According to the Harvard Business School, an increase in customer retention by just 5 percent, can lead to an increase in profits by 25 percent to 95 percent.
Customer retention is important to growing any successful business. But if you’re like the majority of businesses out there today, you know it’s hard! Because let’s face it, no business is perfect, and no one likes losing customers.
Frederick Reicheld defines customer retention as more than giving the customer what they expect, it’s about exceeding their expectations so that they become loyal advocates for your brand.
One of the biggest problems I hear from a lot of small and medium businesses is they do not know where to start when it comes to increasing customer retention.
So keeping that in mind, here are 11 practical examples of how the world’s best businesses increase customer retention through 11 different tactics.
1. Use blogs to educate customers and engage them
Take Unbounce for example. They offer a Landing Page Builder solution which helps marketing managers build and A/B test landing pages without the need to consult with the development team.
There blog focuses on conversion rate optimization (CRO), how to improve landing pages, drive more customers, run A/B tests and generate new leads. Rand Fishkin, CEO of Moz, was quoted as saying that everything he learnt about CRO was from Oli Garner via the Unbounce Blog.
— Unbounce (@unbounce) August 15, 2013
Why are Unbounce’s Blog posts so effective at increasing customer retention?
- It builds trust and shows that you are an expert on the topic.
- It adds value to customers lives beyond the service/product itself.
- It forms a point of differentiation over competitors which makes it harder for customers to defect.
- It gives you more touch points to communicate with customers, leading to a stronger and more loyal business relationship.
2. Use email to send special promotions to customers
Proflowers uses email really well to retain customers and drive repeat sales. They do this by sending special promotions to customers on specific dates that they know are important. I always get special promotions around Valentine ’s Day, Mother’s Day, and anniversary dates of ex-girlfriends (
The great thing about these targeted emails (apart from the last one) is they are relevant and offer a great incentive to make a repeat purchase.
Here’s an example of an email I received from Proflowers:
Why are Proflowers emails are so effective at increasing customer retention?
- Relevant offers drive strong repeat purchase conversions and repeat purchases go a long way to increasing customer loyalty.
- Email offers a great channel to reach specific, segmented customers. Personalized emails get better open rates but more importantly, they show that you care about the customer as a individual with a name, as opposed to a customer with an ID number.
3. Use the phone to call and check in with customers
Dell Computers does this very well. Roughly two to three weeks after expected delivery of a Dell product, a customer service representative gives the customer a call (this has happened to me twice). The purpose of the call isn’t to try sell anything, it’s simply a courtesy call to make sure the product has arrived and the customer is happy with it.
How outstanding is that!
This is known as proactive customer service and goes a long way to building customer loyalty which will increase customer retention. By calling every customer, they eliminate the chance of a customer getting upset by unforeseeable shipping delays or order errors.
See more about Anticipatory Service in my post on 9 Customer Retention Strategies.
Why is Dell’s follow up phone calls so effective at increasing customer retention?
- Dell are able to eliminate and quickly solve customer concerns pro-actively before they even become problems.
- It gives Dell a human touch so the customer knowns he/she is dealing with a real person, not a big online company. As the customer who has probably bought online, you now have a relationship with a human being. Your relationship is no longer a one way dead-end with a brand.
- The customer now has a contact number they know they can reach a Dell representative from, which means they can rest assured if there was ever a problem in the future, they know exactly who to call.
4. Use customer loyalty programs to keep them coming back
A study by Mintel that surveyed customers from coffee shops in the US found that 40% of the 2000 respondents said they had purchased a drink at Starbucks, compared to the combined 21 percent who did so either at a smaller chain or independent store.
The Starbucks success story is not surprising; they have done an outstanding job at creating a brand and experience that is more than just coffee. It’s this intense brand loyalty that may be helping to stave off competitors, according to branding expert Priya Raghubir.
Starbucks can also contribute their customer loyalty program (My Starbucks Rewards) and loyalty mobile apps to helping them achieve this dominating position in the coffeehouse market.
In a report in mobile payments today, Starbucks CEO Howard Schulz told analysts the company was approaching four million payment transactions per week from their mobile app. Schultz said the company expected to have a whopping nine million members on its loyalty program by years end.
Why are Starbucks’ customer loyalty programs and mobile apps so effective at increasing customer retention?
- An easy way to increase customer retention is to hang out where your customers hang out – for Starbucks, that was on mobile through a mobile app.
- They incorporated inbuilt payments into the app which added value to their customers in a way of saving time, eliminating cash/card and easy access to discounts/loyalty points.
