The Power Of Customer Retention
by Arun Kumar Sharma
“Profit in business comes from repeat customers, customers who boast about your product or service bring new customers.”
– W. Edward Deming
Turn Your Customer Into Your Advocate
The Problem
Sam is a small business owner who works hard to bring people to his website and convert them into paying clients.
He’s spent a lot of time, money and effort to understand and master the complex procedures related to email, SEO, website design and development, sales funnels, ecommerce, branding, social media, video production and everything else required to attract and convert customers.
He paid large sums of money to trainers, consultants and coaches to learn about acquiring more customers and selling more products.
Sam has experienced much pain from: the breakup of his partnership, having zero social life, missing important family events and twice having absolutely no money in his back account.
After five years of grinding in his business he finally cracked the code to success.
Yes, now people look up to him as a true marketer and entrepreneur who has learned the art of customer acquisition and selling products.
Still, he is not happy and content with his progress.
Why?
Like many other businesses that just manage to survive, Sam ignored one important area. He was content to draw a salary from a hundred customers instead of one employer.
Most of the time the reason for this situation is only one thing, which I call: ‘The Great Bucket Leakage’.
The Great Bucket Leakage
Say you’re filling up a bucket (your business) with water (new customers and money) and there’s hole in the bottom. All the water drains out (losing customers and money).
You’re always worried about losing water from your bucket, translates to you’re always worried about losing customers and money from your business.
I’m calling this ‘The Great Bucket’ because you’ve built this business with so much hard work and hustle, and the leakage makes it frustrating. It means you have to constantly look for new customers.
Growth Hacking is NOT just about bringing new customers into your funnel, it’s also about retaining current customers, for a longer period of time.
What’s the use of gaining new customers when you’re losing them before you can recoup your marketing and operation costs?
Don’t overlook the potential for doing more business with your present customers, and focus only on the pursuit of new customers.
Don’t be like Sam. With due respect for his work, he was too busy
running after new customers and he totally ignored the fact that great and profitable businesses are built on customer loyalty and retention, which are established through creating the best experiences for your customers and increasing repeat purchases.
Why Focus on Customer Retention?
The following studies explain how ignoring this important lesson could lead to the death of your business.
Research from Frederick Reichheld of Bain and Company, shows how a 5% increase in customer retention increases profits by 25% to 95%.
A study by Koyne Marketing shows that existing customers are 50% more likely to try new products and they spend 31% more, when compared to new customers.
Source of Studies: www.invespcro.com/blog/customer-acquisition-retention/
Turn Your Existing Customers into Advocates
Have you ever wondered how customer advocacy works for companies like Apple, Starbucks, Amazon, Royal Enfield and Netflix?
Customer advocates are critical to long-term growth for these companies.
Three Stages for Customer to Advocate
Stage 1
Customers are impressed with your best quality products and services, over delivery of promised results and dedication to customer service. Customers are getting to know you; they may have questions and are not yet fully committed.
Stage 2
Personalized deals are offered to your customers, great results and case studies are building. You offer rewards and loyalty bonuses along with
continuous excellent service. Customers like and believe in you.
Stage 3
Customers are extremely happy with the results you helped them achieve. They advocate for your company through word of mouth and jump in when you need them most, supporting you however they can. They love your company and tell their friends and people they meet all about it.
At SubMastery Edtech, more than 90% of our customers are repeat buyers. They are responsible for our business sustenance and growth.
Maybe your business is in the early stages and you don’t have many clients yet. Focus on customer retention, from day one. Whether you have a small or large base of customers, customer retention needs to be a strategic, innovative and ongoing goal for any business.
Some of these strategies are so simple they are often overlooked. The way to get the best out of this chapter is to go through each strategy and all the hacks mentioned. Highlight the ones you think will work best for your customer, and then implement them.
Although these strategies are oriented towards internet-based businesses like e-commerce, digital information products, and coaching and consulting products and services, many of these hacks will work perfectly for non-internet-based businesses as well.
Three Strategies for Customer Retention
1. Onboarding
Think of onboarding as the very first impression the customer has about your product or service.
It’s a very important opportunity for you to develop good rapport with your new customer, to help reinforce that their decision to purchase was right, to set their expectations, and to show them the ways to access support at your company.
Next are ways to help the onboarding process:
Reinforce the Customer’s Decision to Purchase
When a customer purchases a product, welcome and congratulate them for their decision. Reinforce that they have made the right decision and remind them how using your product will benefit them.
