“Customer retention is the new growth,” according to Adobe CEO Shantanu Narayen. If you want to survive the 21st-century business battlefield, you need to emphasize keeping your current customers. And the heart of accomplishing customer retention is CRM software.
In today’s fiercely competitive landscape, your current customers are the serum shots (a la Marvel) that take your company to superhero level. Without them, your business is nothing more than a scrawny Steve Rogers (pre-Captain America) getting bullied.
Fortunately, CRM platforms can help you execute a CRM customer retention strategy so you can gain a competitive edge and send your ROI soaring.
What strategies should you focus on? And how does CRM play a role? That’s what we’ll cover in this post.
But first, we’re going to let data tell the story of why customer retention is such a big deal. Put your nerd hat on and let’s get started!
What Is Customer Retention? And Why Is It So Important?
Customer retention is the capacity a company has to keep customers engaged with its product or service. It also acts as a business strategy in customer relationship management that seeks to increase customer loyalty and reduce customer churn. Customer retention techniques include creating a loyalty or VIP program, personalizing the customer experience, re-engaging at-risk customers and placing a high value on customer service.
Customer retention is important because it provides organizations insight into their performance. And, like many other things, it’s rooted in data.
Marketers love data. After all, it acts as the building blocks of a solid strategy and provides a window into what’s working and what’s not. And when it comes to customer retention, the story it shares couldn’t be clearer:
- Retaining customers is a lot more cost-effective than acquiring new ones. How much? Anywhere from five times to 25 times less expensive.
- It’s also a lot harder to establish a solid relationship with a new customer than an existing one. Up to 16 times harder, in fact.
- On the reverse side, losing a customer costs an average of $243.
- If you can keep customers on board for the long haul, it pays off. By their third year, customers spend an average 67 percent more compared to their first year.
Customer loyalty is obviously a critical part in the recipe for business success. But what ingredients help drive customer loyalty? Let’s find out.
Hit a Home Run With These Customer Retention Strategies
There’s a difference between randomly putting together a strategy and thoughtfully mapping out the best areas of focus. With that in mind, here are some effective customer retention strategies you can focus on:
1. Build a Robust Customer Journey
Your customers are on a journey to achieve a particular goal. And like Frodo on his way to Mordor, they won’t get there alone. That’s where your company comes in.
The problem is, you won’t be an effective guide unless you first map out the customer journey. Doing so lets you determine why they’re coming to you in the first place, and how you’re uniquely positioned to help them reach their goal. Only then can you gauge whether they’re actually achieving their goal, which is important because you want to be seen as the best solution for their particular type of problem.
The customer journey includes the various touch points customers have with your company. It starts when they first interact — seeing an ad or reading a blog post, for example — and continues through the process of nurturing them down the funnel and into the post-purchase phase.
At first glance, it might not be obvious how that contributes to customer retention. But think of it this way: Mapping the customer journey allows you to get a visual understanding of how customers interact with your brand. You can use that information to optimize each touchpoint, which enhances the overall experience so customers will see your company in a positive light.
Furthermore, the journey doesn’t stop once they make the first payment. You can strengthen customer loyalty by using customer journey mapping to understand their evolving needs and how you can meet those.
2. Let Data Do the Legwork
Do you know who’s going to win the next Super Bowl? I’m guessing not. Even if you’re a student of the sport and can make an educated guess, it’s still that. A guess.
The good news is that you don’t have to worry about the same thing with your business. Your retention strategy need not (and shouldn’t) amount to a guess. Rather, it should be grounded in hard data that drives informed decisions.
You have a wealth of customer information at your fingertips. An effective strategy will take advantage of that rather than letting the data become stagnant. Use the insights you have to build a solid foundation for your strategy.
3. Set Expectations
Lack of communication can cause a lot of problems. In order to avoid confusing or upsetting your customers, you need to clearly lay out the framework for your relationship.
A service level agreement (SLA) is a way to formalize these “ground rules” so both you and your customers know what the expectations are. You’ll avoid a lot of potential issues by communicating this upfront. Plus, having a written agreement will ease customers’ worries, since they’ll have an exact idea of what your company will provide and how you’ll handle given situations.
To illustrate, if a SaaS provider wanted to instill confidence in their customers, they would include details such as guaranteed server uptime. If a system went down, customers wouldn’t have to panic because either the provider would get the problem fixed in time to uphold their end of the agreement, or the customers would receive some sort of compensation.
With SLAs in place, you present a customer-centric appearance that shows you have customers’ best interests in mind. An SLA will hold you — and your customers — accountable.
