One concept I get asked about a lot is customer retention strategy.
It’s obviously important. Business tends to grow as a result of two factors:
- Your customer acquisition strategy
- Your customer retention strategy
If you’re not acquiring and then retaining customers constantly, your business probably doesn’t have many years left.
Now, a lot of businesses focus much of their effort on the customer acquisition side. By some measures, it’s 3-to-1 or 4-to-1 in terms of a focus on customer acquisition. Here’s the rub, though: it costs 7x the amount to acquire a customer than retain one, on average.
This all leads to one place: you need a customer retention strategy. But many come to me and wonder: is it too late? They’ve been focusing so much on acquisition that they’re not sure how to focus on retention.
Your short answer: it’s not too late. Here are a few quick steps to a better customer retention strategy.
Customer retention strategy: Quick resources
Before we dive a bit deeper on customer retention, let me give you a couple of ‘quick hits’ if you’re a busy person who can’t find the time to read the whole post:
- On virtually every episode of my podcast so far (10 to this point), we talk about customer retention — and that’s across different industries
- Stop worrying so much about customer acquisition and focus more on customer retention
- Strategy: The recovery call
- Five steps for regaining customer trust
- Customer retention strategy: Learn to say ‘I’m sorry’
Customer retention strategy: The five competencies
I’ve been doing this type of work since 1983. In that time, I’ve been blessed to author a few books, meet some amazing professionals from companies all over the world, and give speeches on all manner of customer-facing topics. In the course of doing this work and learning from others, I developed my “five competencies,” which are the guiding forces of customer experience work. When you can focus your company on the five competencies, the customer retention will come.
There are actually also customer experience competency ‘recipe cards’ that you can use to quickly create ROI for your organization. Here’s a primer on how to do just that.
Customer retention strategy: Know how to present the money side of it
Typically, if you want wide executive buy-in on an idea, you need to demonstrate two things (at least in for-profit companies):
- The tie to the bottom line
- How the idea will be measured
When you craft a customer retention strategy, you absolutely need to be able to speak to both of these elements. Otherwise, no one will buy in.This is a good round-up of some strategies for customer retention. The Harvard quote at the top is powerful, too: if you increase customer retention by 5 percent, the profit increase can be anywhere from 25-95 percent. Who wouldn’t want those numbers? I’m not a huge fan of companies focusing on short-term results — customer retention doesn’t happen in the short-term — but I am a big fan of companies doing 95% profit growth, and customer retention is a great way to get there. Here are an additional 20 strategies. If you look at the two lists and see the pockets of overlap, much of it comes down to effective communication. That’s both internal (employees) and external (customers). When you reduce friction and pain points around communication, customer retention can follow.
Customer retention strategy: My podcast
… and, allow me to exit this post on a small self-promotional note. I just released the 15th episode of my customer experience podcast this past Tuesday. I have loved doing this podcast. I’ve talked to guests from all sorts of industries — and for-profit vs. non-profit too. (Private vs. publicly-held as well.) In all 15 episodes, a CCO-level leader explains his or her customer retention strategy. So go listen to 2 or 3 episodes this weekend if you have some time. You’ll pick up at least six actionable ideas from people doing this work day-in and day-out. That’s my hope, at least.
We’ll be back on Tuesday with the 16th episode of my podcast, so look out for it.