This could be done over email, with a simple thank-you letter or card and the best, is to send a personal welcome message in video. As your customers see a face behind your brand, they will trust you even more. If you are coaching or running an online course, you can do an onboarding call with your customer to further set expectations, timeline and accountability.
With Screencastify, Loom and similar quick recording tools, it’s very easy to send a short 30-second personal video message, which will take about the same time as writing and sending an email.
Tell Your Customer Your Company’s WHY
If you can connect with your customer on an emotional level, your relationship will go much deeper. Everyone wants a life with meaning and impact, but most don’t know how to go about getting that. If your company’s product can prove to be a medium for them to do and spread good, they will happily buy from you.
Let your customers know the Why of your company, the reason for your existence and how your contribution in this world will make it a better place. Linking your products and services with an important purpose is a strategy that many companies build successful businesses with.
Your company’s purpose could be a cause for which you really care, it could be related to a welfare activity, environmental protection, helping needy people, building schools, providing education, etc.
Customers feel immense pride to learn they are associated with a company, which has a deep purpose, one who thinks beyond money.
Alpro, a food-based company headquartered in Belgium, heavily promotes a vegan, plant-based diet in an effort to save our planet.
International apparel company TOMS, has run a brilliant ‘One for One’ initiative for a long time. With every product purchased, TOMS donates one pair of shoes or an equivalent contribution to a cause helping a person in need. Source: www.toms.com/one-for-one-en
Accessibility, Support and Response Time
You should be accessible in case your customer wants to reach you, and where possible, provide 24/7 customer support through email, chat, ticket system and your website’s Contact Us page.
Let people know the days and times you are available and the average customer response time. Maintain a customer response time of less than 24 hours.
Use Help Desk support from companies like Zendesk and Freshdesk, and offer online chat options to customers through chat software by Intercom and Help Scout.
Educate Your Customers with an Academy
If your products are SaaS (Software as a Service) or any type of information product, your customers may need support and assistance.
Your customers can benefit if you build training modules around your products and services.
The HubSpot Academy offers a variety of free courses for their products and services, that are open to all.
2. Individualization
How do you feel when someone remembers and calls you by your name? It feels personal, even if it’s a computer and technology; it still helps to create a connection.
Every customer is an individual and wants to feel that your communication to them is personal and that it’s not generic.
Personalize your communication in such a way that your customer feels taken care of.
Customer Segmentation
If you know the present status and situation of your customers, you can draft your communication to them accordingly. Get to know your customers by paying attention to their behavior, through segmentation surveys, click data, through the pages they visit and their purchase history.
Tag your customers’ interests inside your email service account. Active Campaign is a powerful email service that is worth exploring further.
Segmentation tools include Typeform, SurveyMonkey and SurveySlam.
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“Serve your customers in a way that generates repeat buying, referrals, recommendations, testimonials and great feedback.” #TheGrowthHackingBook #GrowthHackingMovement #GrowthHackingDay
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Address Customers by Their First Name
Customers are human beings with a heart and emotions. Powerful bonding can be established when you address your customers by their first name in emails and messages.
Many marketers use their customers’ names in the subject line of their
emails to create a personal feel and connect with their customers. They do this by simply adding the code {First Name} to the subject line in the draft email and the email software takes care of adding each person’s first name.
Another hack is to treat events and festivals as an opportunity to individualize your content for promotions and to encourage repeat purchases. Below is an example of HDFC Bank promoting their product on Mother’s Day.
Fig 1: HDFC Bank promotion for Mother’s Day using the customer name.
Individual Progress Status
Your customers’ progress in any training courses can be sent to them by email on a weekly, or other basis, to remind them how much they have completed and how much work is still pending.
Tools like Teachable, Thinkific and similar Learning Management Systems (LMS) include the feature, Individual Progress Status.
Integration through Zapier is another option used to automate the Individual Progress Status
process.
Search Based Email Triggers
A person’s sense of urgency and motivation can be used to help them make a purchase decision with search based email triggers and individualization.
Recently I was looking forward to our family trip to a beautiful location and had not yet finalized the hotel booking. I searched online and the very next day I received an email with a discount code for the location and date I had been searching.
Regarding Your Corbett Hotel Search for 18-May
Fig 2: Location based trigger and individualization
Respond to Every Communication
Clients need to feel heard and valued. It’s important that you don’t miss any genuine doubts and queries from your customers.
