8 Customer Retention Strategies (Bonus Tip Included)
No matter how big you become, you can never claim that your customer loyalty is a going concern forever.
Either consumer expectations will change, or the competition will start providing something better in the market. And frankly speaking, you cannot control any of the above in a free market.
Customers are value maximizers. It means that customers will come to you when you are proposing higher perceived value than the competition. Customer’s Perceived Value (CPV) is the difference between the benefits of product/service received by the customers and the costs incurred by them to get those benefits. And these costs do not include only the monetary part. Non-monetary costs like buyer’s time, effort and psychological toll are also considered while calculating CPV. As long as you provide high CPV to your customers, they will stick to your business.
There are three ways to maximize CPV. One, you increase the benefits provided by your product with the latest features and advanced methods which will increase your costs. Second, you decrease the monetary costs associated with your product that will affect the gross margins. And third, decrease customers’ non-monetary costs. And the reduction of these non-monetary costs will not only retain your old customers but will also help in attracting the new ones.
In this article, we will discuss 8 customer retention strategies which can reduce these non-monetary costs for your customers:
1- Get Close
How close are you to your customers? Getting close here means that your business should be easily approachable. If a customer has to wait for hours before getting in touch with your customer care executive. Or your business does not reply to his emails for days. Then you are definitely not close to your customer. And proceedings on these lines will soon make you invisible in their eyes, and hence they will move to a competitor who listens to them.
With the entry of social media and new review systems, it has become more challenging for businesses to respond immediately to the feedback coming in from various channels. But if a business puts an honest effort in improving conversations with customers, then huge ROI can be expected in terms of customer loyalty.
2- Frequency Programs
An old, obvious but most successful strategy of customer retention. Reward your loyal customers. Simple, right? No.
Designing frequency programs is also a complex process. You have to maximize the impact on loyalty and minimize the load on your pockets. But if you are creative enough in managing them, then FPs can be a great way of improving customer retention.
FPs are appreciated because they create cross-selling opportunities for your business too. For example, if you are owning a PVR and you start offering popcorns (a high margin product) on a discount for every 3rd movie watched by your frequent customer, then he will be tempted to watch at least 3 movies to buy those popcorns at a cheap rate.
3- Premium Club Memberships
Every business has some high revenue generating customers. These customers are very important for businesses like banks, law firms, airlines, and consultants, etc. These people do not shy away from spending on high-end products of your business. Then why not create a special club for such customers. This will be a major psychological boost for them.
These club members get access to some special benefits and discounts on their purchase. For example, if there is a customer who is a frequent flyer and always books business class tickets and luxury hotels on your travel website. You can make him part of your premium club and offer him a small taxi ride from the airport to his hotel for free.
Such strategic initiatives are not only economical but also give a psychological pump to the customer.
4- Create Tie-ups
This strategy is useful for both B2B and B2C businesses. It is very important to have loyal customers in B2B businesses as the order size is measured in millions and billions of dollars. Businesses (clients) can be made loyal if you make them dependent on you. This dependency can be created with the help of institutional tie-ups.
For example, if you are a commercial vehicle seller. It is important for your customers to get their newly bought vehicles insured. Hence, it becomes obvious for you to have a tie-up with an insurance company. This will save both time and energy of your customers. Thus, resulting in a spike in customer retention.
5- Brand Communities
Whether it’s “HOG” of Harley Davidson or the “Citizens” of Manchester City FC, your brand name can work wonders for your loyalty. A brand community cannot be built overnight. For that, you need some proud customers who are ready to show their love for your company without hesitation. They can also reduce your marketing cost so much as they are your advocates.
A community is the result of the differentiation of your product and marketing capabilities. A brand community once built, will push your customers to stay within that elite group which resonates with their likes and gives them a sense of affiliation.
Customizing your product/services for different customers also generates a sense of belonging in them. Who doesn’t like to feel special?
Therefore, it is your responsibility to treat each customer like they are your priority. But to create personalized services, you need some proper data management. You should know what your frequent customers like about your business and what makes them come more often. This is very useful in hospitality businesses and food-related ventures.
7- Benchmark Competition
Although this is necessary for all parts of the business, it plays a critical role in driving your customer loyalty. Never underestimate your competition. Always keep an eye on their latest offerings. Check if their strategy is working and act fast on it. After all, they are trying to take away your market share.
8- Win-Back Strategy
No matter what you do and how much you do, it is an undeniable truth that some customers will leave at the end of the day. But that does not mean that they cannot come back. It will be easier for your business to re-attract the old customers as compared to new ones because you know who they are. You have their contact details and buying history.
Plus, they are a great source of honest feedback. Contact them for an exit interview. Ask them what they did not like about you. If you can make some changes to get them on board again, do it.
Bonus Tip: CRM
Throughout the article, in implementation of all the 8 strategies, did you have a thought that your customer and sales data plays an important role here?
Of course, it does. First of all, you won’t get to know about your frequent customers if you don’t have any statistics of your sales. You cannot build FPs, club memberships, and brand communities for them. You cannot personalize your service if you don’t have their purchasing history. You cannot win back your ex-customers if you can’t retrieve their names and contacts in a click. CRM can solve all these problems for you.
CRM software records and analyze your sales data. These analytics can tell you about your frequent and premium customers. It also provides you with insights about your strong and weak areas which will help you in improving your sales cycle. Hence, implement a CRM in your company to know your customers better so that you can serve them better.