3 Strategies for Lifting Your Retention Rate
December 2, 2019
Business owners can still make a profit without maintaining a high retention rate. How?
- Get really good at acquiring new customers, even if they quickly churn after feeling disappointed with the service, product, or overall customer experience.
- Slam customers with hidden fees and charges.
- Make it nearly impossible for customers to get out of a contract with the services offered. Then, provide customer support that gives them the run-around — until they become so exhausted that they give up on cancellation.
All of these tactics might earn you a profit… but are they good profits?
Good profits, as defined by business strategist and creator of the Net Promoter System Fred Reichheld, amount to revenue that’s earned from loyal customers who are paying you for a service or product they value.
Good profits amount to steady, consistent growth.
And good profits are earned through high retention rates.
Here are four strategies for lifting your retention rate, with tips on how to prevent customer churn and build a customer base that’s loyal, enthusiastic, and engaged.
Free Download: "Are You Sure You Want to Leave?" 5 Tips for Retaining Unhappy Customers
1: Focus on providing your customers an excellent, high quality experience.
Before we dive into specific strategies for retention, let’s consider the bigger picture of a successful business strategy: keeping your customers at the center of all decision making.
Unfortunately, most leaders do not take a customer-centric approach to business. In fact, only 14% of marketers say that “customer centricity” plays a vital role in their companies.
Keeping your customers at the center of every decision means serving their needs first. It means building a business that seeks to develop relationships with customers even at the expense of quick, easy profits.
Excellent Customer Support
If a customer or client wants to return a purchase, ask a question, or receive tech support, they should finish the process feeling better than ever about your brand.
Unfortunately, that’s not always the case.
Even the most reputable companies may provide poor customer support, leaving customers with long wait times, unresolved technical issues, or errors in payment. A negative exchange with customer support can result in frustration, churn, or worse — reputation damage.
Providing great customer support requires hiring and training friendly, competent staff, documenting processes, organizing support requests, and perhaps even crafting a flexible return/exchange/cancellation policy.
Going “Above and Beyond”
Companies that rate the highest in terms of customer satisfaction and loyalty have earned that badge of honor by providing a customer experience that goes “above and beyond.”
What does that mean?
It means going the extra mile for even one customer. Here are a few examples:
- Refunding a month of service, no questions asked.
- Sending an unhappy customer a generous gift card (such as this story of a Starbucks customer getting $50 bucks in the mail after disagreeing with a barista).
- Making a personal phone call to a customer or client — bonus points if that call is from the company’s CEO.
In the end, excellent customer support or extraordinary gestures of customer service result in a reputation that generates organic growth and loyal, enthusiastic customer advocates.
2: Use a Net Promoter Score survey and assess the feedback.
Paying customers aren’t always happy customers. Maybe they’re still buying from you, but they’re actively looking for a better solution. Maybe they were extremely unsatisfied with their last purchase, and plan on never buying again.
Or maybe they’ve subscribed to your service and simply forgotten about their monthly payment. Once they discover that line item on their credit card statement, chances are that they’ll drop off.
Instead of assuming customers will stick with your brand because they’ve purchased from you, consider asking them how they feel about your product or service.
The best way to gauge customer loyalty is with a Net Promoter Score (NPS) survey.
An NPS survey asks your customers two basic questions:
1) How likely are you to recommend Product X to a friend, family member, or coworker?
Please provide a rating from 0 (very unlikely) to 10 (very likely).
0 1 2 3 4 5 6 7 8 9 10
2) Please explain your answer.
This quick, straightforward survey provides you with a powerful metric that you can use to track growth and determine how many “Promoters” (9 or 10), “Passives” (7 or 8), and “Detractors” (less than 6) you have.
An NPS survey will also generate authentic open-ended feedback that will give you powerful, practical insights.
For example, you might learn that the majority of your detractors are unhappy with your pricing plan. Given this knowledge, you may want to consider revamping your pricing structure to prevent further customer dissatisfaction and even save some of your customers from dropping off.
In order to best filter, track, and act on feedback, you’ll want to use NPS software to get the most value out of this metric.
3: Make a last-ditch effort to save customers from jumping ship.
It’s always better to be proactive rather than reactive.
In other words, it’s better to provide a great customer experience from the get-go. This will help you to create loyal, satisfied buyers that will stick with your brand and provide high lifetime value.
But the reality is that you’re going to have some unhappy customers. Maybe they had a nasty interaction with customer support staff. Maybe your service malfunctioned at an inopportune moment. Maybe they’ve been disappointed with a particular feature.
In any case, it’s almost certain that you have customers who are ready to jump ship.
Here are a couple of “last ditch” strategies you can use to save customers from churn, and maybe even generate new loyal brand advocates in the process.
Strategically Target Customer Segments
You may want to run a campaign that targets specific customer segments, such as:
- Customers who have recently unsubscribed
- Customers who have placed a product in their shopping cart without buying
- Customer who have returned an item
Consider sending an email campaign that asks your customers, “What went wrong?” For customers who haven’t completed the purchase process, remind them of their shopping cart. For customers who have recently received refunds, you could suggest an alternative product/cross-sell.
Offer an Incentive/Free Gift
If a customer unsubscribes from your service, or doesn’t renew after a free trial, consider making one last offer.
In your interactions with customers, don’t be afraid of seeming needy. Saying, “Wait, don’t go!” or “Are you sure you want to unsubscribe?” may sound desperate to some, but in reality, it communicates that you value your customer as an individual. Sometimes that’s all they need to hear to give you one more chance.
Offer customers who are about to churn a special discounted deal or a promo code. Doing so may cause them to reconsider their decision, and even help build a better relationship that could convert apathetic customers into potential promoters.
Did you forget? Download: "Are You Sure You Want to Leave?" 5 Tips for Retaining Unhappy Customers
High Retention = High Value
Ultimately, building a steadfast customer base is a far more profitable strategy than constantly churning through acquisition costs to bring new customers into the fold.
Loyal customers convert 60-70% more often than new customers. And they don’t require new acquisition costs.
In short, focusing on your retention rate is a far more reliable, cost-effective strategy for building a thriving business — and generating steady, increasing profits together with organic growth.
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