5. Use customer satisfaction surveys to listen to customers
R&G Technologies uses customer satisfaction surveys to find out what their customers really think about their service and identify potentially unhappy customers who might be at risk of cancelling their contracts.
Every quarter, the company sends out their customer survey which measures customer satisfaction scores across these areas: Accuracy, Attention to Detail, Partnership and Helpfulness.
By asking the right questions, R&G Technologies is able to get actionable insights from the customer feedback that can help the company make better business decisions, retain more customers and grow revenue.
In fact, in the past 12 months, R&G Technologies increased customer satisfaction by 15%, which has helped them increase customer retention and decrease their number of unhappy customers.
Why are R&G Technologies’ customer satisfaction surveys so effective at increasing customer retention?
- Customer feedback gives you the ability to find out what your customers really think about your service.
- By listening to customers, R&G was able to identify unhappy customers and stop the problems causing their distress.
- By implementing strategies to fix these problems, they have also stopped them from reoccuring in the future. This has helped improve the company’s service across the board which will increase customer satisfaction and lead to increased customer retention.
6. Use LinkedIn to build trust and strengthen relationships
LinkedIn is the world’s largest professional network with more than one-third of the world’s working professionals. This opens up opportunities for brands to go beyond simply pushing advertisements, to now reaching professionals and building relationships.
At the company I work for, Client Heartbeat I use LinkedIn to build relationships with other professionals inside the IT Industry and Marketing Industry. These relationships are formed in the LinkedIn Groups and via our company LinkedIn page.
By engaging inside these groups and on our company page, while also posting relevant and useful content, Client Heartbeat is strengthening relationships with existing customers and making new relationships with future prospects.
Not bad hey?
Here’s how you can replicate the success we’ve seen at Client Heartbeat:
- Create useful and value-adding content that is targeted at your specific market.
- Engage inside LinkedIn Groups where your target market hangs out and post your content in here too (don’t over do it… one new post every week or two MAX).
- Continue to engage with other professionals inside these groups by commenting on articles, offering your expert opinions and providing recommendations where you see fit.
Why is Client Heartbeat’s LinkedIn strategy so effective at increasing customer retention?
- People buy from people they like, know and trust. By becoming a thought-leader, you can build trust with your customers and offer an extra layer of value.
- Client Heartbeat has been able to offer customers more than just a customer satisfaction tool. We provide education and advice on how our customers can improve customer satisfaction and retain more customers.
Here’s what Pamela Vaughan from Hubspot had to say about using content to increase customer retention.
When your content is effective at communicating and educating customers about what problems your products/services can help them solve, they’ll have better expectations as customers.
What this usually means is happier customers. Rather than blindly purchasing from you and not fully understanding that your product does , which can lead to misconceptions and false perception, educational content better prepares your customers and makes for a more informed customer base.
This can lead to future or repeat purchases and lower churn.
7. Use Twitter to show that you care
Using Twitter as a customer service channel offers an efficient way to communicate with customers. Tesco, the British grocery store giant, uses Twitter really well for social customer service. They are great at adding a personal touch while also using humor to relate to customers. At the end of the day, customers want to be talking to humans, so by adding a human-touch, Tesco is able to build a relationship and show they care.
Since strong relationships tend to build customer loyalty and increase customer retention, I think they’re definitely taking the right approach. Check out a short conversation I found posted by Tia Fisher on Social Media Today between a Tesco customer and the company.
Why is Tesco’s Twitter customer service strategy so effective at increasing customer retention?
- Tesco are able to build a stronger relationship with customers by connecting on a human level.
- By talking to a real person, Tesco customers feel like they are being listened to. Recently, a Miller Heiman 2012 Sales Best Practices Study indicated that companies who listen to their customers see 40% better growth in customer retention than those who don’t.
Interested in reading another great example of a business using Twitter to show they care? Read this post about Scotty’s Brewhouse – a local restaurant chain in Indiana, USA.
8. Use whitepapers and eBook guides to show that you’re the expert
Hubspot is the king of using whitepapers and eBook guides to educate customers and prospects to demonstrate they are the experts in the industry. For those of you not familiar with Hubspot, they specialize in inbound marketing and offer a software solution for small and medium businesses.
In a world where customers are becoming immune to push advertising, inbound marketing has grown in popularity because it offers a more passive and ‘pull’ approach to marketing.
This also comes in handy when we want to increase customer retention.
Hubspot demonstrates they are the expert in the field by sending relevant whitepapers and eBooks at different stages in a customers journey. For example, you will receive eBook one after signing up… eBook two after a month and whitepaper three after four months.
