There’s no denying that customer satisfaction is crucial for the survival and success of any business.
Surely, you need to acquire more customers to meet your sales and revenue goals. However, in order to grow your business, it is just as crucial to retaining the existing customers.
Fostering long-term relationships should therefore be a primary objective of every business.
You think that you are doing everything right, but the customers just won’t stay.
Even after all the efforts, you can’t find any reasons for the drop in your customer retention levels.
If this situation seems familiar, you may need an effective customer retention strategy for your business.
Factors like, a reduced churn rate can also lead to a reduction in customer acquisition costs. It can boost team productivity and help you generate more revenue with up-selling opportunities.
Personalized interactions are a prerequisite for improved customer satisfaction. A prospect management software or CRM software can make this process easier by collating customer data and feedback and utilizing it for optimizing interactions. It can enable you to analyze customer behavior and stay connected with them.
Having an effective CRM customer retention strategy in place can keep your customers engaged and satisfied. In this blog, we cover the 7 best practices to retain more customers and the role a CRM system can play in maximizing the effectiveness of these practices.
What is CRM and Customer Retention?
Customer relationship management (CRM) allows you to stay on top of all customer data & interactions. By acting as a repository of customer data and a unified platform that everyone can access, CRM can boost productivity for your team and help you make more sales.
Some of the fundamental functionalities of a CRM tool include:
- Contact data management
- Lead generation & scoring
- Marketing automation
- Communication tracking
- Activity timelines
- Reporting & analytics
- Pipeline management
- Business forecasting
With a CRM system, you can collaborate with your team members easily. Additionally, it allows you to access the data remotely, helping you stay updated at all times. CRM aids customer segmentation and targeting. It also allows you to monitor the progress of activities, creates new tasks, view pending actions, manages sales leads, generates reports and make forecasts. With a CRM system that offers powerful integrations, you can manage everything related to your business without leaving the platform.
Moving on to a crucial aspect of any business enterprise- Customer Retention.
As is evident from the name, customer retention is all about keeping more customers engaged and loyal to your business. A customer retention system can work as a significant driver of revenue for your business in the long run. Therefore, reducing customer churn is a critical business component that requires a comprehensive strategy and the right technology.
But how are CRM and customer retention related?
The implementation of CRM can significantly boost customer satisfaction and, consequently, retention levels. By strengthening customer relationships, CRM provides businesses the opportunity to maximize customer retention.
Why is Customer Retention Important?
Before we begin to understand how CRM helps in customer retention, it is crucial to address the question-
Why care about customer retention at all?
To understand the importance of customer retention, let’s begin by talking about numbers.
Even a 5% increase in customer retention can boost profits by up to 95%.
Such an enormous increase in profitability is a result of the repeat selling opportunities that existing customers provide.
One of the other significant benefits of customer retention is its cost-effectiveness.
Retention of customers is much more cost-effective than acquisition. It is more profitable to retain the customers that you already have than to look for new leads and convert them. Retention can contribute to an increase in the overall lifetime value since they are likely to trust the business more and make more profitable purchases with time.
Next up is brand image.
Customer retention levels can act as an excellent indicator of your business’s reputation.
You can measure the success of your enterprise by how many sales you are making and how many of these customers return for repeat sales. This number can help you discover if there are any lapses in your customer service or experiences. Based on how many customers come back to your business, you can understand how they perceive you and what can be done to make your services more accessible and relevant to their needs.
Additionally, customer referrals can also improve your profits. By recommending your business to other prospects, existing customers can have a considerable impact on your bottom line.
What Affects Customer Churn Rate?
Before we move on to the ways to maximize customer retention, it is essential to identify the reason behind your customers leaving.
There are countless reasons why customers may choose to discontinue their association with a business.
Some of the most common of these include:
Poor Customer Service
A significant reason for the loss of customers is inefficient customer service. Not responding to customer tickets on time or being inefficient can lead to customer frustration. Being resourceful, prompt, and reliable can help you reduce customer wait times and enhance satisfaction.
