Learn how to improve repeat purchases and business ROI.
Several small-to-mid-sized businesses expend a lot of time and money on marketing their business to new customers instead of nurturing the existing ones. If you introduce a new product or service in the market tomorrow, who do you think is more likely to take a chance on it? Is it your existing customers who've tried your brand, experienced your products, trusted your business in the past, or a new set of audience who've just come across your product?
Providing a good customer experience is crucial when launching a new product to make your existing customers go for it without any hesitation.
Continuous innovation is one of the biggest challenges faced by businesses today. With competition as fierce as ever, your best bet is building brand advocacy. Your most loyal customers are the biggest asset to your business and your best marketers. Therefore, you need to focus your efforts on providing the best value to these loyal customers. In this blog, we will discuss the benefits of retaining your customers, and the top 5 strategies that have worked for businesses like yours.
What does it mean to retain customers?
In simple words, it means to keep your customer base loyal to your brand. Good customer retention is a measure of the success of your business. It means your customers are satisfied and would love to be associated with your business in the future as well.
It also means that you will convert every sale into a repeat customer. These repeat customers would then add new people to your list through word-of-mouth marketing. Building a customer retention program for these loyal customers can make acquisition cost-effective and effortless for your business.
Benefits of retention
Loyalty has a substantial impact on your business’s revenue and profits. According to the research conducted by Bain and Company, with a 5% increase in your customer retention, you can enjoy a good 25-95% increase in profits.
Here are a few benefits of[ customer retention that you should know:
1. Increased profitability- It is hard to acquire a new customer. However, retaining your existing customers is even more challenging. You need to meet their expectations and keep them interested in your business to boost repeat visits. With the help of an intelligent customer engagement program, you can improve the overall customer experience and satisfaction, thereby retaining customers more cost-effectively and profitably.
2. Retention impacts your revenue- As discussed earlier, revenue is heavily impacted by retention. Repeat customers are more likely to buy and try new products. As a result, you will notice your company growing profitably with repeat customers.
3. Improved customer loyalty- A repeat customer returns because they’ve seen value in your brand. You may not always need deals or discounts to lure them to return to your outlet. They return because they trust your brand. The customer feels that the brand image resonates with their beliefs and values. This association builds emotional loyalty towards your brand.
4. More customer referrals- It is easier to acquire new customers with a strong base of loyal customers. Your regulars are sure to refer your brand. Your long-term customers are your best marketers and play a key role in boosting revenue and driving growth for your business.
Businesses can never benefit from buyers who are chronic switchers. The customer retention rate for the retail industry is close to 63%. It is quite low when compared to the other sectors. Hence, businesses need to refocus their attention on building customer loyalty.
Here are a few ways in which businesses can improve customer retention and increase their overall profitability:
Top 5 strategies to improve customer retention
You can use these strategies to improve customer experience in the store and keep them coming back to you for more. The idea is to get a base of regular customers, who can help boost profits and get more people. Let us look at the top 5 customer retention strategies in the industry today:
1. Start a loyalty program
A good loyalty program can help businesses to stand out in a high-stakes market where the competition is nothing short of fierce. With your loyalty program, customers can collect points against each purchase, and can later redeem them to unlock exciting rewards.
For instance, customers can earn one point against every rupee/dollar that they spend which can be redeemed as free items or discounts on their favorite dishes or beverages.
With multiple stages, you can make rewards more interesting and exciting. These rewards will entice your customers to spend more money at your outlet and earn more points along the way. As a result, it will impact the repeat visits to your store.
Here’s another example- As a salon owner, say you offer a free hair wash to your customers once they reach 100 points and a flat 25% discount on facials once they accumulate 1000 points. With these exciting offers, more and more customers would be interested in collecting points to avail them. These kinds of loyalty programs will encourage your customers to make frequent purchases and thereby ensure a substantial increase in revenue.
2. Send relevant and timely messages
Businesses generally see more walk-ins during the weekends. If you send your customers targeted weekend campaigns, they are more likely to take you up on that offer and visit your store to avail these discounts. The right message delivered at the right time gets your customers back to the store. This happens for two reasons:
- They had the intent to go out for dinner and you are offering them one more reason to do it.
- It is easy for them to trust your business due to past experiences.
It is important to keep customer preferences in mind while promoting such campaigns. You must choose channels that work for your customers. Emails may work for a few customers while others prefer receiving campaigns through SMS.
It is also a good idea to use "thank you" and "welcome" messages to engage with your customers. Customers love receiving messages from their preferred brands. Therefore, the more you communicate, the more you improve your chances.
3. Incorporate a private feedback system
An excellent way to retain your customers is by getting feedback to learn about the issues they are facing and work on how best you can resolve them. You can ask for their feedback by incorporating a private system where customers can share their feedback directly with the business. No comments are made public. Customers are generally more comfortable with private systems and will happily share their concerns.
When the customers see that the brand takes them seriously and offers ready solutions to their issues, they are more likely to visit again. Wouldn’t you love a brand that goes the extra mile to make you feel valued and comfortable?
4. Focus on boosting customer service
Proactive customer service can help increase repeat customers. When customers walk into your store, make sure they feel comfortable. All attendants need to be equipped with optimal product knowledge so they can easily identify ways to resolve issues if any.
Focus on the little things, such as a warm smile, a welcome note, a presentation, and an easy checkout experience to ensure the best experience for your customers. When the customer walks out with a smile, they are sure to return.
5. Create customer segments to improve customer experience
Understand your customers, profile them and segment them for better marketing outreach. By creating unique and defined segments, you can personalize your messages and target the right audience. These unique and personalized campaigns help you engage with your customers better and increase your business retention rate.
It is essential to keep a check on the critical customer retention metrics such as retention rate, churn rate, etc. This will give you an idea of how to redefine your business strategy if needed, and also dig deeper to find out why your current business model isn't working out.
Instead of focusing all your efforts on acquiring new customers, find intelligent new ways to engage with your existing customers and build meaningful relationships to keep them coming back to you for more and more.
A good customer retention strategy can increase revenue and make your business more profitable than ever.
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