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Updated Mar 23, 2023

How to Boost Customer Retention

The key to your business's success is ensuring your customers return again and again.

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Jennifer Dublino, Senior Writer & Expert on Business Operations
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The key to building a successful business is growing your customer base. It’s normal for some customers to stop buying from you. After all, people move, and their needs may change over time. But if you’re constantly losing customers, especially if they head to your competitors, there’s a problem you must address.  

Poor customer retention keeps your business stagnant and costs you money. According to Invesp, it costs five times as much to gain a new customer as it does to keep a current one. Additionally, the probability of selling to existing customers is 60% to 70%, while the likelihood of selling to a new customer is only 5% to 20%. 

Businesses must avoid getting complacent with current customers. We’ll explore seven retention strategies to help you better engage with customers and keep them happy, and share crucial customer retention mistakes to avoid. 

How to increase customer retention

Incorporate the following valuable strategies and tools into your sales process to help earn repeat business and support your customer retention goals.

1. Stay ahead of churn rates.

The first step in boosting customer retention is knowing your churn rate – the rate at which customers leave your website and stop buying from you. Your churn rate can tell you what’s not working in your customer engagement strategies. Understanding this number can help you anticipate changes in your bottom line and make strategy adjustments to keep customers more engaged and happier. 

2. Use CRM software.

The right customer relationship management (CRM) software supports and enables customer retention by helping you track customer behavior over time. It can tell you about customer purchase patterns and product usage, and alert you when they stop buying from your business. You can also track customer service interactions to understand their frustrations and issues. 

These key customer behavior variables are warning signals that you might lose a customer, allowing you to intervene and potentially save the account. Once you have a clear idea of your customers’ behavior patterns, you can determine if you’re on the right track or if your customer experience strategies need an overhaul. 

CRM supports customer retention by:

  • Plotting the customer’s journey
  • Allowing you to personalize offers and correspondence
  • Providing a centralized database of customer information
  • Storing details like purchase history, customer feedback and returns
  • Monitoring customer interactions with your support team
  • Showing real-time data insights via CRM reports
Did You Know?Did you know
The best CRM software can help you understand when customers are at risk of leaving, giving you a chance to communicate and win them back.

3. Leverage email marketing.

Once you have information that tells you when and why customers are leaving, you’re in a position to target them with emails. Email marketing is the most effective online strategy for successful lead conversions

Integrate one of the best email marketing software solutions with your CRM to do the following: 

  • Send targeted emails to customers at risk of leaving.
  • Offer at-risk customers discounts on abandoned products, free trials or other perks.
  • Follow up with customers who ask for support. 
  • Ask customers for feedback.
  • Request online reviews. 

Email marketing programs enable rapid responses and better communication. You can create templates with content to go out immediately when triggered.  

4. Add personalization to your communication.

CRM and email marketing services make it easier than ever to personalize your communications so customers feel prioritized and important. CRM systems store data about purchases, customer preferences and customer support history. You can leverage this data to launch email marketing campaigns with timely and personalized content for customers, including subject lines that address them by name. Customers are more likely to pay attention when they see a personal touch in marketing communications.

Personalizing your customer interactions creates an incentive for customers to stay with you. They see that you care, creating a closer relationship with your business. Personalization improves customer retention rates through improved customer experiences.

FYIDid you know
According to a study by Salesforce, two-thirds of customers expect companies to understand their needs and expectations, yet the same percentage say they're usually treated like numbers.

5. Create customer loyalty programs.

A customer loyalty program rewards customers who frequently buy from your business, giving them an incentive to continue shopping with you. It also shows them your business is paying attention. Some loyalty program tips include: 

  • Reward your top customers. Your CRM system can help you identify top customers, showing you whom to prioritize. You can create specialized loyalty programs for various customer groups and reward your top customers with the most benefits.
  • Gamify your loyalty program. Another way to make customers feel more invested in your brand is to gamify your loyalty program. You often see this with airline businesses that add miles to a traveler’s account. You can reward users with points, badges and other recognition. It’s also essential to offer exclusive discounts and other benefits when customers reach various levels.

A customer loyalty program can motivate your customers to buy from your brand, keeping your customer retention rate high.

TipBottom line
Customer loyalty is crucial to any company's success, fostering repeat business and positive word-of-mouth referrals.

6. Build an online community.

An online brand community brings businesses and customers closer together, creating various benefits, including the following:

  • Discussion space: A brand community creates a space to discuss your brand, products or industry exclusively. Users can ask questions and answer other members’ queries, creating rich discussions.
  • Platform to advertise events: The brand can share events, contests and other content to foster engagement.
  • Engaged user community: A brand community facilitates user-generated content, increases brand loyalty and reduces expenses with word-of-mouth marketing.

Building an online community is a powerful way to engage your customers and improve customer retention.