If you messed up something, be straightforward and don’t write a generic answer. Instead, apologize and make up for your mistake in a way that creates customer satisfaction. Your customers will appreciate this gesture and will see your integrity and will have more confidence in your work.
Customers are using company social media pages to post complaints and questions online and many companies are responding directly to their messages.
Fig 3: Responding to customer by name in social media.
Source: Domino’s Pizza Twitter Stream
According to Dresner Advisory Services’ Business Intelligence Market Study
, it takes 12 positive customer experiences to negate the poor impression left behind from one unresolved or bad experience.
Website and App Language Selection Opportunities
With the help of technology, automatic translation of web pages and apps is possible.
Everybody loves to listen and talk in his or her Mother Tongue. Using vernacular or common styles of languages is becoming popular because they are easier to understand and connect well with customers.
3. Tribe Engagement
Building an engaged tribe around your business has immense benefits for your business success.
When people associate themselves with your brand and feel proud to do so, they become spokespeople and advocates for your company and it’s products and services.
Their feedback must be an integral part of your product development process as this can help steer your company in the right direction.
Tribe Engagement Platforms
There are a variety of platforms that can be used to engage your audience, for example Groups on Facebook, Linkedin, Slack and Whatsapp as well as forums.
Control group experience by creating rules of engagement.
In a group setting you can run contests, challenges and activities that keep your followers engaged.
You can also deliver live sessions at regular intervals to help your tribe progress and engage with you, through online tools like GoToMeeting and Zoom.
Social Proof
Social Proof happens when existing customers become aware that your other customers are achieving their desired results, by using your
products and services. This enhances their trust of your brand and inspires them to purchase.
Using reviews and testimonials in the beginning of the customer acquisition process helps to create trust and social proof.
It’s equally important to keep reminding customers that they can achieve the results they want, just like many others who are achieving their desired results.
Testimonials can be shared through email and social media groups, in advertisements, articles and on websites, on landing pages and in sales funnels.
Membership Benefits
You may introduce membership benefits to your customers. Members feel that they are getting premium benefits by being part of a select group and this helps to increase customer loyalty.
Membership benefits can include discounts and additional benefits. Not everyone will purchase your membership, however frequent users will consider membership if you help them to see its clear benefits.
Alternatively, you can give points with every purchase that can be redeemed for gifts. Many credit card companies do this. E-commerce and travel companies also offer membership benefits.
Fig 4: Travel Portal Make My Trip Membership BenefitsFeedback
Surveys are great for feedback about your products and services.
Make your surveys simple and interesting.
Limit the number of questions you ask as long surveys can be boring and discourage customers from participating.
Ask only one question at a time.
Consider survey tools, Typeform and SurveyMonkey.
Give your customers incentive to complete your survey by sending them free information products and discount coupons. Incentives encourage participation and tell your customers that you appreciate their time and feedback.
Using customer feedback from surveys will give insight on their pain points and will give you the opportunity to create products and services that you are confident your customer wants and needs.
Increase Customer Lifetime Value
Customer Lifetime Value (CLV) is determined by the equation:
Amount of Average Transaction x Annual Purchase Frequency x Expected Years of Relationship = CLV
My marketing friend sold 500 tickets for an event seminar through his Facebook Group. The group had more than 2000 paid members who had purchased his low priced course. Existing customers from the Facebook Group bought 80% of the tickets. This is an example of how the lifetime value of customers can be increased.
Another way to increase CLV is to offer your customers affiliate products like software, courses, coaching and physical products, which can help them get their desired results.
Fig 5: CLV Calculation
Conclusion
It’s critical to retain your customers for the long-term success of your business. Focus on customer retention strategies by including these in your Business Plan.
Treat your customers well. Learn about them with segmentation, wow them with excellent products and services and over-deliver on promised results. Be accessible and answer any doubts and queries quickly. Dedicate the required resources for improving customer ratings and satisfaction. Show your customers that you care for them and are committed to their success. Track their progress, make them a part of your tribe and engage with them at every chance.
Sam Walton’s wise words, “There is only one boss. The Customer. And he can fire everybody in the company from the Chairman on down, simply by spending his money somewhere else.”
Serve your customers in such a way that generates reciprocity for repeat buying, recommendations and word of mouth publicity. Engage with them, make them feel proud to be a part of your tribe and they’ll keep spending money with you.