What’s one of the best ways to improve your business’ profitability?
Hang on to your existing customers!
It’s much easier on the wallet to keep current customers coming back than to acquire new customers. Plus, loyal customers are more likely to make bigger purchases, giving even greater value than new shoppers.
If you can keep your current customers happy and coming back for more, you’ve got a recipe for long-term success.
Improving customer retention requires looking at the customer lifecycle as a whole and searching for ways to optimize each stage. Let’s take a closer look at how you can achieve this with specific tactics and strategies.
We recently talked about the importance of the pre-purchase customer experience and how you can take steps to foster customer loyalty before a potential buyer has even made their first purchase.
The pre-purchase experience plays an important role in converting a lead into a customer as well as maintaining a customer relationship for years to come. However, even though there’s a clear link between positive customer experiences and long-term retention, many businesses overlook the value of pre-purchase interactions as an indicator of loyalty.
Not only should the experience be positive from the first interaction with your business, but you should pay close attention to your post-purchase measurements to ensure those customers – who you’ve already worked so hard to build a connection with and convert – remain long-term customers.
Creating a positive experience that inspires brand loyalty doesn’t need to be overly complicated. Something as simple as conveying how much your customers mean to you can increase encourage them to stick with your brand for the long haul.
You can demonstrate gratitude with a simple post-purchase thank you notes. Whether a customer shops online or in-store, you can still email them a receipt with a note of appreciation and a discount code or bonus to thank them for their patronage.
Another way to provide post-purchase value is to offer an attractive loyalty program. A well-designed loyalty rewards program allows customers to earn something of value, like a discount, exclusive offer, or freebie after a certain number of purchases (or other perks like company swag if they’ve been with your business for a certain period of time).
Since bonuses are given in return for a customer’s ongoing support, a rewards program not only shows appreciation for your most frequent shoppers but also incentivizes customers to make more future purchases.
Self-service customer support resources can take a variety of forms, from knowledge bases to product guides to how-to videos that aid new customers as they get acquainted with your products or services.
For instance, you could create a resource hub on your website, publish an introductory guide on your blog, or send out a series of onboarding emails to provide the information and context new customers need when getting started. Whatever format you choose, the goal should be to help each customer get the maximum value out of your product or service.
In addition to the self-service resources mention above, you should consider streamlining your customer service with the help of support technology. This might include AI-powered chatbots, technology monitoring that permits proactive support, or an internal knowledge base that allows every agent to provide consistent, accurate information.
Storing all of your data and support information in one place ensures your entire team has access to contextual data about each customer. This saves time and prevents headaches because agents never have to ask a customer to re-explain an issue or repeat themselves – that information is already available.
The easier it is for customers to obtain resolutions to support issues, the more likely they are to continue doing business with you despite the setback.
Sending back a product doesn’t need to be an unpleasant experience. When an exchange or refund goes smoothly, that’s a point for your business in the eyes of the customer. And, since someone who bought from you once is likely to consider doing so again (even if the first item didn’t work out), this is a good chance to create a positive experience.
So, clearly state your refund and return policies on your website so customers know what to expect before they decide to buy. You should also ensure all of your customer service agents are more than happy to help with any customer transaction, whether it’s a purchase, return, exchange, or support issue.
Note that communicating your refund policy could be classified as a pre-purchase measure and might even boost conversions by easing an uncertain a potential buyer’s mind; however, since these policies are only truly relevant after a purchase has been made, streamlining refunds is also an important post-purchase measure that can influence loyalty and retention.
If you sell a product that needs to be topped up occasionally or a license or subscription that needs to be renewed, you should definitely be sending friendly replenishment reminders.
This is a low-effort yet effective way to show that you pay attention to details and make customers feel important. Plus, sending this type of reminder encourages loyalty by nudging them to renew a subscription and making it as convenient as possible to remain a customer or repeat a previous order.
You can automate and schedule these reminders in advance to coincide with the exact moment a customer should start thinking about renewing or repurchasing – that is, just before they run out of your product or subscription.
Go one step further by suggesting upgrades that they may be interested in. We recommend providing personalized product recommendations based on past purchases and interests. Suggest complementary products (not just for the sake of upselling – though that’s an added benefit) to demonstrate that you understand the customer’s needs and are looking out for them.
Although asking for customer input on your product or brand does require effort on their part, the feedback you receive can allow you to simplify the post-purchase experience going forward. It also shows customers that you respect their opinions and value their feedback.
For instance, you can collect feedback via email survey. Send out a short questionnaire after a purchase or support interaction to find out about their experience. Or, if you want more formal, in-depth responses, consider hosting focus groups that give select customers an opportunity to discuss their experiences.
You may want to ask what they like about the product, whether they were able to access whatever resources they needed to get started, whether their support experiences were positive or negative, and what they wish had been handled differently, if anything.
What’s the best time to ask for customer feedback? Well, it can vary depending on your product or service. The more complex your offering is, the more time a new customer might need to gauge their satisfaction with it.
Unfortunately, not all customer feedback will be positive. While it might suck in the moment to get a negative review or unflattering response to an email survey, it’s not the end of the world. In fact, as long as the feedback is constructive and fair, negative customer comments provide an opportunity to learn and improve your product, brand, and the type of experiences offered.
Plus, receiving negative feedback gives you a chance to mend bridges, ensure unhappy customers get their issues resolved, and an encourage open dialogue that creates strong customer relationships.
If you can be transparent with your customers at every stage of their lifecycle, your customer relationships will rest on a foundation of trust and respect.
On the other hand, if you make impossible commitments, promise unlikely results, or intentionally gloss over the details of your return policy, shipping costs, or promotional offers, your customers will likely feel betrayed and lose faith in your brand.
So, be honest about what customers can expect from your offering as well as your support team. Don’t promise quick responses 24/7 to all support questions if your help desk is only operational during business hours.
There are a number of post-purchase measurements and customer retention metrics you should track.
While knowing these measurements won’t improve retention without additional action, the numbers do indicate how well you’re doing post-purchase. This means you’ll know whether you’re on the right track or need to adjust the type of experience you provide – which contributes directly to retention, loyalty, and the longevity of your business.
Some of the most crucial post-purchases measurements include:
Your churn rate refers to the rate at which customers stop buying from you. While some level of churn is inevitable, a high rate of churn can be caused by your product failing to meet customer needs, poor ROI that prices your product out of their budget – or because they switch to a competitor.
Revenue churn calculates the percentage of recurring revenue lost from your current customers. This is most noticeable in business models that operate on retainers or subscriptions (like SaaS companies, for instance).
This metric measures the rate at which existing customers are increasing their spend with you. Ideally, as customers recognize the value your service provides, they are willing to increase their engagement or buy additional products from you.
The percentage of existing customers who make additional purchases after their first transaction. You can break this metric down by segment to track which types of customers are your most profitable and predict which leads are most likely to turn into long-term loyal shoppers.
Product return rate is the percentage of units sold that get returned. This is a simple measurement and can be a great source of insight when tracked consistently over time – especially for businesses that sell physical goods.
If you want to learn even more about crafting amazing customer experiences (both pre- and post-purchase), sign up to get monthly updates on the latest and greatest tips from our blog, sent straight to your inbox.