We have talked millions of times about why it is important to work with a reputation, monitor the quality of the services provided, and generally be sweethearts with your customers for a reason. And it’s a no brainer that a user who has already dealt with you and was generally satisfied with a high degree of probability will contact you again. This is more than logical: why look for something new, unknown, devil-knows-what, when there is already familiar, dear, your own? So we think that there is no need.
According to statistics, marketing research, as well as some experience of crying, we can safely say that retaining old customers is much cheaper and easier for companies than attracting new ones (oh, this 2020 – probably, there are no companies left in the WORLD that would not have to jump with tambourines, dance ritual dances to attract at least some tiny client).
Don’t take my word for it? Well, then let’s not be unfounded and back up everything with extracts from authoritative sources:
- 86% of customers with extensive shopping experience are more likely to buy from the same company again;
- current clients bring companies about 65% of the profits (this is much more than half, by the way!);
- the probability of selling to the current client is 60-70%, and to the new client only 5-20%;
- loyal customers spend 67% more than new ones;
- attracting new customers is 5 times more expensive than retaining existing ones;
- Building a long-term relationship with a new client costs 16 times more than maintaining existing ones.
Thus, all of the above demonstrates why it is so important to retain customers. How to do it? You can, of course, lock them up somewhere in a dark basement, handcuff them to a radiator and force them to buy, buy, buy from you endlessly …. But this is not legal. The article has collected a number of obvious and not very options on how to keep clients close to you for the longest possible period. But first, a little theory.
How do you know if you’re not keeping customers well enough?
Probably, each of you is familiar with such concepts as Customer Retention Rate and LTV. If you see these letters and words for the first time, then we will explain.
Customer retention (literally from English “customer retention”) is the ability of companies to maintain long-term relationships with customers. The higher this criterion, the better. This means that buyers will be happy to contact you for a purchase or service again and will certainly recommend you to friends and family. However, this very ability must be constantly monitored and kept abreast. Customer retention rate (customer retention rate) is a metric that allows you to understand how effectively all of your customer retention tools are performing.
Customer Retention Rate (CRR) is calculated as follows:
CRR = (number of clients at the end of the period – the number of new clients for the period) / number of clients at the beginning of the period
Simply put, CRR is the customer retention rate. It demonstrates how well and how effectively you are working to ensure that customers are happy with you and will contact you again. The norm is considered to be in the region of 6%, excellent – 35% or more.
The indicator goes along with the Customer Retention Rate Lifetime Value (LTV). LTV is the very profit that a client brings to you for the entire time of interaction with you. The indicator is calculated using the following formula:
LTV = income per period / number of clients per period
Why do you need to track LTV? Everything is logical: this indicator allows you to assess the effectiveness of all the measures that you take to retain customers, as well as determine the current level of customer loyalty. Based on LTV metrics, you will understand how you can and should change business processes so that customers stay with you as long as possible, as well as personalize your marketing strategy for customers with different LTV values.
This is not all. There are a couple more metrics to look out for when working on customer retention.
Churn rate (also known as churn rate) is the number of people who, for whatever reason, stopped working with your company. It will be enough for small and medium-sized businesses to calculate this indicator once every six months or even once a year. If you are a big guy, then we recommend keeping your finger on the pulse constantly and fixing the indicator on a monthly basis. You can calculate this metric using the formula:
Churn rate = the number of customers who left for the period / the total number of customers for the period
As you yourself probably guessed, this figure should be as low as possible.
Net promoter score (NPS) – customer loyalty level. This indicator is usually understood as the willingness of customers to recommend your products or services to their friends and acquaintances. In this case, no calculations and formulas are required. It is enough just to ask your clients a question: “How often do you recommend us to your friends and acquaintances?” and offer them a 10-point scale as an answer, where 0 is never, 10 is very often.
By the way, we are monitoring NPS very closely. In each application, we ask customers to evaluate the quality, and then we propose to leave a review so that, if anything, we can understand what we are doing well and where we are wrong. As a rule, 9 and 10 are given by the most loyal customers, 8 and 7 are passive customers, but who are generally satisfied with you, from 6 to 0 are the so-called ill-wishers.
You can calculate NPS using the following formula:
NPS = number of loyal customers (%) – number of detractors (%)
Ideally, we recommend tracking the performance of all these metrics, closely monitoring the dynamics. If you find that the indicators are becoming far from the norm and that they are leaving you, like Timati from Black Star, then try to change the tactics of customer retention. The most popular ones are listed below.
