Customer Retention Down? Here's What to Do.

“Our customer retention rate has decreased…badly. Help!”

First, don’t panic. Customer retention is one of those metrics that can take a dip now and again. But we get it—the drop in customer retention has probably created a pit in your stomach because you know how important loyal customers are to the success of a business.

The truth is, even the best businesses go through rough patches when retention is down. And the good news is: There are steps you can take to increase customer retention again and gain loyal customers who support your business racking up a high lifetime value.

The fact that you are going to an effort to measure customer retention in the first place is a good start because you can act sooner rather than later with a thought-through customer retention strategy that will get you back on track.

Before we delve into customer retention strategies, let’s first discuss why you’re not retaining existing customers at the moment.

What Causes Low Customer Retention? 

Simply put, existing customers don’t have enough of a good reason to stay or even worse, are attracted to competitors instead.

This could be because of a lack of usability so new customers aren’t able to achieve the results they were hoping for with the product or service and therefore don’t see the point in staying. The initial purchase didn’t fulfill their expectations.

Or maybe there’s a lack of customer satisfaction due to a poor customer support experience. They found it an uphill battle to access the service they needed. Any feedback that was given didn’t seem to be listened to or implemented.

Alternatively, the low customer retention might be because current customers don’t have much of a connection to the brand. They aren’t particularly unhappy but they don’t feel pulled to be loyal either. There’s no appreciation that would build their relationship with the brand.

What’s Considered “Good” Customer Retention? 

Let’s talk about customer retention metrics. When you measure customer retention, you might be wondering whether your rate is good or bad. While you want to have as many repeat customers as possible, no one is perfect so not all new customers will become retained customers.

Generally, you’re aiming for an above 50% customer retention rate. The average customer retention rate does depend on the industry but somewhere between 60% and 80% is very good.

Whatever number you produce when you calculate your customer retention rate, each year, you should aim for an increasing customer retention rate even if it’s just by a couple of percentage points. Progress and improvement is the priority when you’re aiming to retain customers.

Here’s How to Improve Your Customer Retention Rate

Now that you know why your customer retention rate has dropped and what a good customer retention rate is, here are some customer retention strategies to bridge the gap from where you are now to where you want to be.

Customer Retention Strategy #1: Decrease Response Times

No one likes waiting forever on the phone. It’s a faux pas not even your most loyal customers will put up with, no matter your hold music. Plus, it stresses out the team to be overwhelmed with customer calls. It’s just not a cost-effective way to deal with customer queries and will definitely up your customer churn rate. 

Fix this by directing inquiring customers to other channels of getting their questions answered. Live chat and text messaging are great alternatives as they are accessible and convenient without any chance of being stuck on hold.

Consider call deflection to reduce response times and keep customers happy. 

Customer Retention Strategy #2: Focus on Relationships 

The best way to retain customers is to build meaningful relationships; a strong connection makes customer loyalty come naturally. Customers enjoy your brand, find value in the service you provide, and feel appreciated by the business. Why would they leave?

Building relationships with new customers and repeat customers alike does take time and effort so it might be worthwhile introducing a customer success team to focus on creating a relational experience.

How can you create brand likability and customer loyalty in your relationship? Well, gathering customer feedback can help.

Customer Retention Strategy #3: Go Straight to the Source

Instead of guessing what your customers want from you, ask them. Collect customer feedback to gain clarity on customer expectations and what you can do to boost customer retention.

Not every customer base is the same. One business’s customer base might value exceptional customer service above all else. Another might prioritize price and therefore would benefit from a subscription model that makes your service more cost-effective.

When it comes to conducting customer surveys, there are some best practices to get the most useful information about customer behavior, expectations, preferences and priorities as they relate to your business. Customer satisfaction is key to customer retention.

It’s well worth conducting a customer survey to gain customer feedback before implementing the next one of our customer retention strategies.

Customer Retention Strategy #4: Start a Customer Loyalty Program

A great way to give back to your current customers and show your appreciation for them is through customer loyalty programs. It elevates the customer experience as you go the extra mile for those who support your business with repeat purchases.

Customer retention programs are a combination of giving customers thanks for shopping with you like bonus points or special offers and building your business relationships with them so they want to keep buying from you.

Additionally, you could take this to the next level by creating brand ambassadors through a referral program to introduce new customers to the business. Such systematizing is really useful as seen in this next tip.

Customer Retention Strategy #5: Use Marketing Automation

An overworked team is not going to deliver exceptional customer service which is a major attraction for loyal customers. So make sure the company’s ability to help customers is maximized through efficiency measures like automation. That means staff can spend more time, focus, and energy on interacting with customers instead of having to deal with a long list of other tasks.

So much is possible with marketing automation. A lot of the mass communication used to engage with customers can be scheduled to go live on certain dates and times or after a certain action has been taken. If a lead has shown interest and needs to be followed up with, marketing automation can ensure the email or text is sent out within the set timeframe.

Your staff shouldn’t be doing what a computer can do. They should be doing what only a human can do. That’s how you achieve your customer retention goals.

Customer Retention Strategy #6: Set Internal Goals

The best way to improve any element of a business is to set a goal to achieve it. Setting a goal to improve your customer retention rate makes it much more likely to be achieved. It ensures the whole team knows the focus and is engaging in increasing customer retention.

Improving the customer experience won’t happen overnight or through the effort of one or two people. It’s a whole team effort, so get everyone prioritizing meeting the needs of existing customers and bumping the customer retention rate.

Add Podium to Your Customer Retention Strategy Toolbox

Those are just some ways to increase customer loyalty and get your customer retention rate back where you want it to be. Having the right tools to put these strategies in place is essential.

At Podium, we make communicating with existing customers easy. Whether they’re visiting your website and need to ask a question through the chat box or need to be reminded to join your loyalty program through text, we’ll help you to streamline your communication and improve customer success in your business.

So what are you waiting for? Try out Podium for free today.