When brainstorming how to grow their businesses, many entrepreneurs’ minds immediately default to attracting more leads and converting them into customers. Maybe this is your tactic, too. Acquiring and converting leads is important, but if you only focus on securing new customers, you could be hindering your growth rather than helping it.
So, what’s the solution? Improving your customer retention strategy. Carmen Campbell, Director of New Customer Onboarding at Keap, recently dedicated her session at the Let’s Grow Summit to this very topic. She discussed:
Why customer retention is becoming even more important
How the economy is affecting retention rates
Strategies to improve your customer retention rate
Tools you can use to better understand and nurture your current customers
If you weren’t there to see her session live, we’ve got you covered. You can read all about Carmen’s top retention tips in this article — but first, let’s get into why retention is so crucial for your business in the first place.
Why retention matters
When a business doesn’t prioritize retention, it’s often because leaders don’t think it’s worth it to invest in customers they already have in the palm of their hand. However, this is a big misconception.
In this day and age, customers have access to more information than ever. Carmen put it best when she said, “we live in a hyperconnected, hypercompetitive world,” which means if your audience isn’t pleased with your customer service, they can find an alternative option in no time.
This information shouldn’t panic you, but it should push you to hone in on your customer retention strategy. In fact, by doing so, you’ll likely save money in the long run. A study by Harvard Business Review found that the cost to acquire a new customer ranges from 5x to 25x more than the cost to retain an existing customer. So, instead of spending more money, you can invest in people who already see the value in your company and focus on turning them into loyal fans who come back for more and bring others (new leads) with them.
With these factors aside, retention is also important simply because it puts the customer first, which is becoming increasingly rare in our economy.
The economy’s role in retention and customer service
It’s no secret — our economic situation could be better right now. We’re all feeling the pressure, whether as consumers, business owners or both. Businesses are making cuts in response, but what’s the impact?
A recent Accenture Life Trends report shows a lot of these cuts are primarily affecting the customer, pushing customer satisfaction further down the priority list. Across the board, customer delight is no longer the driving motive behind companies’ decisions, and customers everywhere are noticing.
How are companies compromising on customer experience? Check out the examples below:
Shrinkflation: Have you noticed any of the products you regularly purchase have shrunk, yet their price tag has stayed the same or maybe even increased? If you have, you’ve experienced shrinkflation firsthand. It’s a way companies cut costs to increase their bottom line, but of course, they don’t tell consumers that. They simply frame the changes as a redesign and hope no one notices.
Skimpflation: Skimpflation is the equally disappointing cousin of shrinkflation. Rather than scaling back on the quantity offered to consumers, skimpflation occurs when businesses start cutting corners on the quality of the product or service they provide.
Shrinkflation and skimpflation are common practices among big businesses, and if they’re cutting corners, what does this mean for small businesses? What are you doing to get by?
Some big businesses can afford to shrink and skimp because it won’t hit them as hard if a few people start opting for an alternative. Small businesses don’t have that luxury. If you and your team start to cut corners on what you provide to current customers, they’ll notice and take action. Efforts to cut back stop being effective, and actually turn counterproductive, when they cause customers to take their business elsewhere.
All this information might seem like bad news, but not all hope is lost. You can easily remedy your customer retention strategy, which will serve to delight your current customers, improve your brand reputation and eventually grow your customer base.
How to increase your business’s retention rate
The number one step Carmen recommends business owners and their teams take is to get customer-obsessed.
To employ this tactic, start by shifting your mindset. This involves keeping your customers and their best interests in mind with every decision you make. As you make this shift, it will naturally cause your team and every part of your business to follow suit.
After adopting that new mindset, there’s a three-part gameplan to follow. If you include the following steps in your customer retention strategy, you can take a deep breath knowing your customers are being nurtured even after they complete a purchase.
1. Understand your customers
Knowing your customers is how you’ll be able to nurture them effectively, so this first step lays a necessary foundation for what comes next. Having a good understanding of your customers goes beyond demographic information. Instead, you need to dive deeper into who your current customers are.
