Customer retention benefits are the positive business impacts of retaining your customers. Customer retention has many benefits, with one key thing in common: they help you drive better marketing results with a greater return on investment.
So, how is customer retention measured? It starts from a customer’s first purchase and accounts for all ongoing interactions. Measuring customer retention helps you identify how many of your customers are loyal, predict purchasing behavior and gauge customer satisfaction. You can use this retention data to make informed decisions and analyze shortcomings like drops in customer engagement.
Customer retention benefits include:
In this article, you will also learn:
Beyond maintaining your most loyal customers, there are several associated benefits to prioritizing customer retention. These benefits include higher ROI, organic advertising and higher customer satisfaction.
It is up to five times more expensive to acquire new customers than it is retaining existing customers. This difference makes it a much more cost effective investment to focus first on keeping your customers engaged and satisfied with your brand. By prioritizing current customers, you get the added benefit of lowering your customer demand for support. Existing customers tend to be more knowledgeable about your products and services.
When customers are loyal, they’re more likely to recommend your brand to others and positively display your brand. This is essentially free advertising and can have a much greater impact on potential customers since it is organic with no hidden or little agenda. In addition to costing you nothing, this type of advertising can produce more loyal customers since consumers begin purchases with positive regard for your brand.
Focusing on customer retention often involves strengthening relationships with customers. For example, by showing appreciation through loyalty programs or providing exceptional customer service if issues arise. These responsive actions can show dedication to customers and encourage them to feel more connected to your brand.
Loyal customers are typically easier to reach and are already familiar with your communication strategies. This means they are more likely to be forgiving if service is not up to standards or if an issue arises. It also often means that customers are more likely to engage with your communications, such as reading newsletters or providing valuable feedback on products.
Brand following and the size of your customer base play a role in your ability to gain more customers. If a brand has no apparent fans or customer voices, other customers may wonder why and fail to trust the brand or its products. In contrast, having a visible fan base can attract attention from other consumers and create brand growth.
When interpreting customer retention metrics, several factors may impact your results:
Price—competitive pricing tends to increase retention. Underpricing can make customers doubt the quality of your products while overpricing encourages them to seek out competitors.
Site performance and user experience—customers have limited patience and poor site performance can cause customers to abandon carts or shopping experiences. Likewise, if your menus are unintuitive or users cannot easily search for products or information, they are likely to move on.
Delivery—including how much delivery costs, how quickly orders are shipped, and how fast deliveries arrive. Free shipping is a known tactic for gaining and retaining customers but it only works if you also ship quickly and reliably.
Customer service—good customer service is required to keep customers. This can mean clear customer policies on your site, responsive agents, or easy to access service assistance.
Loyalty programs—enable you to reward customers in various ways to show appreciation and keep them engaged. However, programs need to be easy to use and make sense to customers, otherwise they will not feel benefitted.
Saved payment details—payment is often one of the most aggravating steps in making online purchases. Customers may not have cards handy or may not remember which card they used last time. Saving these details makes it easy for customers to complete purchases without pausing or digging for payment information, increasing the likelihood of purchases.
Many strategies can help you retain customers, but some of the most effective ones are introduced below.
According to a study by Acquia, 75% of customers report greater brand loyalty when companies personalize interactions. This personalization could mean following up on purchases, reminding customers when items they were considering go on sale or even sending birthday discounts.
To collect the data required for personalization, there are several methods you can use, including directly asking for customer information. Having customers fill out user profiles for purchases or loyalty programs is an easy way to collect demographics and preferences. Another way is to track user behavior on your site, correlating the items that users click or view to determine preferences or tastes.
Customer accounts can make it easier for customers to track orders, make additional purchases, and gain repeat customer perks. However, creating a customer account can be a hassle and some customers may avoid it due to privacy concerns.
To make customer accounts beneficial without punishing those who don’t create them, you need to ensure that both customer and guest purchases are easy. Additionally, you should clearly highlight how customers can benefit from making an account. You may also want to enable customers to create accounts after they have completed a purchase, auto filling the information they have already input.
Loyalty programs are good ways to show customers that they are valuable to your brand. You can use these programs to reward customer purchases or engagement, offer incentives to encourage new purchases, follow up on purchases or generally communicate with customers.
These programs help keep customers engaged with your brand and your products, and they can also provide valuable customer data that you can apply to your personalization strategies or the development of new products.
Learn more in our detailed guide to customer retention programs
When managing customer communications, it’s important to find the balance between keeping customers engaged and annoying them. One option is to create a communication calendar to reach specific customers or groups of customers.
You can use this calendar to track when customers last engaged with your brand or to highlight important dates. For example, you could track customer birthdays, when warranties expire or when you should seek purchase feedback. These calendars can help you keep in contact with a customer, without driving them away with too many emails or notifications.
Effective customer support is key to retaining customers and encouraging customer loyalty. Without good support, customers will abandon your products and may even speak out against your brand, which can cause lasting damage.
In contrast, good support helps ensure that customers can gain the greatest benefit from your products. Support can also increase the likelihood that they will recommend you to others.
Good customer support can also help you gain feedback from customers that you might otherwise miss. For example, if a customer gets frustrated and leaves your brand, you may never know why. However, if you work with them through support you can resolve the issue and learn what caused the issue in the first place.
Formation empowers companies to achieve true 1:1 marketing at enterprise scale. With a
combination of automation, AI and ML, our platform continues to learn about customer preferences, analyzing their interactions and fine-tuning offers until they are in a segment of one. Our solution automates offer development and execution, enabling marketing teams to be
more efficient and effective in engaging and retaining customers.
Formation gives brands dynamic offerings they can use to increase engagement throughout the customer lifecycle, from initial visit to purchase and retention stages. Formation offers are hyper-personalized, with an endless number of combinations of personalized elements; this ensures each offer is tailor-made to appeal to customers individually.