The Science of Customer Retention
You’ve probably heard the old adage that it costs more to get a new customer than it does to keep an existing one. Not only are new customer acquisition costs higher, but successful customer retention helps to strengthen your brand identity and business reputation. Surprisingly, many businesses don’t have a customer retention strategy. If your company is entering a new market or experiencing high initial adoption of your product, you need a robust customer retention strategy to prevent losing any market share to competitors.
Customer retention is primarily driven by building rapport and deepening the relationship with your clientele – this doesn’t mean your approach shouldn’t be informed by a little science as well. Here are a few customer retention strategies that are backed by hard data and quantifiable, top-line results:
– Leverage your sales database
– Analyze upsell patterns
– Promote retention-oriented products
Start by tracking your average customer retention in your sales database, then leverage this data to contact these customers before they leave for a competitor. For example, if you have an average customer retention rate of five years, you need to call or contact them before this milestone to ensure they’re still satisfied with your products or services.
Capitalize on potential cross-selling and upselling opportunities with your current customers. Not only does this mean more revenue for your business, but the more of your products and services a customer finds useful, the less likely he or she is to leave you entirely.
Not all of your products or services have the same built-in value when it comes to customer retention. Determine the “stickiness” of a product or service by mining historical data and conclude if those offerings actually caused customers to retain their business relationship with you.
Often, your most sticky offerings are the ones that involve the highest inconvenience in switching between vendors, suppliers or products. When you upsell these offerings to each of your current customers, you retain more of their business over the long-term.
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