It’s no longer enough for a company to simply provide excellent products or services to their customer bases. Today’s consumers expect much more than that, which is why there is a movement toward establishing strategies focused on customer retention, boosting customer relationships and developing a heightened sense of loyalty among the target audience.
Achieving all three has one important outcome – improved revenue. But getting it right will require the assistance of customer service professionals whose sole job is to effectively communicate with customers.
Why Customer Retention Matters
If more business leaders focused on the fact that improving customer retention by as little as 5% could increase profits by 25% to 95%, there would be a bigger push to create incentives for customers to remain with a brand. Unfortunately, there are a lot of companies that fail to track their retention rates, let alone establish a strategy focused on customer retention.
There are many reasons why companies should build customer retention initiatives, but the following are some of the most often cited:
- It is up to six times more expensive to entice new customers to buy from you than it is to get a return customer to make a purchase. And 82% of companies agree that it is far cheaper to retain customers than it is to acquire new ones.
- Repeat customers spend nearly 70% more in months 31-36 than they did in the first six months of being a customer.
- Trust is the main factor that leads a customer to become loyal to a brand. When they are loyal, they recommend the company to others, buy more products at a more frequent rate and spend more money per purchase. Nearly 80% of customers make purchasing decisions based on their level of trust in a brand.
- Repeat customers spend around 33% more per order compared to other customers.
If you think developing a customer retention strategy is too involved and complex, consider that U.S. companies could save $35 billion per year by doing more to keep their customers around. The numbers get even more extreme, as this survey shows that customer churn costs businesses in the U.S. $168 billion per year.
Customer Retention Impact
A company may have a set of goals, but lack an organized approach to keeping their customers. Fortunately, 84% of companies that put a customer retention strategy in place see an uptick in revenue. The results can vary per industry, but with e-commerce, it is estimated that 35% of revenue is generated from the top 5% of repeat customers.
You also need to consider the prolonged and cumulative impact of customer retention. Convincing a customer to make that first purchase is difficult, but when they have a good customer experience, they’re 27% more likely to come back for round two. And after that second sale, they’re 49% more likely to make another purchase. With that third purchase, close to 62% are coming back for a fourth. This snowballing can have a huge impact on sales, giving even more credence to the power of customer retention.
Building Customer Relationships
It’s no coincidence that when companies build solid customer relationships, they also become successful. While the focus on providing quality products or services matters, relationships with customers are built around much more than that.
When a connection is established, trust becomes a possibility, and as we’ve already covered, with trust comes loyalty and increased revenue. But how do companies establish such strong relationships with customers?
One of the first things you need to consider is outsourcing customer services to a qualified contact center. When customers have a question, they can be quickly connected with a highly trained representative with excellent communication skills and a passion for assisting customers.
While having that resource available is paramount to success, you can also communicate regularly through newsletters, emails or social media content. You can make them aware of new products or services, announce promotions or sales and engage with content about news relevant to your industry.
The more you know about your target audience, the better able you will be to create content that is meaningful to them, which means you can personalize it, but you’ll also have the information you need to distribute your content through the right channels.
Prioritize the Consumer
Improving the customer experience improves your chances of developing a stronger bond with your valued customers. This should involve taking a more customer-centric approach, and according to a report from Forrester, B2C businesses that take a customer-first approach see nearly double the revenue growth of noncustomer-first businesses.
There is also a trend of businesses looking to improve the customer experience by simplifying the methods through which customers receive assistance. Again, this is tied closely to the services provided by professional contact centers where getting in touch with a customer service representative is a pain-free process that is also highly helpful. It is also key to partner with contact centers that have extensive customer service training to ensure your customers receive the best service.
An important thing to note is that you shouldn’t constantly seek to sell something, as consumers are bombarded with this type of content and would prefer to be engaged on a more personal level about topics rather than salesy promotional material. You’re not trying to get money from them with every bit of outreach – rather, you’re engaging your audience in an effort to establish a tighter bond.
Interesting stats about customer relationships:
- A “totally satisfied” customer spends 2.6 times the money with a brand than a “somewhat satisfied” customer.
- According to an Epsilon survey, 80% of consumers are more likely to make a purchase when brands offer personalized experiences.
- Reaching out to a customer within an hour of them making an inquiry makes the roughly seven times more likely to consider themselves a satisfied customer.
- Improving customer relationships offers a competitive advantage, which means your competitors will have a more difficult time disrupting your customer base.
Establishing Customer Loyalty
There are many reasons why businesses become successful, but one thing almost all of them have in common is a large base of loyal customers. And one thing loyal customers have in common is that they make many purchases with the brands they feel loyal to.
Consumers today have high demands, which is why a single poor experience with a brand can completely turn them off and never make another purchase from that brand again. However, loyal customers are willing to weather a bad interaction, forgive the company and return for more business.
Another perk to creating loyal customers is that they become brand ambassadors and tell others about their experience. This is some of the most impactful marketing, as consumers value the input of fellow consumers.
Some of the top reasons why loyalty matters include the following:
- Improve word-of-mouth marketing
- Maintain sales
- Promote growth
- Encourage repeat sales
- Increase spending
- Reduced marketing costs
- Improved customer insights
- An emotional connection that lasts
Return Business Through Heightened Loyalty
It’s not by accident that consumers choose their favorite brands and develop a sense of loyalty to them. There is a lot of work that goes into creating this bond, but it begins with communicating your values as a company. Consumers might love your products or services, but it’s the company culture that encourages loyalty. Consumers today are making purchases based on their belief systems, so when you put your values out front, you stand a better chance of enticing customers with the same values to become long-term fans.
The second step in developing loyalty is to provide top-notch customer service. This is best left to the professionals who make it their full-time job to deal only with customer service and improving the customer experience. This is often left to contact centers where nothing short of excellence is acceptable.
One tactic to establish loyalty is to develop a loyalty program that rewards return service. These programs can involve special invitations to sales that are exclusive to frequent customers. Another is to offer store credit or even special notices of new product releases. Developing community groups via social media is also an option. For example, Starbucks created a Facebook group specifically for fans of their pumpkin spice latte, which despite becoming a punchline enjoys an impressive following.
One of the advantages of working with a contact center is that your customers can have a meaningful conversation with a representative about a range of topics relevant to your brand. For example, a customer could have a minor complaint about a product or service, which is valuable feedback that can be used in the development of future solutions. These conversations provide information about how your customers are evolving and give you the chance to be proactive about how your company’s offerings also evolve.
Outsource to a Professional
At Protel BPO, we’re well aware of the power of outstanding customer service because it’s something we provide on a daily basis. Our goal is to strengthen the bond between our clients and their customers and we do that by providing high-quality, professional customer service with a smile. Contact us and learn more about our approach to putting customers first.
