4 Ways To Drive ROI By Increasing Customer Retention Rates

Posted by Emily Smith on May 29, 2019
Emily Smith

customer retention rate

Increasing your customer retention rate has a direct correlation to ROI. But where to begin? Start by increasing customer engagement with these 4 steps.

 

What’s the difference between companies that grow and those that don’t? The deal- breaker: customer retention.

You know that driving revenue is often a company’s key priority - and that means retaining new clients. It’s repeatedly said that keeping existing customers is 5x cheaper than acquiring new ones, which makes a sound customer retention strategy (through loyalty, valuable customer relationships, and increased user engagement) essential. More importantly, the success rate of selling to existing customers vs new customers is three times more likely!

OK, but where to begin?

Whether you’re a seasoned marketing director or customer experience novice, these 3 customer retention strategies will set you on your way to building engaged customer relationships – that elusive goal – a reality.

1. What’s Your Brand Promise?

Successful brands are those which have invested time and effort into building a brand promise that ties directly to its customers, which in turn drives loyalty based on shared values. To identify your brand promise, and measure the health of your customer service satisfaction program, establish a few ideas clearly:

  1. what you make (SaaS , insurance, etc.)
  2. the product category (online focus group, health insurance, etc.)
  3. customer type (market researchers, families with children, etc.)
  4. market location (global, rural America, etc.)
  5. actionable motivation (in a quick-moving startup market, during hard times, etc.) 
maintain brand promise

Understand the unique selling point that your brand repeatedly offers to customers, and use that to derive how you should position messaging to your customers in a way they emotionally identify with. Your brand promise is the mission, vision, and core values of your business – and it’s definitely much more than a tagline.

Uniqlo - a Forbes’ Most Valuable Brand - is one example of a brand that has established a clear brand promise: to “inspire the world to dress casual.” Uniqlo’s delivery system supports its creation of simple, essential and universal clothing - by hosting its planning, design, manufacturing and distribution capabilities in-house, Uniqlo stays close to customer needs and ensures affordable prices. And, they always follow through.

With its clear brand promise, Uniqlo has boosted its customer retention rate and become a household name for clothing worldwide.

2. Customer Feedback Is Key

According to Inc., almost 90% percent of shoppers trust online reviews as much as friends. Customers connect especially deeply with online reviews, because it’s an accessible source of credible information that they can trust - this applies even for brick-and-mortar stores and service-oriented businesses.

Customer review strategies, as a result, have become a key priority.

After customers have gotten your product and gauged satisfaction, suggest that they write reviews! Your time is valuable, and so are your customers’, so make sure you’re giving them a reason to leave a review. Offer incentives to your customers, like a discount or coupon code, entrance into a contest or gift cards for online shopping.

G2 Crowd, for example, is a brand that understands the importance of reviews and takes action on it – if you write a review of a software that you use at work, you stand to win a $10 Starbucks gift card!

customer feedback survey

What gets measured, gets managed. Actively measure customer reviews to understand how they experience your product, and establish benchmarks of success for responding to their needs. For example:

  1. Use a Customer Satisfaction Score (CSAT) or Customer Effort Score (CES) as an alternative to Net Promoter Score (NPS) to understand whether customers would recommend your product to others
  2. Ask customers to rate their satisfaction regarding the way their request was supported
  3. Calculate your customer engagement rate by looking at the number of people who tag your brand or interact with you on social media.

This is valuable customer feedback in its most direct and raw form!

3. Guarantee Customer Service Satisfaction

Customer retention is all about showing customers that you care. So, what’s the best way to do that?

We know that social media platforms have become core ways in which customers express their opinions and feelings towards brands, whether positive or negative. Show customers that you acknowledge and care about their experience by responding immediately, which is a simple way to provide great customer support. For example, consider splitting your Twitter accounts into a “brand” account and a “customer service” account, like Nike.

Relationships between brands and consumers are solidified by rapid response times. Nike demonstrates endless patience with customers’ requests despite mass volume. With a Twitter account dedicated solely to solving its customer’s problems, Nike provides support all days of the week and in multiple languages (English, Spanish, French, Dutch, Italian, German & Japanese.) And, the support language is branded, which means the brand experience carries over into customer feedback management.

customer service satisfaction on social media

Spotify is another example of a company that treats its customers right on social – in addition to a dedicated support account, Spotify gives specific instructions to customers looking for help. Take their tech queries advice for example: “‘For tech queries, let us know your device/operating system. For payment queries, drop us a DM!”

Laying out the key metrics for social media support can be especially useful for this. A few helpful metrics include:

  1. Response Rate: On platforms such as Facebook and Yelp, this is visible to customers and can determine their perception of your business and how likely they are to engage with you.
  2. Sentiment Analysis: Measure the number of positive, negative and neutral engagements you have.
  3. Popular Keywords: Monitor the top keywords and topics related to your search to better understand how people view your brand. This is a great way to establish benchmarks for user intent and audience interest.

Connecting on social is crucial, not only in developing that relationship with happy customers, but identifying unhappy customers and addressing their concerns before they churn. With a touch of personality and personalization (take a leaf out of Netflix’s book!), you’re set to follow through on your brand promise, and increase user engagement as a result.

increase user engagement

 
4. Measure Historical Customer Churn Signs

If your customers are engaged, they’ll stick around longer. If they aren’t engaged, it’s time to assess the problem. Figure out:

  • Where you’re losing customers

If it’s unclear at which stage of the customer journey you’re losing customers, or it’s difficult to measure the stage at which you acquired them, it’s time to deconstruct your customer life cycle and establish benchmarks for each stage. If this method is new to your company or department, it’s possible that you’ll find multiple issues within the customer life cycle and a clear reason for customer churn.

You might notice, for example, that customers drop out during the onboarding process because signing up takes too much time. Or that customers who complete a free trial without upgrading their subscription believe the product value is not clear.

  • Why you’re losing customers

Unpacking your customer life cycle makes calculating customer churn rate easier, but it doesn’t establish why customers take certain actions. Give your customers an outlet for feedback and listen to their biggest complaints.

Try installing chatbots like Drift to automate common customer feedback issues, or installing customer journey analytics platforms like Full Story, which visually tracks the way a customer navigates your website. If you know that customers begin onboarding but never finish, you might discover that your sign up page is broken - an easy fix!

  • If you’re targeting the right audience

Identifying the correct audience match is one of the most difficult challenges for marketing teams and executives alike. Although a common suggestion is to interact with other teams like sales and customer success - because they interact closely with customers - that tactic can sometimes be inefficient or difficult to accomplish if knowledge holders spend most of their time in meetings.

Alternatively, look to raw data (like the U.S. Census or Facebook’s Graph API) for unique customer insights, or even broad demographic information from places like Google Analytics that might influence your customer personas in an unusual way.

Next Steps

According to Salesforce, businesses should aim for at least 85% of customer retention rate for a business to remain scalable; this varies from business to business, which is why it is crucial to monitor your own customer retention and user engagement rate every month, identifying strategies that work best for your product and industry.

Ready to take customer feedback to the next level? Check out our full eBook: 4 Innovative Ways to Customer Feedback Challenges [With Examples]!

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Topics: Customer Feedback, Customer Engagement