So much of marketing seems to be focused on gaining new customers.
But what about your current customers?
They’re just as, if not more, important to your business, especially in the world of B2B. So alongside your campaigns aimed at attracting new business, you need separate campaigns designed solely towards holding on to the ones you already have.
Customer retention is a crucial part of any successful marketing strategy, but how are you measuring your retention efforts?
In this article, we’re going to look at:
- Why you should care about customer retention
- Boosting customer retention
- Measuring customer retention success
Why you should care about customer retention
Once you’ve gained a new customer, the worst thing you can do is forget about them and move on to the next prospect. People are always looking for new and better things, so you don’t want to give them a reason to start looking elsewhere and not renew their contracts with your business.
Research shows it costs five times more to gain a new customer than to hang onto one! And just a 5% increase in customer retention can boost revenue by 25-95%. So it doesn’t just make business sense to keep hold of customers, but financial sense too.
Not to mention that current customers will buy from you more often, and spend more, as they’ll be familiar with your services and will keep coming back. They’ll also be more likely to recommend your company to their network, bringing you more customers without any effort on your part.
In short, retaining customers is essential, so a solid strategy is needed to help prevent existing customers from slipping through the cracks.
Boosting customer retention
If you don’t have a customer retention strategy, here are some things you can do to get started and hang on to your best customers.
Transparency is crucial, as your clients want that openness and honesty. In B2B, it can often feel like you’re dealing with a faceless organization. But there’s always a person at the end of every aspect of communication, and your customers want to see that. You need to be consistently communicating with them so you’re engaging them, and creating opportunities to upsell and cross-sell.
You need to create a sense of trust with your customers, as this is the key to building a strong relationship with them and getting them to stick around.
As well as honest and open communication, you need to ensure you’re always delivering the best customer service possible; bad service can breed distrust and lead customers to stray elsewhere. Always follow through on what you say you’ll do, and this will help your customers perceive your brand as trustworthy.
A newsletter is a quick, easy, and cost-effective way to retain customers. You can use email automation to send offers and upgrades to your customers on a regular basis. It’s an effortless way to send regular communications with your customers, reminding them you exist and making them feel valued.
Just make sure you find that balance between sending our regular communications and bothering them with too many emails.
Meet and exceed expectations
Customers expect more these days than a good price and high-quality products and services, given just the sheer number of businesses they could turn to if they become displeased.
There’s an expectation of personalized customer service and seamless interactions across all your channels. Get your customers’ feedback via surveys to discover what areas need improvement, and implement these changes so you can continue to meet their needs. Don’t over-promise on things you can’t deliver, as that’s a one-way ticket to ensuring your customers leave for a competitor.
Customers that don’t feel appreciated are liable to jump ship at the drop of a hat. So it’s important you don’t take those loyal customers for granted and reward them for sticking around.
Whether it’s with bonus gifts or free passes to events, some kind of reward offers go a long way to building a loyal customer base that will stick with your business for the long haul. You could also set up a loyalty program to incentivize people to remain customers.
Measuring customer retention success
So, now you’ve got your customer retention strategy in place, how can you make sure you’re on track and your efforts are paying off? Here’s how you can measure your success in customer retention.
Set a benchmark
First, you need a benchmark so you know what you’re aiming for. You can use the following formula to work it out what your current retention rate is:
- E = Customers at the end of the period
- N = New customers acquired
- S = Customers at the start of the period
So you start with the number of customers you have at the end of the year (December 31st) and subtract new customers so it doesn’t throw off the data. Divide this by the number of customers you had at the start of the previous year (January 1st) and multiple by 100, this will give you your customer retention rate percentage.
For example, if you had 100 customers at the start of the year and gained 10 new ones, but ended the year with 100 customers, you’d have a retention rate of 90%. This could then act as your benchmark going forward.
Identify retention metrics
You’ll need to define what success in customer retention means to you, as different metrics will measure different goals.
For example, CLV measures the revenue generated by a single customer and can help you narrow your retention efforts to the most cost-effective people, whereas churn rate is used specifically to measure the number of customers lost.
When you isolate the retention metrics relevant to your goals, you’re able to more precisely calculate the results you’re looking for.
Monitor your progress
Once you’ve got your metrics and the data has been pulled about your customer numbers, you need to monitor your progress so you can see how you're progressing towards your goals.
Set a regular time to pull the numbers, such as monthly or quarterly, and spend time analyzing the results. This way, you can see if you’re on track or if there are any surprises in the data.
If you’re missing your benchmark, or you think you can do even better than the goals you originally set, you should be making continuous improvements to your retention strategy.
Keep adjusting your strategy to accommodate any changes to your business and to keep customers coming back time and time again. By making incremental improvements over time, you’ll be able to determine what works and what doesn’t, and implement the best strategies as you go along.
Increasing your customer retention starts with creating a positive customer experience that will keep them wanting to do business with you. When you understand your retention metrics, you’ll have an easier time aligning your marketing department with customer service to form part of your overall customer retention strategy.
Want to learn more about customer retention? Join the B2B Marketing Alliance Community Slack channel!