In today’s competitive market, customer retention is essential for businesses to remain successful. With inflation climbing at a rate not seen in decades, individuals and businesses have become increasingly cautious about how they spend their money. (ONS, 2022) It is now more important than ever for businesses to focus on their CRM strategies to ensure customers remain loyal. Many small businesses offering products or services are concerned about retention of clients when they are left with no alternative but to increase prices to offset margin erosion and growing costs. In this blog, we’ll be looking at the benefits of customer retention, customer retention strategies, and the importance of customer loyalty programs.
Benefits of Customer Retention
There are many benefits of customer retention, and they can have a significant impact on a business’s bottom line. Here are some of the top benefits of good customer retention:
- Supports sustainable company growth: Retaining customers is a major factor in sustained business growth. It brings down expenses while raising revenue. When customers remain loyal to a business, they tend to spend more money with that business.
- Increases referrals and consumer loyalty: Customers that are loyal to a business are more likely to provide referrals and spread good word of mouth. Utilise the influence that a personal recommendation has to grow your company. Potential clients are far more inclined to believe a testimonial than a sales presentation.
- Reduces customer churn: Keeping existing clients is more cost-effective than seeking out new ones. Additionally, learning about new clients is more difficult than marketing to people you currently know well. The efficiency of a whole sales team can be hampered by a high churn rate; this is because current customers are far more likely to make purchases from you than new ones are.
Customer Retention Strategies:
Retaining customers in a high inflation environment is challenging. However, there are certain strategies that businesses can use to ensure their customers remain loyal. Here are some of the strategies businesses can use to retain customers in a high inflation environment:
- Utilise client accounts. By providing clients with immediate access to prior orders and pre-filled shipping information, accounts may make repurchasing simpler. The key is to provide customers the choice to register for an account after their initial order has been placed.
- Improve your customer service. Efficient customer service enables a business to effectively communicate with customers and provide them support. Whether a consumer contacts you on-site, having a live chat or help desk tool accessible may transform their inquiry into a sale or their grievance into a resolution. Provide opportunities for customers to give feedback. This allows customers to get involved and to feel heard. Rather than being reduced to a number on a spreadsheet, your customers will feel more invested in the business.
- Start a referral program. A referral programme encourages current customers to suggest new customers to your business. Usually, that includes some sort of incentive, like a discount code or value match deal (e.g., “Give £10 get £10”).
- Offer personalised experiences. 40% more revenue is often generated by brands who thrive in personalisation than those that don’t (Arora et al, 2021). This could involve making specific product suggestions, creating unique experiences, and providing specialised product information. Sending a discount code to new customers for after their first purchase with a is a great way to make their experience personalised. For this reason, discounting can also be an effective way to bring back customers that haven’t purchased in a while.
Once a business has identified the strategy that suites their circumstances, it’s important to develop a customer retention plan. A customer retention plan should include all strategies, processes, and goals that will help the business achieve customer retention. This plan should be made clear to all customer facing internal departments or individuals. Here are the steps to developing a customer retention plan:
The Importance of Customer Loyalty Programs
Customer loyalty programs are arguably the most important part of customer retention strategies. For a company to succeed in the long run, marketing strategies that emphasise loyalty are crucial. Loyalty programs help businesses reward their customers for their loyalty and encourage them to come back. An effective customer loyalty program transforms your customers intro brand ambassadors. Customer loyalty programmes come in a wide variety of shapes and sizes, but they generally fall into one of three categories:
Customer retention is essential for businesses to remain successful, especially in a high inflation environment. There are several strategies that businesses can use to achieve customer retention, such as developing a customer loyalty program, providing excellent customer service, focusing on customer experience, offering incentives, and developing relationships. Businesses should also measure their customer retention and use this data to make decisions. By implementing these strategies, businesses can ensure their customers remain loyal and increase their profits.
Office for National Statistics (2022). CPIH ANNUAL RATE. [online] Ons.gov.uk. Available at: https://www.ons.gov.uk/economy/inflationandpriceindices/timeseries/l55o/mm23. [Accessed 15 Dec. 2022]
Arora N., Ensslen D., Fielder L., Liu W., Robinson K., Stein E., & Schüler G. (2021) The value of getting personalization right—or wrong—is multiplying [online]. Available at: https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights/the-value-of-getting-personalization-right-or-wrong-is-multiplying. [Accessed 17 Dec. 2022]