What do they like? What problem do they need you to solve? What’s their purchase history? What content do they enjoy?
The data you need to know about your customers will be specific to your business, but the universal point here is your business needs to collect, document, store and use data on each individual to provide them with customized, personal value.
This is an overwhelming process to accomplish without a solid system in place, so opt for a small business CRM to help you get it done. A CRM for small business, such as Keap, will enable you to:
Capture new information you learn about your customers
Keep track of customer activities, such as purchase history
Store everything you know about your customers in one place
Segment your customers into different groups based on common information they share
With CRM software on your side, understanding your customers becomes an automatic part of your business. And a solid CRM database will make communicating and connecting with your customers even easier, which leads us to the next step in customer retention.
2. Stay connected
When your customers were leads, you most likely were nurturing them consistently, trying to provide value and convince them to make a purchase. Eventually, they completed that purchase of your product or service, but that doesn’t mean they expect to never hear from you again. They’ve gotten used to you connecting with them throughout every part of the buyers’ journey, and you want to keep that connection going. So, rather than stopping all communications after they receive their purchase confirmation, you should pivot your strategy.
Pivoting is necessary because your customers have already made a purchase — they don’t want to keep seeing the same content from you. It’s time to mix it up and meet them where they are.
It’s easier than you think to delight buyers after the sale. A few campaigns to keep in mind and customize to your business are:
Send free resources, such as blog articles and guides, that will help your customer make the most of what they just purchased
Follow up with a short survey to see how they’re liking their purchase so far. If they’re having trouble, this provides an opportunity for you to reach out and remedy it
Invite them to a free webinar on a subject you know they’re interested in
Sending more communications post-purchase doesn’t have to be a confusing or time-consuming process. Small business marketing automation can automatically launch custom campaigns to customers once they’ve purchased, saving your team the time and headache of doing it manually.
3. Be relevant
As you start to connect more with current customers, you’ll want everything you send to be relevant. Don’t reach out to your database just to check a box. If you do, your contacts will notice and your outreach will lose its significance. Instead, you want your customers to look forward to hearing from you and trust you’ll provide relevant value with everything you send.
It can be hard to remain relevant and know exactly what will please your customers. This is where marketing automation for small business and the data stored in your CRM can come in handy. A CRM will be your source for all relevant customer information, which you can use to make your follow-ups personal and full of tailor-made content.
For example, if someone purchased a social media consulting package from you, your CRM will log that information. Then, you can segment all the other customers who bought the same thing into one group. You’ll know everyone in this group is interested in improving their social media strategy, so you could use small business automation to send them a free Instagram eBook, an invite to a webinar on TikTok strategy and a newsletter about new social media features. The beautiful part about using small business CRM and automation software is all these communications can operate behind the scenes while you focus on other parts of your business.
Another way to ensure you stay relevant to your customers is by listening to them. This is how you’ll know what they like, what they don’t like, what they want more of and so much more. Listening can take on a variety of forms, including:
Paying attention to what customers say on social media
Conducting routine surveys
Holding focus groups
Reading reviews and ratings
Staying up to date with customer forums and blogs
Checking out email, chat, text and other responses
Wherever you interact with customers is an opportunity to listen and improve, and as you do, you’ll be able to provide relevant, meaningful experiences time and time again.
Your next step in retaining customers
Carmen’s retention gameplan will be an incredible asset for your business, but before you hit the ground running, you should assess the tools you have. The most important systems to bolster your retention efforts are small business automation and CRM software.
If you don’t have these tools or are looking to switch to new software, this is the first task you should tackle. Check out our free CRM buyers’ guide or marketing automation buyers’ guide so you know the features and tools you need to look for as you shop.
Already know what you’re looking for and want to test it out for yourself? Try Keap’s small business automation and CRM platform free for 14 days (no credit card required).