The key to a successful business is retaining customers. When you have only new clients, it indicates that your previous customers did not enjoy your products and services and that something went wrong.
If this is your experience, or if you are trying to prevent this, we will attempt to help you resolve it in this blog post. In the process, we will share a definition of the term ‘customer retention rate’, and set out three useful tips for improving it.
So, let’s get right to it.
What is the customer retention rate?
A given brand’s customer retention rate is the percentage of existing customers who remain customers of that brand after a specific period.
How do you calculate customer retention rate?
To calculate your organisation’s customer retention rate, follow these simple steps:
- Consider the number of clients you have at the end of a specific period – for example, a week, month or quarter;
- From that, subtract how many new customers you gained during that period;
- Divide the amount by the number of clients that you had at the beginning of the period;
- Multiply the result by one hundred.
3 powerful ways to improve your customer retention rate
- Create loyalty programs
Customers who don’t feel appreciated for consistently purchasing your products and services will most likely leave and purchase from another company. Thus, you shouldn’t ignore loyal customers.
Instead, create and offer rewards programs. For instance, you might offer loyalty rewards to customers who achieve certain milestones (like spending a particular amount per order, or having a certain number of orders).
Potential rewards can include discounts, gifts, free delivery, and more.
- Pay close attention to any feedback
Feedback is a valuable asset for any business, as it shows clearly what you should improve about your product, service, or customer support.
Whenever you receive a terrible review from a customer, or even if it is a merely ‘mixed’ review, you should be concerned and immediately focus on areas that require improvement.
Thus, it could be a very good idea for you to go through all the reviews you have already received, analyse them in detail, and note the most frequent complaints. Then, you will be able to make informed changes as needed.
By doing this, you will be able to help prevent your existing customers from leaving and improve the retention rate.
Also, don’t forget to thank your customers for their feedback, apologise for any inconvenience they may have experienced, and assure them that you will take all necessary measures to improve the situation.
- Implement cross-selling and up-selling
Cross-selling and up-selling are strategies that help ensure you a little extra revenue and can further improve customer retention.
Here are some examples to make these strategies clearer to you:
- Cross-selling example: a customer is about to buy a mobile phone from you, and you recommend a protective case or earphones.
- Up-selling example: a customer is about to buy a mobile phone and you suggest one with more storage.
By adding complementary or additional products or services, you can help improve the overall experience of your product or service, making it appear more valuable to your customers.
When your customers are happy with their purchase and the quality of your products or service, it is likelier that they will come back to your organisation again and again.
Conclusion
Establishing a loyal relationship with your brand’s clients takes time, experience, and dedication.
However, keeping track of your customer retention rate and applying all the best strategies, like the ones listed above, to improve it will benefit your business from many angles, including with regard to brand authority and revenue.