What do modern-day customers and fate have in common?
They are both fickle. Haha.
As consumers are spoilt for choice, switching from one brand to another can take place merely with a click of a button. In the course of this action, the pull could be anything from freebies and offers to better products or services.
Naturally, as the competition heats up, businesses cannot afford to lose their greatest assets - their existing customers. As a result, there is a growing need to plug customer churn through proactive customer retention.
Customer Retention: What is it? And Why Does it Matter?
Customer retention is a series of business activities that are aimed at, increasing the customer lifetime value, gaining repeat customers, reducing bounce rates or drop-offs, and boosting profitability. These strategies harness the potential of your existing customer base to ensure that your customers stick with you - no matter what.
According to a Harvard Business Review report, it is 5-25x cheaper to retain a customer than to acquire a new one. And that’s not all, a retained customer offers more value than a new customer in the following ways:
- The probability of selling to a new customer is a meager 5% to 20% while the probability of selling to an existing customer is between 60% to 70%.
- Existing customers are 50% more likely to purchase or try out a new offering by your business.
- They are also 31% more likely to spend a higher amount while transacting with your business.
- A 5% increase in customer retention can accelerate profits by 25% to 95%.
Effective Strategies to Boost Customer Retention
Now that you understand the true value of customer retention, here are a few actionable techniques to fix your churn bucket:
Analyze Customer Churn Patterns
Customer churn does not take place overnight. So ask yourself - what is causing customers to leave?
While customer churn could be a result of personal reasons or choices, you can track metrics and analyze data to find commonalities at a higher level. Your business could be driving away customers by treating them poorly or unfairly, by not offering upfront value at the given price point, by offering sub-standard customer service, and more.
Identify these pain points and observe any warning signs that point towards fixing your churn bucket. Set these as triggers so that you can intervene at the earliest.
Set Up Dedicated User Accounts
Encouraging users to set up an account on your website can get tricky.
On the one hand, you do not wish to pose it as a hurdle in the way of guest checkout, especially since only 54% of individuals are willing to share their email address - a number that dwindles when it comes to account-linked addresses, spouse name, and other identifiers. And on the other hand, customer registrations contribute to your data pools and empower your business. You can leverage it to understand customer requirements, preferences, and other crucial details.
Fortunately, you can strike the fine balance by offering a seamless order placement experience first, irrespective of whether or not they sign up with you. Then, you can then nudge them to register on your website and flesh out their profile.
Bolster Your Customer Support
Customer support covers everything from pre-sales assistance to post-sales guidance. It helps retention in two primary ways. First, it is the backbone of the customer experience. And second, it acts as a net to capture customers who slip through the cracks.
Communication plays a vital role in strengthening customer support. Apart from communicating through emails and social media profiles, introduce live chat features or help desks to render it scalable and instantaneous. You can even leverage AI-powered chat bots that can seamlessly handle customer queries and enhance customer retention.
The increased accessibility paired with instant gratification can make a strong case in your favor.
Personalization is more than a buzzword, it is the medium to form long-term relationships.
A staggering 80% of consumers are willing to purchase from a brand that offers personalization. Personalization has become a potent tool in maintaining user interest and engagement. AI engines power personalization decisions that modify the content or products depending on the target audience. Similarly, it helps set up trigger-based events that will reward the existing customers by boosting customer retention. Such use cases are just the tip of the iceberg! Personalization offers immense scope in deployment and applicability across all industry segments, from eCommerce to Finance.
It is the ultimate and multivariate differentiator whether you are sending marketing emails to your customers or suggesting products in your eCommerce search bar.
Kick-Off a Customer Loyalty Program
Customer loyalty programs are known as customer retention programs for a reason - they are a tried and tested strategy to get your customers to keep returning for more. With the customer loyalty programmes your customers can enjoy a wide range of benefits that offer value for their loyalty, while you cash in on the profits of repeat business. Issue a few customer loyalty points when a user signs up, and these will rapidly multiply in almost no time!
As per the Pareto Principle, 80% of your profits originate from 20% of your customers. This fact summarizes how businesses should focus on retaining their customers just as much as they prioritize acquiring new ones.
Personalization backed with robust recommendation practices could be the shortcut for brands to keep customers engaged. And it can be achieved through the wonders of technology like artificial intelligence and machine learning. Argoid is one such solution that offers a mix of humanity and technology.
FAQs on Customer Churn
What is customer churn?
Customer churn is the percentage of customers who have stopped using your product after a certain time. Customer churn rate is a major metric that provides an in-depth overview into customer satisfaction level of an organization.
Why customer churn rate is a major eCommerce metric?
Customer churn rate provides the customers with in-depth understanding of which customers are abandoning your eCommerce stores over a certain period of time. As a result, it becomes easier to understand which customers to target in your retargeting campaigns and how to personalize your marketing strategies.
How to reduce customer churn rate in eCommerce?
There are several ways to reduce customer churn rate, including incentivizing purchases, surveying churners, celebrating customer loyalty and so on.