How to increase customer retention
When you’re growing your business, it’s easy to focus on finding new customers constantly. But it’s also important to retain your existing customer base: a healthy business will often be built on the foundations of loyal customers. Below, we explore how you can increase customer retention.
What is customer retention?
To boost customer retention, it’s important to know the precise definition. Customer retention is a metric that measures customer loyalty. This is usually measured via a retention rate: it’s calculated by measuring the number of customers at the start of a certain period, versus the number of customers at the end of this time. From there, you identify the number of new customers you acquired in this period to create your retention rate. For instance, if your business starts with 750 customers and ends with 950, but acquires 625 over the period of time, the customer retention rate would be 43.3 per cent.
Why is it important?
Customer retention is crucial for a number of reasons. For a start, having a loyal customer base will make your business more durable – if you’re struggling to find new sales, you can always rely on your existing customers. Similarly, spreading awareness about your business is expensive and requires strong marketing. By holding onto your customers, you won’t have to invest so much into marketing. Finally, a strong retention rate will allow you to raise your prices without affecting your sales – as long as your increases are within reason.
How to boost customer retention
Customer experience
A positive customer experience – both online and in store – can make them much more likely to shop again with your business. You can achieve this in person, by providing friendly and helpful customer service. Whether they’re returning an item or looking for advice, you should always look to provide the best service. If you’re looking to boost customer experience online, then you could consider open banking solutions to make payments faster and more secure.
Ask for feedback
Feedback can help you tailor your business to suit your customers’ needs. One way to achieve this is through your employees: they might be able to notice patterns with returning and non-returning customers to highlight areas you can improve within the store. Meanwhile, you can ask customers for advice on what your business is missing that could allow it to compete more effectively with competitors. You could encourage customers to fill out surveys by entering each participant into a prize draw with products or goodies for the winner.
Customer retention is hugely important for businesses. And by following the advice above, you should be all set to boost customer loyalty toward your business.
