From travel to hospitality and tech to retail, every industry struggles with turning one-time customers into long-term fans.
Keeping your customers engaged and interested in your business for as long as possible is no easy task. It requires unique strategies, careful planning, and flawless execution.
This is what customer retention management is all about. Learn how you can apply customer retention management to your organization to improve your customer retention efforts.
What is customer retention management?
In simple terms, customer retention management is all about keeping the customers you have for as long as possible so they spend the maximum amount of money with you over the course of their engagement with your organization.
To do this effectively, organizations need a deep understanding of their target market and the needs, challenges, and fears those customers have. Catering to exactly what your customers want helps ensure they choose you over a competitor every time.
Ian Edwards, cofounder of BeeLiked, a provider of gamified incentive solutions, says “Fred Reichheld, author of The Loyalty Effect, famously said that a five percent increase in customer retention can lead to a 25–100 percent increase in profit for your company. Once you get your customers, you want to keep them for life!”
In other words, customer retention is good for your bottom line.
There are multiple areas of customer retention management:
- Customer acquisition. Every new customer has the potential to be a long-term customer. However, it’s critical to note that customers who are the wrong fit for your business won’t end up being lasting ones. That’s why customer acquisition efforts have to target the right audience, one whose needs your business can meet.
- Customer retention. Businesses can’t retain every single customer; some are more likely than others to leave the business for a variety of reasons (such as a mismatch in needs or price point). Through customer retention research, your organization can determine which customers are most likely to stay so you can focus your attention on them.
- Customer development. How much money does the average customer spend with you at any given time? What if you could double or triple it? This area focuses on cross-selling and upselling to existing customers to increase the value of each purchase.
- Customer life cycle management. This area encompasses the many different touchpoints a customer has with your business, from pre- to post-sale. Enhancing each touchpoint ensures your customers have the best experience possible so they’re more likely to purchase again.
Why does your business need customer retention management?
Your business can realize several benefits as a result of focusing on customer retention management. One of the key drivers for many organizations is that retaining existing customers is more cost effective than acquiring new ones.
Customer acquisition is an expensive and time-consuming process in most industries, and there’s no guarantee of success. That’s why once you’ve acquired a customer, it’s prudent to ensure they stay with you as long as possible.
“There’s no point in attempting to build a house on a foundation that could fall away at any second. Doing so could lead to a serious leak, where customers are flowing through the door due to the initial marketing efforts but then leaving very quickly and not returning,” says Edwards.
A qualitative benefit of customer retention management is loyalty. Long-term customers are often loyal ones who love doing business with you because you’ve treated them well.
This means they may recommend you to their family and friends, talk positively about you whenever a potential opportunity emerges, and even share flattering reviews online. This kind of brand advocacy is invaluable to businesses and is as effective — if not more effective — than any traditional marketing medium.
What are some customer retention management best practices?
Wondering how to incorporate customer retention management into your business? Try these best practices:
- Know your customers inside and out. Ask your customers about their needs, challenges, likes, dislikes, and suggestions by using online surveys and focus group interviews.
- Personalize their experiences. Be sure to cater all touchpoints to specific customer journeys, and don’t treat them with a one-size-fits-all approach.
- Take a varied approach. From improving the onboarding process to enhancing customer service and support, take multiple routes to satisfy your customers.
- Automate data collection and workflows. Make collecting information easy and streamline processes using secure automation software like Jotform.
- Understand that retention isn’t linear. Keep in mind that retained customers can always change their minds, so you have to continue your retention efforts.
- Show your appreciation. Rewards, exclusive offers, VIP access, contests, and other loyalty-building programs show customers how much you value their business.
As a vital part of a long-term business strategy, customer retention management can help you reach business goals like improving profitability or increasing revenue. Be sure to apply best practices and take a well-rounded approach.
Photo by Christina @ wocintechchat.com on Unsplash
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