Customer loyalty is essential for long-term profits and the overall well-being of every business. Reports by Bain & Company confirmed that increasing customer retention by just 5% could lead to increments in profit of 25% or even more. Usually, to achieve this jump in customer loyalty from wherever it is to 5% more, you would need effective customer retention strategies and good management tactics.
Many businesses and brands across the globe find it challenging to get customer retention strategies right. However, it’s an open secret that customer retention begins with an effective retail business plan, which leads to creating the right first impression with your customers.
What is Customer Retention?
Customer retention can be explained as the day to day activities organizations or companies undertake to reduce customer attrition so that more and more customers keep coming back. Usually, you can achieve this through customer or brand loyalty.
In 2019, statistics about customer engagement and loyalty disclosed that 61.08% of consumers are loyal to between 1-5 brands, 26.19% are loyal to between 6-10 brands, and 5.68% are loyal to between 11-20 brands. The quest to improve customer loyalty is a challenging task for many brands and marketers. This is because it involves innovation and hard work, but may yield no immediate results.
How to Achieve Customer Loyalty
When it comes to customer loyalty strategies, many businesses adopt a trial-and-error approach. Even so, the smallest gestures or compliments can do the magic in some cases. To improve customer loyalty, few practices like ‘saying thank you,” and referral programs can be adopted. These are effective customer loyalty strategies that can help you.
Building Blocks of Customer Retention
Customer retention involves a triangular process of product or brand attraction, conversion, and retention. Thus, once the product or service attracts the attention of the customer, he or she is automatically changed from a particular preference and begins the path to retention.
Customer Retention Strategies
Putting together effective customer retention strategies are worthwhile, especially because cash flow management is directly proportional to the number of customers your business retains. You and your business or brand can effectively use the following strategies to maximize their intended results.
As a business or brand, you have market expectations for every product or service in your product line. Therefore, it’s always advisable to set expectations very early to eliminate uncertainties surrounding the performances of your services and products. In 2019, retail loyalty statistics indicated that 62% of unhappy consumers were less likely to pay for a given product or service.
On the other hand, only 36% of satisfied customers were willing to pay money for the same product or service. You can guess for yourself what these mean for your business.
Capitalize on Customer Trust
In an era of digitalization, trust is the backbone of marketing; whether you’re into social media marketing or TV ads, you want to capitalize on the latest trends in these domains. One key strategy you need to deploy in customer retention is trust-building. Your business or brand will benefit greatly if a renowned field expert, or trusted figure will serve as the authority to endorse your products or services.
Reasonable Pricing or Goods and Services
You need to give customers reasonable prices, with emphasis on convenience during the buying and selling process. The frequent use of delivery or courier service offers customers the luxury of home delivery and online shopping. Many consider this service because they trust the brands and companies involved to fulfill their purchase and deliver the right product.
Build on your Customer Relationship
Some of the most successful businesses adopted effective customer retention strategies by developing strong relationships with their customers. Once your customer trusts you to offer a lasting solution or provide the best service, you have an opportunity to build a lasting relationship. Hence, the goal should be to make your customers part of a movement, a partnership that they can be active members of.
Offer Complaints and Grievance Channels
When you consider customer retention strategies, you also need to think of customer service; there is a need to offer customers an avenue to channel their complaints, grievances, or even recommendations. Today, social platforms like Facebook and Twitter offer brands the convenience to connect and communicate with customers. It will give you a chance to improve your products and services based on customer feedback. At the same time, it will show that you do care about your customers and are always open to discussion.
Change your Customer Service Approach
Why is excellent customer service so valuable? Maybe because it’s integral to the kinds of customer retention strategies that generate real profit. But it’s also so hard to find, and its scarcity makes it so much more valuable when people can also find it with you. Hence, you need a proactive approach to address the grievances, complaints, or even recommendations your customers bring to you.
Digitize Your Services and Products
Using technology to provide your services and serve your product comes with many benefits, like the Amazons and Ebays of this new era teach us. Thus, you want to be intentional in positioning both existing or new products with some technological advantage. According to the 2019 Restaurant Loyalty Statistics, 38% of restaurant executives say that improving digital customer engagement and loyalty was an integral part of 2019 tech objectives.
From free giveaways, exclusive coupons to discount promotions, customers do like to enjoy extra incentives from their favorite brands. This is one of the most effective customer retention strategies you can implement. Because most people cannot remain quiet about such promotions, they will tell their friends, tweet it and post pictures of their prizes on social media.
In many cases, introducing custom retail packaging with refined promotional materials and branded messages deliver significant positive results. It helps keep customers interested in your products. Because, believe it or not, customers do not only pay for products but also pay for the experience of unpacking or unboxing a beautifully packaged product.
Pricing is one of the main tools used to compete in business. With a strategic pricing method, customers can enjoy good deals on products and services. Hence, getting more value for their money.
However, it’s very crucial to avoid market manipulations in an attempt to kill your competition. Spikes and dips in product prices might rub customers off the wrong way. As a result, you might find yourself while dealing with difficult customers, which is something you want to avoid.
Strategy Evaluation & Monitoring
For every strategy, you need to take an interest in measuring success. This is because companies, like human beings,, have their respective weaknesses. Hence, you need to use specific metrics to measure customer retention.
Key metrics like attrition rates are vital for evaluating customer retention strategies. A company’s attrition rate can be defined by the percentage of customers lost over a given period. Once this strategy is considered, attention will be given to highlighters like the number of existing customers or new customers acquired during the period.
Customer retention is a long term goal; the same goes for customer loyalty. Hence, you need to work at it daily. Many businesses lose sight of the end game, retail stores in particular since retail management has such a direct effect on customer satisfaction.
However, with the customer retention strategies outlined above, you can surmount some of the challenges associated with creating and sticking to a working plan. You can follow this blog to know about maximizing profit figures in your retail or restaurant business.