Why you should be focusing on consumer retention

Why you should be focusing on consumer retention

The average business loses 20% of its customers each year, and with some high volume businesses, as much as 90% of customers only purchase once.

When you focus on customer retention, the benefits compound over time and can increase by as much as 10% year on year. What’s more, increasing customer retention by as little as 5% can yield between 25% and 90% in profit increases. In consumer electronics particularly, profit per customers increases by 20% by the third year if retained as a customer. Pretty compelling figures don’t you think?

Building a retention strategy:

There are five key elements to a retention strategy:

  1. Relationship

Like any person you have in your life, you need to focus on building a relationship. And this means two-way communication and focusing on what makes that person happy.

Your retention strategy should ensure that you communicate regularly, giving your customers opportunities to engage with your brand and to share ideas and experiences. How you do this varies depending on what industry you’re in, but rather than ticking boxes in creating content, think about how it could achieve this goal.

  1. Start Small

Don’t try and achieve all your goals all at once, start small and test – see what your audience responds to and what it doesn’t. There’s no magic wand, but there are core strategies that work.

Focus on a core segment of your customers, and try different approaches to see what they respond to.

  1. Buyers Remorse

There’s a key band of time post purchase where you have the ideal opportunity to make your customer appreciate what they’ve just purchased, particularly for higher end brands (B2B and B2C by the way). Providing the customer with something unexpected (in a good way!) means they will feel reassured they have made the right choice, it could be as simple as a welcome pack, or a follow up call or note to check everything is OK for example.

  1. Magic Moments

Small gestures that don’t cost the earth go a long way with customers, remembering their birthday, or the anniversary of a big purchase, or recognising they are a West Ham fan when West Ham win the cup.

You’ll need a plan for how to collect that data, and how you’ll use it (ensuring GDPR compliance of course) to make your customers feel just that little bit more special.

  1. Feedback Loop

Somewhat related to point 1, the Feedback loop is critical. Make sure your social channels are monitored regularly to pick up real-time customer feedback or comments. After a particularly awful experience renting a car with Green Motion, I shared my story, real-time on Twitter, hoping for a response. I tried “wry amusement” rather than “bitter pill to swallow” , and while I had some comments from other customers, to this day (12 months on)  I still haven’t had a response.

BA on the other hand are great at this, I’ve resolved numerous queries, and had my frustration at delayed flights salved by their highly responsive Twitter team. (You can follow me @weblet71 if you like).

You’ll need to think about your audience when it comes to deciding which strategy will work most effectively for your retention strategy, make sure it’s relevant and appropriate for the purchases the customer is making.

Considering that 86% of consumers would pay up to 25% more for a better customer experience, then you’d be daft not to really.

At Varia Solutions we can guide you through and help you manage effective customer retention strategies. Contact us to find out more.

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