4. Listen to Your Customers
Listening starts with asking the right questions. Use surveys, polls and other feedback mechanisms to extract how customers feel about their relationship with your company.
Back to letting data do your heavy lifting, it’s risky to base anything on assumptions. Maybe you knew a customer’s pain point when she first bought your product or service. But that doesn’t mean her current challenges are the same.
You could wing it, but you’ll likely end up heading the wrong direction eventually, and that burns through precious time and resources. Your best bet is to let your customers’ feedback guide you.
But don’t stop there. Once you have that feedback in hand, use it. Whether that’s updating a help desk process to make the experience smoother or tweaking the regularity of your loyalty program newsletter, it will only serve to strengthen the relationship with your customers.
5. Make It Personal
Too often, it’s easy for a company to treat their customers as no more than checkmarks on a list or a credit card number. The reality is, though, that you’re dealing with people. And those people are demanding exceptional experiences.
By placing an emphasis on personalization, you show customers that you understand they’re individual people — not a random entry plugged into the machine of your business. That makes them feel special and cared about.
However, personalization cuts both ways. As much as you need to consider the human element of your customer communications, customers want to know they’re not interacting with an impersonal entity.
Sending targeted offers and personalized messages are two excellent places to start. We’ll cover the “how to” details in the CRM section.
6. Stay in Touch
If you want loyal customers, you need to spend time building a relationship with them. It doesn’t need to be complicated — in fact, you shouldn’t be so intent on reaching out that you become an annoyance. However, showing you care about each customer will foster the warm sort of relationship that will keep customers around.
7. Catch Customers Before They Say Goodbye
It doesn’t take much to send customers packing. Any number of things can cause customer churn, from rude staff to slow responses. In fact, eight in 10 people will leave if they have a poor customer experience.
Not to worry; you don’t have to stand by helplessly. The key is to pay attention to the signals. If you notice a trend such as lower engagement, which suggests customers might have mentally checked out and are headed for the door, take action. Send a survey to get a reading on where they’re at or cue up a short email campaign.
8. Give Customers the White Glove Treatment
We’ve all been on the receiving end of bad customer service experiences, so it should come as no surprise that providing top-notch service is one of the best ways to retain customers. In fact, subpar customer service is enough to drive seven out of every 10 people away from a company.
Turn the coin over, however, and you’ll find a correlation between great customer service and happy customers. Nearly 80 percent of Americans consider friendly service and knowledgeable help among the top factors of a positive experience, according to a 2018 PwC survey.
Unfortunately, that same survey also revealed that companies have a difficult time meeting customer expectations. A gap exists between the satisfaction level and the level of importance people place on customer service.
What does that mean for your company? Closing that gap should play a central role in your strategy, and doing so will help you retain more customers.
How CRM Software Aids Customer Retention
A strategy is only useful if you have the means to make it a reality. That’s where CRM systems enter the picture. Here are some examples, based on the strategies above, of how you can use a CRM platform to execute your plans.
Seamless Data Storage
Everything starts here. Without data, you’re navigating the rocky customer landscape blindfolded. A CRM uses contact management features to provide a central, secure warehouse to store your reams of customer data.
Whether you’re gathering data from landing pages on your website or connecting with social media platforms to extract additional info, you can keep your data under one roof for easy management. From there, you can access relevant information that drives the execution of other strategies.
Data shouldn’t exist in a vacuum. Simply storing it (because that’s what everyone does) isn’t enough.
Once your CRM has pulled in customer information, analyze it with business intelligence tools to glean insights. Dashboards provide a summarized view of important metrics so you’re always up-to-date. This arms you with information that allows you to effectively implement your retention strategies.
Here are a few ways you can make that happen:
Personalize your interactions. A CRM allows you to store customer information in profiles. You can access that data to personalize the communications you have with customers. Think things like sending emails using their first name or offering a special discount on their birthday.
Boost engagement. If you don’t want to be shouting into a black hole when you send campaigns to customers, campaign analysis features can help. They let you track how well your campaigns perform for a variety of factors.
For example, you can test two different subject lines to see which results in a higher open rate, or design different CTAs and watch which one earns a better click-through rate. Such insights make it easier to optimize future campaigns so you’re sending content that people are more likely to engage with.
Customers who are more engaged are way more valuable to your business, according to research. They’ll buy significantly more often and spend up to 60 percent more on each transaction. Plus, they’re five times more likely to only buy from your company in the future.
