Every new customer a business earns takes a lot of hard work. Keeping those customers, maximises the reward of that hard work.
Customer retention gives a huge indication as to the growth of a business, as a high or growing customer retention rate suggests a business is expanding. A lot more time, effort and resources go into acquiring new customers, however it’s existing customers that spend more and are more likely to purchase higher-value products/services.
In terms of taking those new customers and encouraging them to turn into repeat/loyal customers, there are several things a business can consider:
1. Offer Incentives
If you’re able to give returning customers a discount on your products/services (even if it’s a once a month 10% off offer or a free delivery reward), it can go a long way to encouraging customers to make repeat purchases. Some companies even have systems that after a few days, send notifications to customers that have items placed in their online basket, but haven’t yet purchased. These notifications often include discounts to encourage customers to complete these purchases. Offers can be chopped, changed, and fine-tuned to suit a customer group, increasing the chances of repeat purchases. As well as discounts, offering digital points schemes similar to that of Papa Johns and other takeaways, can also help improve customer retention.
2. Implement Cross-Selling or Upselling Strategies
Implementing a successful cross-selling or upselling strategy will need research. Understanding customer buying patterns, and which products/services they purchase in conjunction with one-another, or which add-ons they prefer, will allow your business to make informed decisions about merchandising techniques, and which should be used to draw consumer attention. As well as utilising in-store upselling and cross-selling strategies, this can also be done over eCommerce sites. Including a ‘related products’ feature will help increase the exposure of items that are generally bought together.
3. Personalise the Buyer’s Journey
It’s a simple task to personalise emails for those customers that have signed up to receive news and offers, both with the inclusion of their names, and products/offers that match their interests and previous purchases. As well as this, with eCommerce businesses, saving previous purchases and delivery details for each customer account will make it so much easier for them to make repeat purchases of the products/services they love most.
4. Meet Your Customers Where They are
Understanding your customer base, to the point where you know about their hobbies and the website’s they’re most likely to browse, will help your business effectively advertise its products/services. Display advertising has a huge potential in terms of targeting options, and allows businesses to focus their marketing efforts on a more concentrated customer group based on location and interests. This allows your company to advertise in the places your customers are already looking, with the content they’re most likely to engage with. This also rings true with social media marketing, both Facebook and Instagram have millions of daily users that can be advertised to through sponsored content and other targeted methods. Customers that have already purchased from your business can be advertised to, which keeps your brand in the mind of the consumers’ that have already had exposure to your business. It’s important to understand the content your customers want to see most. For enticing existing customers to make repeat purchases, creating commercial content that helps tell the story of your business will go far to creating an emotional connection and help encourage loyalty.
Understanding how to calculate your customer retention rate (CRR) is hugely important for understanding and forecasting your company’s growth, as well as giving an indication of the quality of your products and services, and the loyalty of your customer base. A higher CRR actually means you’re more than likely saving money, as it costs 5x to 25x more to find new customers than is does to retain existing customers. The CRR of your business can be calculated using the following formula:
Using the formula above, say you start your chosen time period with 150 customers, and you lose 10 but gain 25 throughout that time. At the end, you would have 165 customers. Working out the CRR would look like the following:
165 – 25 = 140; 140 ÷ 150 = 0.933; 0.933 x 100 = 93.3%
Whether you want to calculate the CRR from a week, month, quarter or year, the formula above will show your CRR as a percentage. The higher your percentage, the better (although this depends on your business model).
For more information and advice on how to keep your customers returning to your business, speak to us today!