Lack of Personalization
A generalized experience can lead to dissatisfaction. Customers expect businesses to deliver personalized and relevant solutions. The absence of this can result in customers switching to a competitor that alters its experiences according to the client’s needs.
Not Feeling Heard
Another common reason for customer churn is the lack of a human touch to the communication. There may be instances where the customers may find it difficult to explain their issues to a bot or customer service system. In such cases, it is essential to have customer service representatives to help the customer out and make them feel heard & valuable.
Customer Acquisition and Customer Retention – How Are They Different?
Customer acquisition, as the name suggests, is the process of acquiring new customers. It involves all the efforts that go into finding new leads and converting them into customers. Customer acquisition requires a considerable amount of time and resources to find people interested in your product/service and encouraging them to make the final purchase decision. You would have to spend money on advertising, devote time to scoring the leads acquired through these marketing efforts, and nurturing them before seeing actual profits for your business.
Customer retention, on the other hand, is much cheaper. It involves the efforts that go into retaining previously acquired customers. Customer retention provides cross-selling & up-selling opportunities. It helps cut down acquisition costs while increasing profits. Additionally, customers are likely to spend more when making a repeat purchase. They also help attract new customers through recommendations.
How Can CRM Help Improve Customer Retention?
Turning one-time buyers into loyal customers requires an effective customer retention process.
An essential aspect of this is a tool that can help manage customer relationships and provide personalized services to improve customer retention.
This is where CRM comes into play.
CRM brings agility to customer data management. Customer data is constantly changing. With a CRM customer retention strategy, you can establish consistent data management processes & customer experiences that can strengthen your brand identity.
Here are all the ways how CRM helps in customer retention:
Keeps Data Organized
Data scattered across multiple platforms is rendered useless. CRM can improve data management for your business, helping you know everything about your customers. This information can be used to identify what your customers expect from you.
Furthermore, this data can be accessed from any device, anytime. This ensures that you never miss out on important communications and get in touch with your customers at the most convenient time.
Use a CRM tool to track customers’ behavior, preferences, and challenges. With usable contact data available at your fingertips, you can easily personalize your engagement. For example, if your ecommerce CRM collects information about customers’ previous purchases and buying behavior, you can offer the most relevant offers & services in marketing messages or during next visits.
Another role of CRM in customer retention is that it enables you to reach your customers directly with personalized content. Improved targeting helps drive more conversions. You can identify the preferred communication channels for individual customers and get in touch with them accordingly.
Your customer support efforts can be considerably improved with a CRM system. You can find all the associated tickets and previous interactions logged against individual contact records. This can help you prioritize high-value customers and respond to their queries promptly.
You can also automate replies for commonly asked questions to ensure that issues are resolved more quickly. Along with these instant replies, the respective support executive is updated about the issue and provided regular alerts about any new developments.
Keep Them Engaged
Customer retention CRM provides you with the necessary information and tools to keep customers engaged. You can easily identify which channels produce the best results and use these channels to connect with your customers. With all the previous communications logged in one place, you can avoid customer frustration and deliver a seamless experience.
To optimize your customer retention strategy, you need to have a clear understanding of what works well and what doesn’t. Customer retention management software can help you track metrics that help you find out how many customers make repeat purchases and how much revenue you generate from them. Insightful reporting can help you allocate your resources more judiciously.
You can automate repetitive tasks to make more time for more crucial activities for customer retention. Furthermore, automated follow-ups and reminders ensure that you do not miss out on important opportunities and stay connected with customers at all times. You can automate actions for specific triggers to ensure that the customers receive instant replies and they do not have to encounter unnecessary delays.
Improve Internal Communication
CRM can also boost internal collaboration by easing communication and helping everyone from your team to work on the same platform. With sales and customer support departments collaborating using a CRM system, you can close more sales easily and acquire more credibility.
