Customer retention: understand how to do it and its importance for your business
In theory, there is no doubt about the importance of customer retention strategies. After all, they are important for maintaining good business profitability.
In addition to ensuring recurring sales, having a stable customer base means gathering more advocates for brands.
That said, we are forced to acknowledge that, in practice, companies do not always devote the necessary attention to this area, choosing to prioritize actions aimed at attracting new customers.
Do you want to know how to change that scenario in your company? Then you’re in the right place, because we’ve gathered, in this post, some tips to improve the loyalty strategies of your base.
Believe it: simple initiatives can make a big difference in your daily life.
However, it is important to have the discipline to change the operation mindset, that is, to make everyone in the company understand the importance of working with a focus on customer satisfaction.
The following topics will be covered in this article:
Keep reading to learn more!
What does the company get by focusing on customer retention strategies?
You’ve certainly heard that retaining your existing customers is cheaper than getting new ones, right? But do you know how to calculate this for your company?
First of all, you must plan your strategies based on some key performance indicators (KPIs). The more information you have about your sales process, the more accurate your decisions will be.
Thinking specifically about customer retention, one of the main indicators is customer acquisition cost (CAC).
In a simplified way, the idea is that you can gather data on how much your operation spends, on average, attracting customers — mainly considering the investments made by the areas of marketing and sales.
When evaluating it, you are likely to pay more attention to the work done with your current base.
Of course, each operation needs to consider the specifics of its business process — certain activities require more time than others. But the most important thing is to understand the concept: all data about the actions performed needs to be recorded and properly analyzed.
It makes no sense to leave this kind of evaluation out at a time when we have so many useful tools at our disposal for this type of monitoring.
This is the starting point for a company to be able to improve its strategies and, above all, concentrate its efforts on those initiatives that have been proven to yield better results.
So, if you haven’t done that yet, analyze the CRM software options on the market. You will find that the market currently offers solutions for all types of companies, from the simplest to the most complex.
Think about it: taking care of customer relationship management is the first step toward retaining your base.
After all, we can only improve our products and services’ level of satisfaction when we understand the customers’ actual experience with the brand.
It may seem obvious, but we still see serious flaws in this regard. Companies work so hard to get the client and, once the deal is closed, many managers forget that this is the beginning of a new funnel, the one of retention.
In practice, besides efficient delivery, it is necessary to define strategies that ensure the quality of this relationship and make clear to the client that the company is interested in keeping them.
In the next section, we will see what can be done concretely in this area, but you can already note something: several methodologies can be adopted in the post-sales process.
However, more than the name of the area that will take care of it, what matters is incorporating the philosophy behind customer success.
How do you retain customers?
1. Prioritize excellence in service
Considering that the company has closed the sale, we assume that it offers a good product or service. Thus, when we think about retention, the main concern is to ensure that the customer experience meets expectations.
The team responsible for the service has an enormous responsibility in this scenario. However, the results will be better only if this team plays a more strategic role instead of having to put out fires all the time.
It is not by chance that many operations have structured specific teams to work on customer success, which is prepared to activate onboarding strategies and to accompany the customer journey.
In this case, the main purpose is to sophisticate the service process more, seeking the best way to use the acquired resources. This is one of the dilemmas in the service segment.
Usually, the customer buys but often is unable to enjoy the benefits because of internal failures.
2. Present concrete results
Being quick to meet the demands of new customers is important. However, the efforts will have little effect if the company cannot concretely demonstrate its value.
The service provided doesn’t always have an immediate effect on the company’s results. This is why it is necessary to gather the information that helps their operations team better understand the benefits obtained.
Please note: there is no point in preparing extensive reports to be presented only during contract renewal periods or when the client wishes to disconnect from your base.
In an ideal scenario, you should monitor each new company’s situation (B2B), or an individual buyer (B2C) and check in with them frequently.
For those who work with large volumes of accounts, automated systems can be very useful.
But it is also important to evaluate the possibility of having professionals dedicated to this task.
It’s easy to see the importance of these strategies for companies that maintain subscription services, but these tactics are not exclusive to this area.
Any company that keeps track of its buyers can develop loyalty actions for the base.
3. Say what the client wants to hear
This may seem like a cliché, but it has everything to do with the success of loyalty strategies. But be careful: it’s not about “fooling” the client, it’s about understanding their demands and acting on them.
The operations team needs a well-segmented base for this kind of strategy, besides ensuring that there is room for dialogue. Feedback from customer service is important but also considers the possibility of systematizing the evaluation of customer satisfaction.
NPS methodologies are relatively simple and can help a lot. Be sure to create the conditions to respond individually to the most critical cases.
It makes no sense to ignore the fact that a client is not fully satisfied with your services. Often, a simple phone call helps to understand what the problem is.
4. Organize yourself around the client, not the company
It is impossible to have a good customer retention strategy if the company is unwilling to adapt, seek improvements in its products and services, and, of course, in its customer service.
To do this, it is often necessary to acknowledge that the path chosen to perform a certain task is not ideal from the customer’s point of view, even if it favors day-to-day operations.
More radical measures will likely face internal resistance. Understand objections as an obstacle that can be overcome by showing the results that can be obtained in the long term.
5. Value your brand
When we develop a customer acquisition strategy, we usually focus on the reputation of the company.
And why not keep this concern when handling the relationship with current customers?
In this context, it is important to have a well-structured communication plan, designed according to the customer’s journey in the company.
Remember that valuing the relationship means, for example, understanding that current customers need to be updated first about new developments in your product or service.
In SaaS subscription, this is a recurring complaint: companies seem to treat incoming customers better than people who have been in their base for longer.
This also happens in B2B. Companies promote specific actions to attract new customers but do not develop loyalty programs.
The ideal is to always invest on both fronts. After all, nothing is better than having a 100% stable base and constantly working on its expansion.
In practice, this can be difficult, but your company should make sure that the post-sales processes are not neglected.
6. Track crucial metrics
Customer retention initiatives will not always require major operational efforts. Most important is the discipline to guide business in favor of customer satisfaction.
Keep in mind that by properly managing your relationship with customers, you cannot only keep the customer satisfied but also detect new business opportunities.
For this to happen, you need, for example, to closely monitor the company’s churn rate, which is critical to measuring the efficiency of the sales team in maintaining revenues.
To ensure that the team is properly engaged, another metric that should be monitored is the lifetime value (LTV), used to assess how much revenue each customer will generate for the company during the period of their contract.
Important: those who work with subscription services should relate this data to the CAC, ensuring that the LTV is higher so that the acquisition of clients represents profit and not a loss.
Since we mentioned LTV, check out our interactive calculator on this metric. You can use it in your own way to find out how positive your results have been:
This is an issue that needs attention and should be emphasized internally to ensure that the teams are committed to customer retention strategies.
Did you like the article? Did it help you better understand how customer retention works? Then find out how to improve customer experience with interactive content!