Often, the top brass of a company can become so focused on the acquisition, that they lose sight of the cash egg they are sitting on in existing clients.
Not only can customer retention provide additional revenue streams from upsells, but it can also be your biggest advocate in getting new clients through the door. Having a reliable customer base is the best way for your brand to spread by word-of-mouth and keep your healthy business.
Neglecting existing customers results in tarnished reputation and a displaced growth strategy. Regardless of how much money you throw at targeting new clients, if you are hemorrhaging your base, you won’t keep up. Tweaking your approach towards existing customers can have major results. A Harvard study found that just a five percent increase in retention rate will increase profits by 25-95 percent.
How to Measure Your Customer Retention Rate
First of all – let’s find out what your retention rate is. Once you have that measured, implement the tips below and watch the impact of these strategies take off.
Select a period of time you’d like to measure the data for – over a month? A quarter? A year?
Measure your client retention rate with the following formula: ((E-N/B) x 100
Here’s our key:
E = the number of total clients at the end of a determined period
N = the number of new clients acquired over the period
B = the number of total clients at the start of the period
Great, now you have your retention rate – let’s get started on your strategy for improvement!
Our Top 8 Retention Tips
1 – Say Thank You – sending a handwritten thank you card upon a customer signing up for your services or purchasing a product can go a long way in creating goodwill. You can send a small thank you gift or card at the one year anniversary of using your services,or during the holidays.
2 – Segment– segmenting your customers by industry or size gives your account managers a chance to drill down on industry-specific trends and what matters most to this segment so their communication with the client feels personal.
3 – Reach wider – Focus sales efforts on a cross-selling strategy. The more services a client has with you, the less likely they are to uproot and move to a different provider. This is often called creating “stickiness” in a relationship.
4 – Ask for feedback– set up touch points throughout the year to keep a pulse on the customer’s happiness. Ask questions about how their business uses your product, and what improvements or features would make their lives easier, and if there is anything they need help with. Send NPS surveys out throughout their experience and make sure each survey is read and considered.
5 – Onboarding – go overboard with onboarding. A first impression lasts a lifetime, and making sure your customers are off to a good start feeling comfortable with your product can set the tone for the relationship. Create a resource-rich onboarding experience offering live or recorded demos, training videos, use cases, and user guides so they can become comfortable with your product in a learning style that best suits them.
6 – Reward loyalty – create special promotions only available to existing clients and perks that incentivize return business or renewals. You can offer exclusive discount codes for the purchase of additional products. Allow access to special forums, webinars, or events that are gated to non-clients.
7 – Create a referral program – A study from the Journal of Marketing found the value of a referred client to be at least 16% higher than that of a non-referred client. Not only that, but they cost an average of $20 less to acquire. Incentivize customers with a discount on their bill or a one-time payment for client referrals. Customers acquired through referrals also require fewer resources and are more likely to reach out to the person that referred them with questions before contacting support.
8 – Be responsive – Stay on top of community forums, the comment section, and social media. Being hyper-responsive lets you tamp out fires before you have to call in a damage control squad. If you do not have the manpower to respond to each email within the hour, set up an automatic response email that confirms you’ve received their message, are working on their issue, and can expect a response within 4 hours (or whatever you determine). Provide resources in the response like an escalation option or a help desk link to create a ticket. This automatic response gives the customer reassurance that their email has gotten through, even if you cannot immediately reply.
Nurturing your client base is the most important part of any growth strategy, and taking existing clients for granted can be a business’s Achilles’ Heel. Let us know what works best for you to keep your customers coming back? Add your tips in the comments below.