“Get closer to your customers. So close that you know their needs better than they do.”- Steve Jobs
Acquiring a customer is a big win for any business, big or small. But whether your organization stays in business or not is determined by how it is perceived by your customers, both existing and new. New customers are a hard win, but how often are your current customers given the attention they deserve? Enter the customer retention rate, a valuable business metric of recent times.
Customer retention rate
Customer retention rate (CRR) is a metric that calculates the percentage of customers your business has managed to retain for a particular period. We use a simple formula to calculate CRR:
Striving to improve your customer retention rate is a long, drawn-out process and needs a considerable amount of resources and planning to be set in motion. There are a variety of factors that can influence CRR and pose a challenge for customer success teams. Let’s take a deeper look at them.
Challenges surrounding customer retention
Retention of customers measures how well a company acquires new customers and maintains existing customers. Businesses also enjoy an increased ROI, boosted loyalty, and added new customers when they drive value from their existing customer base. Here are five challenges they face when retaining customers-
Focus on customer acquisition than customer retention
Market research has proved that customer retention is much more cost-effective than new customer acquisition. Acquiring new customers often costs 25x the resources needed just to retain one. Also, returning or existing customers are more likely to go through with a sale because they already have an ongoing deal with you.
Lack of loyalty rewards
Existing customers need to feel valued and rewarded at specific intervals to maintain a healthy relationship. Loyalty offers can include beta trial versions of products, personalized suggestions on special days, or making them the first to use a new service.
Neglected customer service
Neglecting customer feedback or service channels is an absolute no-no in any business. The correct way to retain customers is to work on their feedback and remove their pain points that might hinder your business.
Wrong product fit
Every product or service has a particular set of target audiences. You cannot club all your existing customers under one umbrella and decide all your products are for them. You need to map your buyer personas and determine which customers to target for your new offerings.
Market competition
Retaining customers can be cumbersome if your competitors launch a better product than yours. Lack of product innovation might also drive your customers to other competitors.
7 ways to improve customer retention
Customer retention needs to be carefully planned out and unique to each business. Let’s look at how you can improve it for your organization.
Stay ahead of attrition rates
Customer attrition or churn rate is the percentage of customers that no longer use your product. You must stay ahead of your churn rates to maintain an optimal retention rate. Your churn rates also convey whether your retention strategies work for you.
Efficient communication
Communication is key.
Listen to the customer using multiple channels and software such as Auryc’s Voice of Customer. Understand the shortcomings of your customer service from the feedback they provide you. Your company gets notified instantly when customer feedback or frustrations match triggers you can tailor to meet your needs with Auryc's Instant Feedback Alerts. Help your customers in less time. You can let everyone know about customer frustrations through email, Slack, or other platforms.
Always deliver on the expectations you set
If you set certain expectations regarding your product with your customers, always strive to over-deliver. As a result, your customers learn to trust your brand.
Work on customer data
With tools like Smart Funnels and Session Replays, you can efficiently collect customer data and improve retention rates. You can take action based on the information you observe and get better results with your customer satisfaction.
Reward loyalty
Loyal customers need regular reward programs. Acknowledgments or gratitude can go a long way while dealing with customers.
Build a community
Once you have a community of loyal customers, build a community site with them where you can communicate and seek feedback directly. It gives the customers a sense of belonging, engaging more fruitfully when asked for feedback.
Keep room for improvement
Your product may be top-notch, but never assume there is no scope for improvement. Learn about your customer journey, discover where people get frustrated, and leave your site using tools such as Smart Path Analysis. You can always create a better experience for them.
Better customer retention rates for better business
Customer retention is a top metric for any successful, self-sustaining business. Is it enough for your business to analyze quantitative data such as customer retention? Getting a holistic view of the customer journey requires more than quantitative data. With Auryc, product and marketing teams can make high-quality decisions based on qualitative and quantitative insights, not just quantitative metrics alone.
Want to learn how to create a solid customer retention plan for your business?
