In an increasingly competitive business world, realising the difference in cost between acquiring new customers and retaining existing ones can give your company just the competitive edge it needs.
Keeping existing customers saves a lot of money in the marketing budget, attracting new customers can cost up to five times more than keeping one. Another fact is that loyal customers also spend significantly more than new customers do, and are more willing to try out new products. It is often said that even a small increase in customer retention of a few percent, will lead to double growth figures for your profit.
It comes as no surprise then that customer retention has quickly grown to an industry itself called ‘customer experience (CX) technology’. CX technologies help other businesses to manage and improve their customers’ experience, helping them create brand loyalty and thereby retaining customers.
Customer Experience
Customer experience (CX) is the total of all the customer’s interactions with your brand. It starts with the very first impression of your product or service, be it an ad or product placement, or a recommendation from a friend. It continues all the way to after-sales in the form of support, service or following up with customers.
Every step of your customers’ journey has an effect on their overall perception of your brand and what it is that you are selling. Even the smallest things such as the way your website asks for permission to place cookies, or how you try to convince customers to subscribe to your mailing list. Being a little too pushy can already mean that in the back of their mind a customer is wondering if he can’t get a better experience elsewhere.
On the other hand, a flawless experience where all these interactions are smooth, helpful, and maybe even delightful, will leave the customer feeling valued and satisfied. This satisfaction translates to loyalty and keeps them coming back for more, or better, recommend you to others.
Customer Service
Although customers will rightfully see your website or social media presence as your business card, your real chance to impress is when there is real human to human contact.
Customer service statistics show some amazing numbers, for example, that 9 out of 10 customers decide to do business with you based on the score of your customer service, or that a single bad support experience comes with a 50% chance of losing that customer immediately.
The key to a successful support department is to let the customer know that you care about them. Every customer that contacts you wants to be heard and taken seriously in the first place. Solving their problems comes second, however strange that may seem. But what is a better experience? Someone that explains to you in a calm and friendly way why something cannot be fixed immediately? Or someone that is rude, that gives you the feeling you’re simple-minded and ultimately does fix the problem?
The first step in achieving this is to make sure that your support staff is not only competent, but has access to the resources they need; in practice this comes down to just some time and information. Time for genuine attention and information to actually solve or explain the problem.
Especially when having a rare moment of real human interaction with your company, the last feeling customers want to get is that they are on the other end of a machine that is only rushing to work as efficiently and as profitable as possible.
Unfortunately many businesses still see support as a cost, and not as an opportunity to invest in customer experience. Most companies still use external contact centres where the average time for a call or an email is determined to tenths of a second.
Invest in ESG
ESG stands for ‘Environmental, Social and Governance’ and is a framework that focuses on different sustainability and ethical issues. Among other things it addresses matters such as Diversity, Equity and Inclusiveness and openness and transparency.
These topics nowadays carry more and more weight towards the outside world. Although it’s a snakepit with the risk of being cancelled for one wrong social media message, brands are expected to speak out and stand up for what they stand for. If you express the same values that your customers identify with, they will become more loyal to your brand.
Two of the most underestimated values are openness and transparency. Don’t be afraid to admit mistakes and own them. Customers and non-customers alike will praise and respect you for it, and with that again comes the loyalty we are looking for.
Stay in touch
Although different industries will all address customer loyalty in their own specific ways, let’s take this comprehensive guide to customer engagement as an example: in the end it all comes down to staying in touch with your customers. The player that had a perfect customer service experience is likely willing to spend more money. Directly targeting the customer is almost a guaranteed success. But what is the best channel for such contact?
Where paid search and online advertising are by far the most used methods to acquire new customers, when it comes to customer retention, nothing beats the success of a good old-fashioned email. Whether it’s less intrusive than a social media message, or gives a sense of control knowing that you can read it later in your own time, no other channel is as effective as email marketing.
Another reason to stay in touch is to measure the effectiveness of all your efforts. Maybe you feel that your support department is running as smoothly as possible, but have you checked with your customers if you have the same perspective, or are they focussing on other aspects of their experience? The only way to find out what your customers are thinking, is to keep communicating with them.
In conclusion, customer retention isn’t just a strategy, it’s an investment in the very lifeblood of your business. By prioritising a positive customer experience during a customer’s journey from browsing your website to interacting with customer service, you can cultivate loyalty and keep customers coming back for more.
Finally, don’t underestimate the power of old-fashioned email marketing just yet, sometimes old tools stay useful forever.
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