Customer retention: why is it important?
Many companies, even today, do not attribute the right value
to customer retention, preferring to direct attention to lead generation
activities. However, especially for those companies that have an online
business, acquiring new customers would involve a greater outlay than keeping
them.
Therefore, increasing the number of customers is as
important as undertaking loyalty strategies, which can also significantly
affect the growth of your business.
Loyalty defines all the actions that cooperate in building a
lasting bond between brand and consumers and demonstrates a company's ability
to stimulate customers to repeat purchases, transforming them into repeat
customers.
Why build customer loyalty?
Focusing solely on expanding the number of your customers, neglecting the benefits of loyalty, would mean losing regular consumers.
It should be noted that building a relationship with consumers takes time and patience but, as we have already mentioned, it contributes to obtaining a constant source of income. This implies, among other aspects, an activity of renewal of the offer: do not cling to your status quo, but look for solutions that can improve your products so that they are always able to meet the needs of customers .
Customer retention rate
All actions taken by a company aimed at maintaining customers over time are part of the sphere of customer retention. To monitor its progress, the following metrics can be considered.
- Customer loyalty rate. It refers to the percentage of customers who remain loyal over time.
- Customer churn rate. It is the percentage of customers who no longer make purchases in a given period of time. Knowing the abandonment rate is important: if it is beyond a certain threshold, you may need to correct some strategies and intervene to make your services and products adequate to customer requests.
- Customer value. This indicator helps to understand how much value a customer brings to the company. This is an important metric because it indicates whether your business needs to encourage customers to make additional purchases. If the value is low, you can invest in loyalty programs to stimulate purchases.
- Purchase frequency. Indicates how often customers make a purchase again.
- Average order value . How much are regular consumer purchases actually worth? This parameter refers to the average expense that a loyal customer incurs when buying a company's products or services.
Why and how to invest in customer retention
Keeping customers is just as important as acquiring new ones
as it helps build ROI. Building a loyalty relationship starts with how you
communicate with your customers. An online presence (website and social media),
efficient support and an email marketing strategy can stimulate interactions
and engagement, encouraging customers to repeat purchases.
Regular customers are the lifeblood of any business and,
over time, can become ambassadors: a loyal consumer will not only buy your
products or services, but will also talk about the brand to friends and family.
This aspect is the basis of evangelism marketing : there is a high probability
that customers who particularly appreciate a company will spontaneously suggest
the company's offer. This is a distinctive word-of-mouth approach that can
bring important reputational benefits of the company, which can be beneficial
for the long-term success of the business and customer retention, thanks to a
marketing strategy focused on the word of mouth.
According to a recent study by McKinsey , word of mouth is
still the primary factor that drives 20% -50% of all purchasing decisions. In
the age of digitization, in particular, social media and review collection
platforms play a central role. This is the case of user generated content ,
which defines any type of content (text, video, reviews, images) created by
people, and not by brands.
The power of reviews
Collecting reviews allows companies to develop and refine
relationships with their customers, as well as acquire new ones. Before making
a purchase, people tend to inform themselves by turning their attention to the
opinions released by other consumers that are perceived as authentic and
disinterested.
The absence of reviews not only damages conversion, but also
loyalty. Users may desist from purchasing a product they cannot find online,
just as companies miss the opportunity to interact with consumers and build a
two-way relationship that turns out to be truly valuable over time.
Getting only positive reviews seems like a pipe dream.
That's why you need to try to take advantage of the opportunities that
criticism offers: Following a negative shopping experience, most customers will
remain loyal if the company shows that it is working to solve the problem in
question.
Many companies, when faced with a negative review, prefer to
delete it. However, people can harbor skepticism when they only read positive
feedback. Prove, therefore, that you have nothing to hide and always try to reply
to the most critical reviews. Responding to negative reviews improves
retention, making your customers feel valued and showing that you care about
their satisfaction.
Send email
According to data collected by Shopify, email has the
highest conversion rate compared to other sources, at 4.29%. This means of
communication, therefore, is a powerful retention tool for those companies that
take the time to use it correctly.
Email marketing, in fact, requires a certain know-how to
obtain the desired results. A proactive email marketing strategy helps increase
engagement, loyalty and satisfaction.
Provide the best assistance
Providing fast and efficient support has a huge impact on
customer retention. How you handle problems when they occur is critical.
Companies offer various ways in which customers can request
assistance whenever necessary. In this context, Shellrent offers a broad
spectrum support, which develops around Live Chat, Guides and Tickets, in
addition to the Assistance Plus and Web Genius solutions to give timely
responses to customer requests.
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