There are so many different tried and true methods that your business can improve its customer retention rate. Below, we will review a few of them.
Start Measuring CRR
Despite the importance of CRR, 44% of businesses don’t measure it. You can’t improve what you cannot quantify, so the first way to improve your CRR is to make sure that you’re measuring it. You don’t need to be a data scientist or a programming wiz to start collecting, analyzing and acting on customer retention data and there are plenty of tools on the market that simplify and enhance the process.
Collect and Act on Customer Feedback
Surveys provide you with feedback directly from the people who you are trying to learn about. A survey can provide you with the extra details that you can’t see from usage data, help you understand the “why” and “how” of the trends that you’re observing and equip you with the insights needed to make your next move a smart one.
For example, if a customer cancels their subscription to your service, you can prompt them to take a survey to try and discover why they left. With enough feedback, you can make changes to your services in the future to prevent other customers from churning in the future.
Focus on Acquiring the ‘Right’ Customers
If you want to maximize your CRR, then it makes sense to target prospects who are identical to your loyal customers and avoid those who are most likely to churn.
Sticking with our dog walking application as an example, let’s say you are digging into the customer retention data and you notice that our most loyal customers are predominantly single, aged 24 to 35, make over $75,000 per year and live in the heart of cities. You also notice that most customers who churned recently had switched their relationship status to “in a couple” within the last six months.
With that in mind, you create a targeted campaign pointed at Facebook users that fit in those parameters but ignoring anyone who has recently switched their relationship status. By focusing your efforts on customers that are less likely to churn, your CRR will gradually increase over time.
Predict and Stop Churn Before it Happens
Another useful strategy for reducing churn is to use your customer data to predict when churn is likely to occur and take steps to prevent churn from occurring.
Let’s say we are running an online coffee co-op with three subscription tiers—each with a wider variety than the last. We notice that when top- and mid-tier customers that have subscribed for less than six months reduce their order frequency, narrow the number of blends that they order and complain about the price of the service, there is a high probability that they will churn when their subscription is due for renewal, even if they like the coffee that they do order.
Armed with this knowledge, you configure your customer relationship management (CRM) platform to email customers who fit this profile with a renewal offer for a lower-cost tier automatically. That way, customers are able to continue consuming the products that they love, but don’t have to pay for a higher-tier subscription to enjoy it.
Loyal Customers Like Customer Loyalty Programs
Customer loyalty programs are a proven winner when it comes to making sure customers stick with your business. According to The Loyalty Report, 80% of customers said that they would continue to do business with a brand because they offer a loyalty program and 68% of customers said modify the amount that they spend to maximize the benefits that they receive.
Not all customers are equal. Some are more likely to praise your brand than others. Some spend more money with you than others. Some are more likely to buy your other products. But it turns out that, if they are a repeat customer, then they are likely to do all three. This is why CRR is so important. It helps you achieve the thing that all business owners want: more customers who spend more money and who advise others to do the same.