Talk about ROI.
Identify top customers. With a window into every transaction, you can monitor which customers are the most loyal. It’s then easy to build a loyalty program, where you reward your best customers with additional perks to make them feel valued. And that contributes to a first-class customer experience.
Build a customer journey map. Maps have lots of data — cities, roads, national boundaries. Your customer journey map is no different, only it uses the data in your CRM to sketch the big picture of how customers interact at every point from marketing to customer service. Such insights enable you to create an accurate map that helps you be more customer-centric.
With your data tracked, you get a clear view into customer habits, patterns and more, which informs your understanding of customer behavior. When combined with marketing automation features, this helps you avoid customer churn.
Let’s use a specific example. A company that sells high-end outdoor apparel notices that a large portion of customers haven’t bought anything in the past year.
Using their CRM, they set up a special promo offer for 20 percent off during the first week of summer. They send this campaign to that particular segment with the goal of convincing them to take advantage of the sale and remain customers.
With segmentation and custom campaign options, you can define the criteria for who receives the campaign and target any type of customer group you need to.
Providing high-quality customer service is one way to keep your customers coming back for more. CRMs have knowledge management capabilities to make this easier on your teams. Any new employees can get up to speed quickly and you can be confident they’re putting their best foot forward on behalf of your company.
Knowledge management also provides a way for your company to standardize customer service responsibilities. That way, customers receive a consistent experience, whether they’re interacting with a seasoned veteran or a team member who’s only been on the job a few months.
Let’s stay on the customer service theme. When issues arise, you need a way to handle the activities involved in resolving the problem. That’s where case management features come into play. They let you:
- Store interactions in a central location
- Gather requests via a ticketing system
- Track issues from open to close
- Assign issues to the right support members
- Monitor outcomes to ensure your team is resolving issues in a timely manner
The entire system is automated. So rather than getting caught up in manual tasks, your support team can focus on problem-solving and giving each customer their full attention.
Case management tools also help manage SLAs. Besides the mechanics of building and distributing SLAs, a CRM provides insight into KPIs for your SLAs and makes it easy to monitor cases within a specific SLA. The ability to track performance lets you identify any areas that are lacking.
We’ve already established that you need to ace your customer service. Luckily, CRM systems have a number of features to make that job easy.
One way is by integrating with your help desk software. This gives your support team fast access to a customer’s file information and ensures they always have the right data. That frees them to focus on solving problems and personalizing the interaction.
Social media integration is another useful tool at your disposal. Connecting your CRM and social channels allows you to monitor how customers engage with your content. You can pinpoint customers who may be primed for additional selling, based on their engagement pattern, and you can use these insights to optimize your content by weeding out the types of posts that don’t perform as well.
Integrating your CRM and social media also enhances your support capabilities. You’ll gain a window into any complaints that surface and be able to meet customers on the platforms they frequent so you can solve their problems in a timely fashion. Plus, by coming to them, you’ll build rapport and show you care enough to deal with an issue in a way that’s most convenient for them.
Marketing automation is your go-to tool here. Your CRM may have a built-in module, or you may need to integrate a separate platform with your CRM. Whatever the case, marketing automation provides you with a world of opportunities.
You can lay out campaigns of varying complexity and fully map the journey of your customers. Combining marketing automation capabilities with your data analysis allows you send campaigns that take advantage of cross-sell and upsell opportunities.
For example, if a company was selling electronics, they could pull data to find which customers recently purchased a new desktop and send an email offering accessories such as a Bluetooth keyboard and mouse.
Because you have full control over what triggers an email sequence, you can also ensure the right people are receiving the right messaging. In other words, no sending irrelevant (read: annoying) content to your customers.
The Wrap Up: CRM Paves the Way to Customer Retention
If you want your company to grow, retaining existing customers is one of your best options. Not only does it cost less than acquiring new customers, it also gives your revenue stream a rejuvenating shot.
But you have to put in the work. By laying out a customer retention strategy and then using CRM software to help you execute, you’ll give your business firm footing in an often unstable market landscape.
Because strategy and execution go hand-in-hand, you need to ace your CRM selection. There are plenty of solutions out there, but which one will offer the best functionality for your business? To help answer that, we put together a free CRM comparison report. Grab it to get insights on vendors that will help inform and speed up your search.
A CRM system is one of the pillars that supports your business. You owe it to your organization — and more importantly, your customers — to find a solution that’s a perfect fit.
How do you see CRM and customer retention strategies working together to help your business? Let us know in the comments!