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3 Ways Marketers Can Improve Customer Retention Rates
According to Greek mythology, Sisyphus was doomed by Zeus to spend eternity pushing a boulder up a hill — only for that boulder to roll down again as soon as it reached the top. Well, marketers may start to feel similarly about putting in time, effort, and funds to acquire customers only to see many of them leave soon after.
Then, as in the case of unfortunate Sisyphus and his boulder, the process must begin all over again. Thankfully, marketers absolutely have the power to break that cycle and improve customer retention rates. Here are three strategies to try.
Understand the Causes of Customer Churn
Customer churn, in addition to being a major frustration, is costly. Harvard Business Review cites Bain & Company research showing that increasing customer retention rates by just five percent increases profits by 25 to 95 percent.
In other words, there’s serious value in retaining existing customers. One way to go about doing so is by understanding why customer churn is occurring. This lays the foundation for teams to implement targeted solutions.
With the help of advanced marketing data analytics, marketers can dig into patterns in customer behavior to better understand exactly who is leaving, when, and why. Search-driven analytics tools allow marketers to input specific queries. In contrast, artificial intelligence-driven analytics can help fill in some gaps by unearthing trends and anomalies related to customer behavior teams that may not have yet noticed.
I believe a great infographic to include for more information would be Preventing Passive Customer Churn. Passive churn is an involuntary cancellation of a service such as a billing error or mechanical issue.
Infographic created by Fiserv, an omnichannel commerce company.
Although some degree of churn is inevitable for every business — and some customers will depart for personal reasons — HubSpot points out a few common categories to consider:
- Price: If customers find a more cost-effective way to meet the same need or want, they may leave your company for a competitor. This underscores the importance of providing customers with value and communicating that value to them throughout the relationship.
- Product/Market Fit: Marketing to people who are ultimately a poor fit for your product or service almost inevitably fuels churn. This speaks to the need for more relevant messaging to more on-target customer segments.
- User Experience: Difficulty using your products or services reduces customers’ incentive to build a rapport with your company and stay for the long haul. This calls for putting yourself in their shoes to find the pain points and eliminate them — as well as providing the information patrons need to benefit from your offerings.
- Customer Experience: Customers who feel your company’s communication across channels fall short of their expectations may decide to leave. Think about what you can do to make new and returning customers feel seen, valued, and welcomed into your brand community. Customer service and social media messaging are huge here.
To get a handle on churn, your marketing team must understand what’s fueling it and which customer segments are most affected. Armed with this knowledge, it’s possible to implement targeted solutions.
Continuously Strive to Engage Customers
Far too many brands start strong when it comes to customer relations — sending that perfect “Welcome!” email to every new buyer or subscriber. Then the communication after the initial kick-off starts to resemble crickets chirping — that is, there’s little to no consistent meaningful engagement happening.
When in doubt, connect with customers in a highly personalized manner. For instance, you could design a brief — and fun — quiz for visitors to your website, then offer hand-picked recommendations based on their answers.
There’s also no such thing as too much valuable, interesting, and helpful content to help people get the most out of your offerings. It’s also nice to check in once in a while on people who have not purchased in a while — not to push them to buy something but to see if there’s anything your brand can do to further take care of them.
Optimize Your Loyalty Program
Last but not least, treat your repeat customers like the special and valuable benefactors they are. Use marketing analytics to mine insights about customer behavior and preferences, then use those findings to improve your loyalty program.
Monitor the effectiveness of your actions through metrics like customer lifetime value and redemption rate. Aim to make your loyalty program share-worthy — not only will your customers want to participate actively, but they’ll also want to refer their friends. Marketers today have everything they need to improve customer retention rates and reduce churn — advanced analytics, a plethora of channels for engagement, and the know-how.