10 ways to keep a customer
Working with feedback
Be sure to collect reviews from customers. Also, don’t just learn listen, but also hear clients. Often, in their complaints, they not only pour out their resentment and discontent, but also point you to specific errors and problems in business processes – read the reviews carefully, there is a lot of useful information you can find there. By the way, we remind you that you need to process the negative also wisely. How exactly – read the article.
Product trials and / or free useful tools
Trial versions are, rather, an option for customers who have just come to you and are not yet ready to give you a lot of money right away. The user needs to understand if there is any value in your proposal. Various streaming services (music, cinemas, libraries, etc.) often use this kind of technique. For example, Spotify, which launched in 2020, offers 3 months of free subscription.
Here we are not talking about the notorious discounts for regular customers. There are options that are more interesting and work much more efficiently. For example, a loyalty program or the accrual of any bonuses / buns, cashback, which will subsequently allow customers to receive a product or service either completely free of charge or for very little money. Airlines offer to accumulate miles: a certain number of miles is credited for each flight, which can later be used to pay for the ticket. Or not just a ticket – with S7 miles, according to their S7 Priority loyalty program, you can pay for baggage transportation, seat selection or transfer to business class.
Convenience and ease of ordering
You will probably be surprised, but in fact there are thousands of sites on the Internet where it is so difficult to place an order that customers can not stand it, give up this whole bad job and go to buy where a minimum of action is required of them. Even if the second offer will be inferior to the first in price. And please, no kilometer shapes!
Instead of registering an account, offer authorization through social networks, and, if possible, automatically fill in some fields from the order form (if the user has already contacted you).
How long a client stays with you also depends on a quality support service. Pay attention to users before the purchase, and after, and during. Be attentive, friendly, patient. Do not leave the client alone with his problems if he simply does not understand which button to click on your website to see where his package is now.
Work anticipating expectations
The client is always pleased if you do not just perform a service or provide a product, but also do something that the client does not expect at all. For example, when buying a cabinet, offer a free assembly, or when ordering from an online store, add something to the order. Each time one of the Internet shops in Irkutsk puts something with a sticker “Just like that” in a package with an order. A trifle, but nice. And I want to buy something again. After all, everyone loves gifts, right?
Personalization of offers
Here we are talking not only about the standard address by name and mailing with congratulations on your birthday. Everything is much wider.
We recommend reminding customers about unfinished orders, viewed products. Notify that there is a discount on the product that he added to his favorites.
Collect customer information, analyze their purchases, wishlists, favorites, product views, and more. All this will help you make personalized recommendations that will be of interest to a specific user.
ASOS works well with personalization. For example, the site sends such mailings after you first looked at an item, but did not buy:
ASOS also makes personal selections of things that you might like. And you know – they really like them.
Motivate and reward customers to tell customers about you. Affiliate links, discounts, bonuses for each brought friend, promotional codes – all of this works for sure, but provided that your client is happy and ready to share it with his friends and acquaintances. If he is not satisfied, then all this did not give up to him for nothing.
This works well for Airbnb. Share your referral link with your friends. They use it to create an account for themselves, book accommodation for a trip. Friends welcome bonus, you just a bonus for the trip. I will not specify the amounts. There is a feeling that in 2020, due to the pandemic, the rules have changed.
By the way, we also have our own referral program – we advise you to take a look.
Promotions and discounts
This, of course, is well known, but still we repeat. Oh, this sweet word “Sale” – there is hardly a person who at least once in his life did not fall for him. It seems that you don’t need this product now, but a good discount or an interesting promotional offer forces the client to apply again.
Your clients are definitely serious adults. But from time to time they need to be distracted, to switch their brain from pressing questions to entertainment. Add games, quests, tests and more to the site. You can link them to your marketing plan, loyalty program, calendar events, etc. Also, with the help of gamification of content, you will play well on virality and reach – users will share on social networks, tell their friends and subscribers about you. We have a long blog post on this topic.
Let’s take Ascona as an example. Most recently, they offered a game in which you have to catch pillows and get up to 3,000 bonuses to your account.
Of course, these are not all ways to keep a client on the Internet. There are much more of them. In the article, we have listed only the main ones. It must be remembered that the main profit of any company comes from regular customers, so take care of them and value them. Be sure to track CRR, adjust and build a marketing plan based on its data, and also constantly improve the quality of the services provided or the product sold.
If customers do not stay on your site – contact us, the whole team will think over a plan to retain customers.