Making the Most out of Customer Retention Tools
To elevate your customer retention, you need to find the most effective CRM system and use it effectively.
Some of the best ways to leverage CRM customer retention for your benefits are:
- Improve buyer’s experience with gamification to keep customers engaged
- Seek feedback to find out what can be done to improve customer experiences
- Make use of the email marketing functionality of customer retention tools
- Create an online community where customers can engage, discuss, ask questions and connect with others
- Choose a tool that offers customer retention automation
7 Simple Ways to Boost Customer Retention
Being the go-to choice for your existing customers requires you to make an effort to stay in touch with them continuously. Your business development plan should take this into account and have an effective customer retention strategy in place.
Optimizing customer experience by taking into account their expectations and needs can enable you to keep them coming back for more sales. The objective of customer retention efforts is to make your customers feel valued. Therefore, you need to create a smooth, hassle-free experience for them that encourages them to invest more in your business.
Here are 7 customer retention best practices that have proven to be effective for several enterprises. You can incorporate these in your customer retention model to keep your customers from switching to another competitor:
1. Implement the Right Technology
The right customer retention management system can not organize all your customer data and improve its accessibility but also provide you the opportunity to form better relationships with your customers. Choose a tool that offers reliable performance and can be adapted according to your requirements.
2. Know What is Causing the Churn
You need to identify the reason why customers are leaving. Is it your customer service, the performance of your product, or involuntary churn? Knowing exactly what is causing the customer churn can help you take appropriate actions to resolve it. Seek customer feedback and take the necessary steps to eliminate any problems that customers face during the buying process.
In this competitive marketplace, customers have a broad range of options to choose from. Therefore, you need to have effective retention strategies for customers in order to stand out from the competition. Modifying experiences for individual customers can be an effective way to earn their trust. They are more likely to hear what you have to say when you deliver the message in a personalized manner.
Social media also offers great opportunities for you to stay connected with your customers. Use an efficient CRM for customer retention that collects customers’ social media profiles and activities to help you get in touch with them more personally.
4. Service & Support
Ensure that your customers can reach out to customer representatives easily whenever required. Choosing a CRM with helpdesk integration can help you extend better customer support. You can view all tickets & queries against individual contact records and decide the due course of action according to previous interactions and purchasing behavior.
You can also automate emails to improve customer support or use chatbots to address minor issues faced by the customers.
5. Improve Engagement
You need to keep your customers interested and engaged in order to continue doing business with them. With the data stored in your client retention software, you can fine-tune your content to deliver only the most relevant information that grasps the attention of your customers. By engaging with customers how they prefer, you can ensure that your message is relayed across accurately.
Inactivity is a significant reason why customers leave a business and switch to another. You need to continue to make an effort to stay in touch with them to prevent them from looking for alternatives to your business.
6. Loyalty Programs
Keep tabs on your loyal customers. Use a CRM system to track customer data for your most loyal customers and provide them rewards as a token of your appreciation. You can offer discount codes, points, badges, etc., as rewards for your customer loyalty programs. Such incentives can go a long way in keeping your customers happy and encourage them to make more purchases from you.
7. Be Honest & Accountable
Be empathetic & responsible towards your customers. Accountability for your actions plays an impactful role in determining the customer sentiment for your business. Accepting your mistake provides your customers with the assurance that you are willing to improve.
Customer Retention – The Key to Profitability
Only relying on customer acquisition for your business growth is not the best way to go about it.
To grow your business, you also need to retain the customers that you have previously acquired.
This requires efficient management of customer data to optimize interactions and gain a credible position. An effective CRM customer retention strategy can help you accomplish this by keeping track of all customer interactions and providing centralized access to the contact database.
BIGContacts is a powerful CRM solution that can help your business meet customer expectations with a strong customer management strategy. The easy-to-use interface of the CRM tool adds to the accessibility of the data. With BIGContacts, you can build strong customer relationships that can stand the test of time and propel your business growth.