Customer retention is critical for the survival of every brand. To retain customers successfully, businesses need to keep their brand fresh in the customer’s mind and be committed to giving them reasons to stay. But how can you stay top of mind, if customers don’t engage with your brand daily? Firstly, remind customers regularly of the benefits they receive being a customer, and give them a reason (incentive) to choose your brand over your competitors when renewal time comes around.
Why offer incentives?
Investments need to be made in both acquisition and customer retention strategies; however, it is far more expensive to attract new customers, when compared to retaining existing ones. Companies also attain significantly greater value and returns from retained customers. The highest customer lifetime value is found with those who feel loyal to a brand – so it makes sense to put the greatest portion of your marketing efforts into customer retention.
There is a legitimate and tangible link between the investment and the return. Existing customers are more likely to:
• Try new products or services
• Buy products and services
• Spend more money with your brand compared to new customers
Research conducted by Marketing Metrics shows that the selling success rate to new customers is 5-20%. For existing customers, the selling success rate leaps up to 60-70%!
The biggest challenge that companies face is knowing where to begin. The truth is that you will need to earn customer loyalty first, and this means implementing the following proactive strategies.
Extending your brand reach
Why: Your brand cannot form relationships where it has no voice. You can invest heavily in website development and awareness campaigns, but your customers can reach other prospects that you have no direct influence over.
How: Brand reach is most powerfully expanded through word-of-mouth recommendations. People share their experiences online and outside of their circle of friends and family. Through social media, review sites, and forums, your customer becomes your spokesperson and brand advocates, which means that the money spent on customer retention is also money spent on customer acquisition!
Why: Historically, financial and economic stress has a significant impact on businesses that are not perceived by their clients as offering value for money. If the business-client relationship is not founded on reliability, value, and a proven track record, then business growth, goals, and renewal targets are impossible to achieve. If you can support customers as you both work through financial downturns, then a positive business environment is set for the future.
How: You should start by building in value right now. Successful strategies include identifying which products and services clients are not utilising to their fullest. Engage with these customers to drive awareness and provide training on these features. You can widen the reach by encouraging customers to share what is working for them across online communities. Offering limited-time access to products and services is an excellent value-building strategy for ushering in the adoption of new services.
Why: People interact with hundreds of brands daily, so companies must create an emotional connection to create loyal customers. By focusing on nurturing existing customers, an unconscious habit and automatic response are formed, and the client naturally turns to the company for renewals and new services.
How: Companies must do what they say they will, which means following through on tasks, keeping appointments, and resolving issues. Tracking every customer touchpoint ensures team members keep their promises on time.
Spotting churn rate signals
Why: If you do not know that your customer is thinking of leaving, it will be impossible to counter this intention.
How: The most effective strategy to lowering churn rates is to listen and detect the signals that hint that a customer may be considering a move. Numerous metrics can be monitored to detect these signals, including changes in the number of customer service enquiries and dips in purchase patterns. When these metrics change, it is imperative to contact the customer and discover their reason.
When to incentivise renewals
Why: Renewals do not need to wait until the contract has expired. In fact, waiting until contract expiration is a recipe that produces high customer churn rates. An early renewal incentive is one of the strongest tactics. Encouraging customers to renew early, gets their buy-in while they are under contract and before they have the opportunity to move elsewhere.
How: Your customer’s future decisions are built upon what happens from onboarding and day one. You should offer value, deliver on promises, and strengthen the relationship throughout. To continually strengthen your case for renewal, you should track and assign health scores to customers, identify risks and opportunities, and automate service driving strategies. Your pre-contract expiration renewals should be driven by an assessment and identification of no-risk and at-risk customers. The value of renewal incentives should reflect the determined level of risk.
Why: Any barrier to renewal adds to client-loss-risks, and responding on the day presents a danger. A lack of planning leaves your renewal team blind, unprepared, and short of the time needed to resolve roadblocks that become apparent.
How: The renewal process should be ongoing and automated, where large customer bases exist. Renewal reminders should be scheduled ahead of time, celebrate past campaigns, and introduce future benefits, services, and products. Where your company works closely with customers, contact should be personalised to reflect the relationship’s importance.
How to incentivise renewals
Incentives can take numerous forms, such as service price reductions and giveaways. While both of these tactics are worth it to secure the customer’s revenue for the next term, there is an immediate impact on the bottom line. If the incentive is a giveaway, you should focus on building segmentation and demographic data to aid incentive diversification and offer the perceived value in line with customer value.
Flexing the value of incentives
Why: Some customers have a significantly higher value, and their accounts have the greatest effect on your company. To maximise ongoing revenue and profit, your focus and customer retention efforts should work hardest here. Flexibility is critical in appropriating incentives to client value.
How: Discount cards present one solution, where the card can be loaded with a monetary value equal to the customer value. Customers find them appealing because they offer savings on big brands and at large retailers. Essentially, the card has a low cost to the business and high value to the customer.
Maintaining engagement and personalising follow-ups
Why: To drive success, the business needs to be the perfect fit. The business should segment their customers, respect every client, target the right audience, resolve complaints, and incentivise renewals.
How: Retention teams should check in with clients throughout the contract term, keeping the brand fresh in their minds by reminding them of their eligibility for rewards and discounts.
According to research conducted by Econsultancy, personalising follow-ups based on purchase history and other relevant data delivers a significant ROI.
Even though acquiring new customers is key to business growth, retention through renewals can play an even greater role. It is vital for businesses don’t overlook retention and balance the scales if they intend to grow and maintain revenues through economic and financial downturns.
Customer Retention: Key Takeaways
● Build a customer loyalty program
● Use your loyalty program to upsell
● Help your clients see more value in your relationship
● Communicate with your advocates
● Reward high-value customers
● Keep your promises
● Track and automate your digital experiences
● Actively look for churn signals
● Reduce renewal friction by taking a proactive approach