Customer Retention Strategies: The Key To Business Growth

Customer retention is on the lips of many small software business owners. It represents a key factor that determines the growth of a business and its further success. It refers to managing to bring people back to you and maintain them as your customers. The definition may seem simple, but on a market filled with great competition, the situation becomes a little more complicated. 

The importance of customer retention

Why are we stressing out the importance of customer retention? Let’s take some numbers as examples.

  • If your customer retention increases with 5%, the profitability of your company can increase with 75%.
  • 20% of your current clients will generate 80% of the future revenues of your business
  • Every 1% of returning online customers will generate a revenue increase of approximately 10%

These are just 3 examples that point out why you as a business owner should focus more on your already existing customers than on trying to bring new ones. For this reason, you need to concentrate on creating retention strategies.

Before the customer retention strategy – What you need to know

In order to create efficient customer retention strategies, you as a business owner need to know and understand a few aspects related to your clients and the market they are in. These details will increase your chances of obtaining the results you want.

1. Segmentation

Dividing your target audience into categories according to interests, types of behavior or lifestyle is a key step when you want to establish how to keep your customers loyal to your business. It will help you understand better whether you have to create campaigns for each category and on what to focus in your strategy.

2. Research what your customers want

It is essential to know what clients want from a company like you. It is one of the vital pieces of information a company owns and it should stand at the basis of any marketing strategy you work on. There are several methods through which you can find out what your customers desire.

  • Feedback questionnaires
    After your customers purchase a product or a service from you, send them a questionnaire asking for their feedback related to the services you offered. Also, you can send them a questionnaire asking about the products they have purchased. This will bring you a double benefit, as you will know about your services and your products.
  • Customer service campaign
    Another method you can use is to create a customer service campaign. You call your customers asking about their opinion related to your business services and to what they would like to get from you. Nothing is better than receiving a direct response from your clients.
  • Social media
    People use social media to express their feelings on different topics. Speaking about businesses with which they have interacted is one popular topic. Engage with your audience, look at the comments and messages they leave and determine what they are looking for.

3. Research what your customers do not want

This aspect is as important as finding out the desires your customers have. You need to know why they are not your clients anymore and learn to prevent this from happening with your other existing clients. You can do this by sending them a survey in which you ask them why they ‘cancelled’ to being your customer. You may find out if you do not offer quality services, if you need to improve your software product or if you have strong competitor on the market. Not only will this help you, but it will also show your audience that you care about their needs and about what they think.

4. Analyze your competition

If you have not done this step before, now is the perfect time to start. In order for you to offer the best services and to keep your customers satisfied, you need to know what your competition is delivering, how they are doing it and how customers are feeling about it. One way you can find out such information is by studying the social media profiles of your competition. Facebook, for example, gives you insights from the reviews they receive and the comments people leave. This can represent a great starting point for you.

The customer retention strategy

After you have established what you need to know, you can start working on your strategy. Remember: the purpose of customer retention is to make your already existing customers return to you for services and/or products and to make them become loyal to your brand.

There is no secret recipe for a successful customer retention strategy, as each business needs to adapt it according to their target audience. However, there are a few elements that you can include and that can help you obtain the results you want.

Contact your ‘lost’ customers

You may have a list of customers that have bought from you and now you are not receiving any sign from them. Do not consider them forever lost. On the contrary, you have a great opportunity to reconnect with them. Contact them in order to remind them of your existence, to find out why are no longer purchasing products from you and to learn from the experience they had with you. Show them that you value what they think about your business and you respect their opinion and decisions.

Create special promotions

You can easily attract customers back by creating promotions. Let’s take the following example. You are a small software business which produces a WordPress SEO plugin which optimizes blog content for search engines. People can use your product if they pay a $10 monthly subscription. You can offer your clients a 25% discount for their monthly subscription in December as a winter holiday present. Another example is to offer them a free month if they subscribe in advance for 3 months. You can choose to create a promotion in a way that is suitable for your business. The result is the same. Customers are excited of receiving discounts or free things and they may be willing to return to you or even recommend you to other people.

Keep in touch with your customers

You need to regularly communicate with your clients. For this reason, you can establish a communication schedule which will include the exact days and hours at which you send newsletter campaigns, emails containing promotions, make phone calls asking about their experience with your business or sending “Thank you” messages. This will make your communication process easier to manage and you will constantly communicate with your audience. It may have a positive impact on the way they perceive your company.

Five star customer service

If you want customers to have a pleasant image of your service in their minds and to recommend you to other people, you need to offer impeccable services. This includes your product, how the product is delivered and the customer support team. All of these elements combined will help you bring customers back and keep them away from your competition.

After the customer retention strategy

You analyzed the market, your audience, you created and implemented the customer retention strategy. The next step is to see how it went and what results it brought to you. Choose a period of time after which you will look at the results and compare them with the ante-strategy period. See if something has changed and how it helped your business grow.

Your current customers are a valuable element for the growth of your business. They play an important role for your future success and your customer retention strategy can determine the direction in which your company goes. Make sure to create one suitable for your business and your needs and to implement it correctly.

How do you deal with customer retention? Share your experience with us in a comment below.

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