Highlights
- Definition of customer retention management?
- Formula to find retention rate
- Winning the right customers in the right way
- Sustainable efforts to retain the customers
- Ensure the best customer experience programs
- Customer engagement strategies for customer growth and development
- Linking customer data to derive strategies to retain customers
There is an old saying that “Customer is always right”. Believe us there is nothing more true than this. For this very reason, customer retention management plays a key role in the growth of your business.
Now, what this monster is? Well, Customer retention management is the process of ensuring customer satisfaction and experience in your organization. It’s the practice that helps an organization boost its revenue from existing clients. Because keeping customers is more cost-effective than gaining new ones.
Customer Retention Management Definition
Customer retention management refers to the practices that an organization takes to ensure their customer stays loyal to them. 65% of the company’s business comes from retained customers. Thus, in simple words, customer retention is the key to success.
If you are thinking about the sustainable long-term growth of your business, you must know that ensuring your customers' happiness is necessary. Of course, if the customers are happy they remain with the business, so customer retention is the key to achieving business growth. There is no denying the fact that bringing new customers in is extremely important, but nonetheless, retaining those customers is the actual win.
Measuring Retention Rate
Statistics show that 49% of customers are likely to buy from the same store from which they shop in the last 90 days. Doing the math gives you an idea that a major share of business comes from existing customers. As per Customer Gauge, 44% of companies still don’t bother to calculate their customer retention rate.
Measuring customer retention rate allows you to track your efforts and effective strategies that work for your customer retention. Also, it helps in communicating the value of customer retention to key stakeholders and creating strategies for the future.
The formula to calculate the customer retention rate is:
Elements of Customer Retention Management
There are 4 main elements of customer retention management.
Customer Acquisition
It seems strange to consider gathering new customers while talking about customer retention. Well, believe us it should be your first thing to consider in customer retention management. Attracting and acquiring new customers through brand marketing and maintaining their loyalty provide the base of retention management.
Targeting the wrong customers can be an easy mistake with frightening consequences. Thus, finding customers who will need your products or services in the long run is important. And these are the customers you would want to maintain.
Customer Retention
Customer acquisition is the only start of the lengthy process. This step generates revenue but many businesses stop at this very first step and fail to reap the benefits in the long run by retaining customers. Customer retention is a broad topic and involves many strategies. However, in essence, customer retention refers to all the efforts that a business puts into keeping the customers loyal to the business.
In fact, many businesses are adopting various strategies to break off from a bad customer base. They find and retain good customers who bring in more profit. As per Gartner's study, 75% of organizations will break off with poor-fit customers.
Customer Lifecycle Management
At this stage, organizations put in effort to maintain the relationship with their customers. Focusing on various aspects of customer experience, organizations create strategies such as mystery shopping exercises.
Basically, this step ensures the experience of the customers stays above industry standards. It’s just one of many ways to earn the customers’ trust and keep them interested.
Customer Development and Growth
The last but most important element of customer retention management is development which refers to the amount customers are spending on you. This is the step where customer relationship management and customer retention come together. Good customer relations allow organizations to earn the trust of their customers, fulfilling the purpose of customer retention management.
Customer Retention Best Practices
Wondering what you need to do if you are starting out with customer retention? Well, here are 3 things you can do:
- Always start with data. You have to know the extent of churning of your customers. Reasons for their churning and creating the strategies as per all the statistics. This is only possible with the concrete data. So, data gathering should be your first step.
- Flexibility and versatility are the essence of a good customer management program. Various customers have various touch points, so your program should be able to adapt to all those touch points.
- Use good CXM software in case your customer base grows. This customer retention management software gives you clarity on all of your retention data and helps you make calculative decisions.
Final Say
Taking everything into account, customer retention management is essential for your business growth. It highlights the importance of using customer feedback to understand customer preferences and give the experience in line with those expectations.
FAQ
What is customer retention management?
Customer retention management includes the strategies and processes that organizations use to encourage customers to remain loyal to them for a long time.
