Retention refers to preventing customers from leaving. The goal is to encourage them to continue using your service, product or app.
It is the concept of creating customer loyalty, taking them down the funnel past the purchase into advocacy, and maximizing your profits. Retention starts with the first contact or first visit; it does not start with the purchase.
Acquiring a customer costs 5 to 10 times more than retaining an existing customer.
Retaining a customer means spending money on qualified prospects, those who have already been proven, rather than shots in the dark brought in by acquisition. By encouraging retention, you increase revenues without having to increase the number of customers.
Before you begin trying to create a retention program or strategy, you need to get a handle on your numbers. Typically, 20% of your customers will bring in 80% of your revenue, but many businesses spend most of their time investing in the wrong category of customers.
With your numbers identified, you will be able to analyze and choose the best retention strategy for your customers.
Beyond retention strategy
Once you decide on a strategy, distinguishing between behavioral intentions and actual customer behaviors is important when looking to measure retention. Looking at repurchase intentions versus customer satisfaction, for example, will help measure retention success.
Unlike with acquisition or conversion, you must focus on more than the product. Retention relies on how you service customers and the reputation you create, in addition to the product. You must exceed your customers’ expectations of service to retain them. Do what customers need and your competitors don’t dare to do.
Retention and user experience
Retention requires a personalized user experience:
- Personalize their experience by using their name
- Give recommendations based on items purchased, shopper experience, or interests
- Reward your best customers
- Send emails with tailored discounts based on pages viewed or previous product interests
- Send reminders or unique discounts for items abandoned in carts
- Send gifts like extended subscriptions or trials for premium services
- Use competitive shopping with rewards earned for activity
- Utilize mobile apps or other channels
- Offer 24/7 contact such as through an online chat module or toll-free number
Customized user experiences give you the opportunity to engage with your target customers and offer an immersive cross-channel experience they will enjoy. For retention to be successful, you should focus on an authentic commitment to relationships rather than sales.