Business growth isn’t just about acquiring new customers; it’s about retaining the customers you have, too.
It takes a lot of work to acquire a new customer. And once you get someone into your company’s ecosystem, the last thing you want to do is lose them – because it costs 5X more to acquire a new customer than retain an old one. You do the maths.
This is why businesses must pay more attention to improving customer retention and boosting loyalty.
In this article, we’ll show you 10 ways to improve customer loyalty and retention for your business.
Let’s get started.
Customer Loyalty vs Customer Retention
Customer retention is a metric that measures customer loyalty. In other words, it is the ability of a company to retain its customers over a specific period. On the other hand, customer loyalty is about building relationships and turning your customers into brand ambassadors. It drives repeat purchases and prompts existing customers to choose your company over competitors offering similar benefits.
Proven ways to improve customer loyalty and retention
Let’s look at some of the best methods you can employ to enhance customer loyalty and retention.
Measure your Current Customer Retention Rate
You need to know where you currently stand to improve your retention rates. Start by measuring your current customer retention rate over a specific period (monthly, quarterly or yearly)
Here’s how to do it:
- Look at the number of customers you had at the end of the period.
- Subtract the number of new customers you got during that period.
- Then divide that total by the number of customers you had at the beginning of the period.
- Multiply by 100 to get a percentage; you have your retention rate.
- What do our customers expect from us?
- What are our competitors doing for their customers, and how can we top that?
- How can we make our customers happier than they are?
- How can we not only meet our customers’ expectations but exceed them?
- “We’d love to know how we can improve your experience with us?”
- “Why did you stick with us over our competitors?”
- “What do you like the least and the most about our product?”
- “Thank you for your feedback! We’d love to know why you scored us that way?”
Let’s understand this formula with the help of an example.
Suppose you started your year (2023) with 120 customers, ended the year with 100 customers, and added 20 new customers within the year.
Then following the formula, the CRR would be [(100-20)/120] * 100 = 66.66%
Remember that a 100% customer retention rate probably won’t happen, so it’s OK if you don’t get a 100.
A Mixpanel report states that an acceptable user retention score for the SaaS industry is above 35%.
So if your retention rate is >=35%, you’re good to go, but you can always improve your customer retention. As you continue reading this article, you’ll see proven ways to increase customer retention and loyalty.
Make your customers feel special
Your customers are humans, which means they have feelings. So what better way to sweep them off their feet than letting them know you’re thinking about them?
You can spend less to make your customers feel loved. An occasional freebie or a quick note of appreciation would go a long way to make your customers feel special.
An example is from SEO Video Show – a show meant to help SEOs and digital marketers learn more about SEO. They partnered with Ahrefs to give gifts to people that watch the show.
This strategy works because SEO Video Show not only makes their customer feel appreciated by giving gifts. But they also partner with another relevant brand, Ahrefs, which helps them offer their existing customers more options.
Make customers change their minds about leaving
I recently saw a TikTok video about how some companies would offer you everything not to cancel.
I could relate to the video because every time I tried to cancel a service, I got drawn back with a special offer I couldn’t resist. I’m sure it’s happened to many of us in the past.
Sometimes, you need an extra offer to make customers change their minds about canceling a subscription.
When you make a mistake, admit to it and do something about it
Mistakes and human error are inevitable, but what you do after making a mistake makes all the difference. For example, when a customer points out a mistake, do something about it instead of apologizing.
Acknowledge that you’ve made a mistake and be willing to compensate for it. I spoke about a company that did this perfectly in the previous article about retention techniques from top companies.
It’s one thing to satisfy your customers; it’s another to exceed their expectations. Make them wowed; that’s what will make them stay!
Make it easy to use your product
Take it from me, a customer myself. One of the main reasons your customers churn is that they need to learn how to use your product.
Apart from investing in great marketing, ensure your product is easy to use. But how do you know if your product is easy or difficult? Ask your customers for feedback on ease of use. Then use their feedback to make your product better and customer-friendly.
We covered everything you need to know to collect feedback from customers in this article:
Ask your customers for honest feedback
Still, in the “feedback” conversation, gathering customer feedback is one of the best things you can do to improve customer retention and gain loyalty. In a previous article on customer retention techniques, I shared an example of a brand that uses customer feedback to learn more about its customers and increase retention.
One of the best ways to gather customer feedback is through surveys.
Surveys are great because they are easy to take and can help you learn more about your customers if you do them correctly. For example, you can use NPS surveys to find out how your customers feel about your product, then follow it up with questions depending on their score on the NPS scale. Here are some follow-up questions that can get the job done:
Based on the answers to the follow-up questions, you have a general outlook of how your customers feel about your business and what you can do to improve it.
Schedule a demo with one of our experts to take a deeper dive into Churn360Book a demo
Use customer segmentation to offer personalized support
The problem with many companies is that they think work ends with acquiring a customer. Heck no! Work’s just getting started. It’s not about getting customers; it’s about keeping them.
One of the most significant ways you can blow your customers’ minds is through the support you give them. Everyone loves a company that pays attention to them and cares about them. So how do you do this? Through customer segmentation.
Segmenting your customers into different groups and personas can provide valuable information and context for every customer, which helps you serve them better. As a result, you avoid the “one-size-fits-all” approach and focus your customer service more on the customer.
Improve Employee Experience
I know you must be thinking, what does employee experience have to do with customer loyalty? More than you think. Ever heard the saying, “great customer service starts with great employee experience”?
An IDC survey on employee experience showed an improved employee experience means a better customer experience and higher customer satisfaction.
That survey alone indicates that a positive employee experience can be a strong driver of loyalty and make your workplace a nicer environment.
When you treat your employees well, they treat your customers well. So make sure you give your people autonomy, great pay, and respect so they can collaboratively help you grow your business.
Invest in customer service tools
Having the right tools at your disposal makes it easy to improve retention and gain loyalty.
For instance, Churn360’s customer journey solution helps you monitor whether your customers are moving through the lifecycle stages of onboarding, adoption, renewal, and upselling. With this solution, you can see customers at the risk of churning, so you can take proactive action before it’s too late.
Investing in customer service tools makes it easy for your team to retain customers and reduce churn.