How to improve your customer retention
It goes without saying that in order for a business to prosper and stay competitive it is essential not only to implement effective sales and marketing strategies and create unique products to attract new clients, but also to think of ways to keep their existing clients and earn their loyalty. Unfortunately, many of the companies tend to invest more resources in customer acquisition than in customer retention.
So, why is customer retention so important?
A quick look at the stats
What do researches show:
– Attracting a new client costs your business 6 to 7 times more than retaining an existing one.
– 68% of the business comes from existing clients.
– Increasing customer retention by 5% could lead to an increase in profits from 25- 95%.
– The likelihood for an existing client to turn into a repeat one is 60-70%, as opposed to 5-20% for a new lead
The metrics – CRR and how to calculate it
Customer retention rate (CRR) is the place to start before jumping into strategies and planning as it gives you an idea at where your business stands in keeping your customers satisfied and willing to continue using your services. It’s simple and easy to calculate and can be applied to companies of any size and in any industry.
The Formula for Calculation
CRR = ((E-N)/S) X 100
– The number of customers at the start of a given period you want to analyze (S)
– The number of customers at the end of a period (E)
– The number of new customers acquired during that period (N)
Example: You start the week/month/year (or any other period you’ve chosen) with 500 customers. You lose 30, but you gain 60 new ones. At the end of the period you have 530 customers.
530-60 = 470; 470/500 = 0.94; 0.94 x 100 = 94. In this case, your CRR for the specific period you chose is 94%.
How to improve your client retention
CX is the key – Developing a customer-centric business model and focusing on CX (customer experience) are the drive for both retention and acquisition. Going beyond the normal service or product that you offer is what sets you apart from other businesses in the industry and is the main factor impacting customer satisfaction and customer loyalty and influencing your brand image.
What can you do to build a better experience for your customers?
– Improve your customer support – make it possible for clients to reach you through multiple channels and platforms, reduce the response time for queries and complaints, always ask for feedback
– Create transparent and comprehensive procedures and pricing.
– Offer user-friendly and innovative payment methods to make it easier for clients to transact with you quickly and seamlessly.
Customer retention is all about client experience and added value and is fundamental for business growth. Investing in CX is rewarding both for clients and businesses and is what makes a brand more distinguishable and recognizable in today’s fast-paced economic environment.