Outbound engine reports that it takes five times as much revenue to acquire a new customer as it does to retain a current one. Even so, most small businesses put much more time, money and energy into new customer acquisition.
What companies should really be focusing on is customer retention — that is, keeping the customers you already have happy. The rate at which you lose customers, acquire new customers while taking into account keeping the ones you already have is called retention rate.
A company’s retention rate can be calculated using the following equation:
Retention Rate = [(End Customers – New Customers)/Start Customers]*100
The retention rate can be a great indicator for how your customer service team is performing. If you notice customers are purchasing one thing and never buying again, you may have problems keeping your customers engaged. If you’re losing customers left and right, it may be an indicator that your customer service team isn’t as knowledgeable as they should be.
Building your business’s culture around exceptional customer service while fostering genuine relationships with your customers makes a huge difference when it comes to customer retention. There are many top companies, as well as several newcomers on the block who are excelling at the game of customer retention.
Nextiva covered 30 great examples of how to retain customers for life (and has detailed some of the most important ones in the infographic below). For example, Patagonia helps create a community among its advocates by launching programs designed to recycle and re-use their clothing.
Since their customer base is largely earth-conscious, nature-loving people, they can build a bond over a shared concern for eco-friendliness. Small businesses can emulate this easily by being involved in the community, or creating a community on social media. Larger companies will need to analyze their customer base and figure out what is important to them — then act on it.
Another perfect example of exceptional customer service is how Buffer has built its culture around it. They call their representative “Happiness Representatives” and always make solving customer’s issues a top priority.
Making your customers feel heard and valued is extremely important, this is just what Capital One did when they noticed a customer had posted online about spilling orange juice on their keyboard. Since a few of the keys were damaged, the customer was unable to sign into Capital One’s online portal. He complained about this online and they responded in a way he never expected. They sent him a new keyboard with a handwritten note which ended up going viral while creating a customer for life.
One thing to remember when attempting to connect with your customer base is how and where they communicate. For example, Slack, the instant messenger app, knows that many of their customers communicate on Twitter. Whenever there is a bug or an outage they will post about it there. Now, most Slack users know that is the first place to check when experiencing an issue.
Businesses that excel at customer retention also keep their customers interested. What better way to keep people engaged with your offering than through exclusive rewards programs? Starbucks offers a loyalty card that awards loyal customers treats and perks, which is a great example of a successful loyalty card program.
There are so many ways companies, both large and small, can go above and beyond for their customers. Happy customers are unlikely to patronize another company, which leads to customer retention. Some other perks include positive reviews, word of mouth marketing and even increased sales. See some more examples of how top companies are acing the retention game below!