Each of these specific pieces of content are targeted to the customer at a particularly stage in the ‘workflow’ or customer journey. All content aims to educate the customer on the problems they may be coming across with inbound marketing and presents Hubspot as the expert software solution to help them solve the problem. All their content includes actionable steps that the customer can take to solve the problem , which will help improve their business.
Why is Hubspot’s Whitepaper and eBook strategy so effective at increasing customer retention?
- Instead of being only a product/service that the customer rely’s on when they need it, you can use content to extend your relationship and become a expert source that your customers depends on.
- Content is a great way to show customers what problems your products/services can help them solve. This leads to better customer expectations from customers.
- Educating customers about the expectations of your product or service is key to making sure you are meeting customer expectations. No one likes a service that under-delivers, so focus on setting expectations through your content, then make sure you try to exceed them!
9. Use postcards to send friendly reminders
My local Dentist, Central Dental cuts through all the marketing noise by sending me friendly reminders via postcards every six months when I’m due for a checkup. In a society where we are bombarded with so much advertising and marketing, using more traditional marketing channels like direct mail, can do a really good job at breaking through and creating a meaningful experience.
Although my dentist is in the B2C market, B2B marketers are also under utilizing this channel to increase customer retention. Most companies in 2013 are scrambling to improve customer retention by sending emails or using customer surveys, whilst many are forgetting the more traditional channels.
To bring some perspective to this, let’s look at a study by Target Marketing which surveyed B2B Marketers. It found that although email marketing was sighted as the strongest ROI for customer retention (44%), direct mail came in second with 17%.
Stat’s don’t like… what are you going to put on your next postcard?
Why is Central Dental’s Postcard strategy so effective at increasing customer retention?
- It breaks through the traditional noise of email and phone. How many personal postcards do you receive? When this one comes round, you are bound to remenber it because it is unique.
- Friendly reminders show that you care – they give you an easy and open way to connect with your customer which can lead to a repeat purchase.
10. Use Salespeople to set expectations early
R&G Technologies always sets firm expectations right from the initial sales encounter. The company believes that there is no point in trying to oversell a product that will only underdeliver in the future.
By setting expectations correctly, it gives your company the opportunity to go above and beyond them to exceed customer expectations.
Tony Nissen, National Solutions Manager at R&G told me that he likes to always under promise and over deliver.
“There’s no better feeling in the world than to exceed my clients expectations. I see this over and over again at R&G, and our clients are always telling us that we deliver outstanding service. I strongly believe it comes down to setting correct expectations early so both parties know what to expect. Then it’s just a matter of trying to go above and beyond to exceed the expectations.”
This scenario has helped R&G grow their number of satisfied customers and turn lots of them into raving customer advocates who are referring new business on a regular basis.
Why is R&G Technologies ‘setting expectations early’ strategy so effective at increasing customer retention?
- Incorrect customer expectations are one of the customer retention mistakes you must try and avoid. Salespeople can not be selling the house down and the company under delivering.
- By setting expectations correctly, R&G never under delivers or lets a client down. They are always seen to be over-delivering and exceeding customer expectations. This creates positive word of mouth, new business referrals and strong customer loyalty.
11. Use Facebook to build a community of engaged customers
At Client Heartbeat we’ve been using Facebook to grow a community of engaged customers and prospects.
I can already hear you yelling, Facebook doesn’t work for B2B!
But… I can tell you it certainly does. Client Heartbeat is using Facebook as an ‘owned’ marketing channel which we can use to push out blog posts, white papers and resources.
Every time we release a new blog post, I know there are 324 of our followers on Facebook that are interested in what we have to say. These Facebook followers are a combination of our customers, prospects and sometimes just fans of our content.
By keeping existingi customers engaged with us on Facebook, we have the opportunity to touch base with them on a regular occasion. Furthermore, since the communication channels open, we let customers reach out to us via Facebook with product requests or questions, and guess what; we’re there to answer them, promptly.
It’s important to recognize that as a company competing in the B2B space, you need to be available to your customers where they hang out. Although Facebook isn’t the main channel our customers hang out on, it’s still an important part of our overall strategy for customer satisfaction and support.
Why is Client Heartbeat’s Facebook strategy so effective at increasing customer retention?
- It gives us another ‘owned’ channel to communicate with our customers. Instead of relying on customers to open emails, we can push messages, valuable content, product updates and questions directly to fans via Facebook.
- Client Heartbeat’s Facebook channel provides customers with a way to instantly ask questions and get quick responses from the sales and support teams.
Increase Customer Retention by learning from the best
Customer retention is a challenge for all of us, but it’s an essential component to growing your business. By using these 11 customer retention tactics, you can work towards improving your customers experience which will assist in retaining more customers.
Other valuable resources on Customer Retention: