pain points and how negative feedback can be used for continuous improvement. While most buyers or prospects browse online, a seamless CX will usually include equipped mobile application (that has AI trained chatbots), informative websites and active social listening to close feedback loop. This also brings us to capturing insights in real-time
Real time data analysis
Real time data analysis is the most efficient way to collect feedback and attend to an unhappy user base. A negative word of mouth can hamper online reputation. Mapping real time insights by using instant feedback methods can help you gauge where the support team might need to intervene or identify their happy customers.
Multichannel Retention and personalization
Multi channel or the omnichannel platform is a great way to capture live feedback from customers round the clock. Multi channel includes social media channels of Twitter, Facebook, Whatsapp surveys, live chat on websites, in-app surveys and AMP email surveys. These are some of the different ways of collecting feedback, complaints, testimonials for products and services. Consistent feedback data across channels can equip customer support to attend to feedback and relay important information to the marketing team. Brands can turn towards a well planned omnichannel customer retention program where they can capture instant feedback, real time complaints and close feedback loop for maximum customer success.
The Modern Day Marketer can use messenger apps and AMP emails
To leverage customer relationship management protocols, the modern day marketers need a powerful tool like the AI. AI survey data analysis can easily be implemented into the marketing strategy. Using AI for collecting customer feedback, organisations can empower the entire team to devote their energies for individual customers. Automate manual processes and avoid batch processing reviews and feedback. Using AI to curate customer feedback surveys, you can study user experience and customer engagement metrics better.
Conclusion
CRR is the collective effort that happens via increased CX, opting to collect survey feedback and gather insights, close feedback loop and stay on top of multi-channel activities. To understand how you can supercharge your customer feedback collection, sign up for our 14 day free trial, without any credit card. Take your first step today and empower the customer success team now.