4 Things Your Boss Wishes You Knew About Customer Retention
Before you can master customer retention, you’ve got to understand people. What makes us purchase? What makes us loyal? Or, conversely, what pushes us away? And what the heck makes retention so important?
Let’s answer those questions and shine a light on which factors motivate folks to stick around with a particular brand transaction after transaction.
1. It’s cheaper to keep your customers than to find new ones.
To be specific, it costs 7x more to acquire new customers than it does to retain existing ones. Despite this, many companies still prioritize acquisition over retention. For that reason, American companies have a big problem with high churn rates. It’s estimated that customer churn costs US companies $1.6 trillion annually. And once those customers decide to abandon a brand, 68% never go back again.
You don’t need a business school grad or finance expert to tell you that that’s a massive price to pay for a problem that can be easily avoided by prioritizing customer retention.
So just how much money can be saved by driving loyalty? A 10% improvement in customer retention can lead to a 30% increase in company’s value, and 43% of consumers spend more money with the brands and companies they are loyal to.
2. Never underestimate customer happiness.
Zappos.com, the online retailer that self-describes as “a customer service company that just happens to sell shoes”, understands customer experience management.
Zappos’ CEO Tony Hsieh says, “Our whole philosophy became ‘let’s take most of the money we would’ve spent on paid advertising and paid marketing and instead of spending it on that invest it in the customer experience/customer service and then let our customers do the marketing for us through word of mouth’ and that became the whole business model.”
Because they recognize the importance of customer happiness and have modelled their goals around customer satisfaction, 75% of Zappos orders are from loyal repeat customers. People keep coming back simply because they know they can count on Zappos for an easy, enjoyable shopping experience.
Naming customer satisfaction as a top priority when looking to generate loyalty is a smart move. According to Accenture, 55% of U.S. consumers express loyalty by recommending the brands and companies they love to family friends, which then begins a domino effect of loyalty. 42% of U.S. consumers are loyal to brands that their family and friends do business with.
On the flip side, 67% of consumers list bad customer experience as one of the primary reasons for churning. Bad experiences are so impactful, that following just one single sub-par experience, 58% of Americans say they would never use that company again.
And it turns out that 95% of unhappy customers share their negative brand experiences with other people. Needless to say, those people are frequently sharing their dissatisfaction on social media, where reviews have the possibility of poisoning the waters for entire networks worth of potential leads. So far in 2017, 63% of consumers said they have read negative reviews in their social feeds.
3. Personalization is a powerful tool.
According to Campaign Monitor, marketers reported a 760% increase in revenue from segmented email campaigns. I believe this falls into the “work smarter, not harder” ideology – most companies are already collecting data on their customers.
Why not put that data to work by personalizing communication and making informed service/product suggestions? 73% of all consumers prefer to do business with a company that leverages user data to make their shopping experience more relevant, and 85% of millennials are more likely to make a purchase if it is personalized to their interests. Data points like name, location, behavior and shopping history can all be leveraged to offer people the brand experience they desire and expect.
It bears mentioning that 21% of shoppers are more likely to purchase again from brands that make an effort to personalize their digital experience than those that do not, and 17% of customers are more loyal to brands offering personalization.
4. Put a spotlight on your company values.
People like to stand for something. Animal rights organizations, fair-trade practices, small business owners in developing nations…whatever someone’s passion issue is, they especially like when they find brands who stand for the same thing. 37% of U.S. consumers show loyalty to brands that actively support shared causes, such as charities or public campaigns.
Millennials especially like aligning with “good business citizens” with 72% of that segment rewarding socially conscious companies with their business and loyalty.
On a broader scale, 89% of American consumers say they are loyal to brands that share their overall values. These can be broad stroke principles like family-friendliness, transparency and high-quality.
By sharing the beliefs, organizations and initiatives your brand supports, you’re giving customers a reason to be loyal. They’ll feel that by doing business with you, they’re personally aligned with your values and are participants in doing good for others.
Are you interested in optimizing your customer retention strategy? Find tips for driving customer engagement(especially within the much-coveted millennial market), reducing churn at critical lifecycle junctures and more in our eBook, “The Insider’s Guide to Customer Retention”, available for download here!
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