TipBottom line
An easy way to build an online community for your brand is to use membership site software for your WordPress platform. You can also create groups on Facebook and LinkedIn that foster discussions.

7. Improve customer support.

Excellent customer support makes a difference to your business’s success. Your entire team must strive to delight the customer. 

Consider adding additional support channels like the following:

  • Chatbots: Information like tracking updates, delivery details and reservations don’t need human intervention. Take advantage of artificial intelligence tools like chatbots to augment your customer support. Chatbots save time when users need information that can be extracted from a database. Your live customer support staff can focus on critical issues, and you’ll offer faster support, saving time and resources. 
  • Texting support: Some text message customer service uses include using autoresponders to provide instant answers to customer service questions, scheduling messages to automate the customer service experience, and providing appointment reminders and alerts.
  • Social media support: To improve customer retention with social media, monitor social channels like Twitter for customer complaints and respond promptly. You should also respond to comments on social posts and resolve issues swiftly. 
Did You Know?Did you know
Improving customer support is crucial. Customers are more likely to post a negative online review after a bad experience than happy customers are to post a good customer review.

Mistakes that hurt customer retention

Customer retention rates vary across industries, depending on the competitive environment and how easily customers can switch providers. You can calculate your customer retention rate with this formula: 

Total number of customers at the end of the period minus new customers acquired during the period divided by number of customers at the start of the period  

If your customer retention rate is lower than average for your industry, you may be committing one (or more) of the following mistakes. 

  • Having a poor customer experience: A poor customer experience is the main reason customers jump ship. They may have had a bad experience with the product or service or dealt with unhelpful or inattentive employees. To protect your brand reputation, consider monitoring and observing the customer experience to identify points of friction that can lead to dissatisfaction. 
  • Not providing good value for the money: Whether your offerings are budget-friendly or luxury items, customers want good value. If they feel taken advantage of, they will likely seek an alternative provider. Improve product or service quality wherever possible. If you can’t cut costs, consider adding low-cost offerings that provide additional value, such as proactively letting customers know when a new version of their product is available or offering solid warranties.
  • Not understanding your customers: To retain customers, you must thoroughly understand their experience before, during and after the sale. This takes some effort and investment. If your company is struggling financially, it’s more critical than ever to identify and fix problems causing customer abandonment. Send out customer surveys, show customers you care about them and their experience with your company, and gather feedback to put programs in place to stop the attrition. 
  • Relying on only one feedback source: Companies typically have multiple feedback sources, such as complaints to the customer service team, online reviews, social media comments, customer surveys and conversations with sales reps. With all this data coming in, it’s tempting to focus on only one source, discounting the others. However, monitoring all channels accurately shows how customers experience and perceive your product and company.
  • Ignoring customer complaints and feedback: Many customers just want to be heard. Empathy goes a long way, and it starts with quickly acknowledging that you heard the customer’s complaint and are doing something about it. Respond to all online reviews, both good and bad. Immediately acknowledge and sympathize with customer complaints even if you can’t give them the resolution they want (in this case, offer alternative solutions). Thank them for their business, and apologize for the problem. Examine feedback to find pain points in your product, people or processes so you can fix the problem going forward. 
  • Not keeping customers in the loop: You should stay in constant communication with your customers. If something impacts them, let them know in advance. For example, inform customers if you are moving or closing locations, discontinuing a product, replacing or changing a product, or changing a policy like your refund policy. Explain why you are making the change. 
  • Having no exit/retention process: If you have a subscription business model or membership website where customers must call or email you to cancel, you have the perfect opportunity for a second chance to keep them. Put a customer retention process in place with a specially trained employee to discover the problem, try to resolve it and possibly offer the customer an incentive, such as a discount or freebie, to stay. 

Keeping current customers happy

Customer retention is about keeping your current customers happy. When done correctly, customers become unwilling to switch to another business. You can make it more convenient for them to stay with you than buy from a competitor. Successful businesses are the ones that recognize that customers form the backbone of their business. Support your customers with retention strategies, and they’ll support you.

Jared Atchison contributed to the reporting and writing in this article.

author image
Jennifer Dublino, Senior Writer & Expert on Business Operations
Jennifer Dublino is an experienced entrepreneur and astute marketing strategist. With over three decades of industry experience, she has been a guiding force for many businesses, offering invaluable expertise in market research, strategic planning, budget allocation, lead generation and beyond. Earlier in her career, Dublino established, nurtured and successfully sold her own marketing firm. Dublino, who has a bachelor's degree in business administration and an MBA in marketing and finance, also served as the chief operating officer of the Scent Marketing Institute, showcasing her ability to navigate diverse sectors within the marketing landscape. Over the years, Dublino has amassed a comprehensive understanding of business operations across a wide array of areas, ranging from credit card processing to compensation management. Her insights and expertise have earned her recognition, with her contributions quoted in reputable publications such as Reuters, Adweek, AdAge and others.
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