Customer retention is critical to the success of your company. It increases revenue and boosts each customer's lifetime value, as repeat customers tend to spend 31 percent more than their new counterparts.
More importantly, customer retention lowers costs. Studies show that retaining a current customer is five times cheaper than acquiring a new one.
You are 40 percent more likely to sell to an existing customer than you are to convert a new one. An existing customer is 50 percent more likely to try your new products than someone who is still getting to know you.
So how can you achieve customer retention?
Several factors can increase your customer retention, two of which are customer satisfaction and customer loyalty. For many, customer retention, customer satisfaction, and customer loyalty seem to refer to the same thing but using different terms. Yet, they are different.
Understanding this difference can be a critical first step towards maximizing your company's revenue.
What’s The Difference Between Customer Retention, Loyalty, & Satisfaction?
Customer retention is all about repeat business. It's all about getting the customer to work with you again rather than switching to your competitors.
However, just because a customer has done business with you more than once doesn't mean they are loyal to you. They might be waiting for someone better or researching their options and just biding their time.
Loyal customers are the customers who not only buy from you exclusively but are also your biggest supporters, singing your praises to whoever will listen. There are many ways to retain a customer, but the best one will always be to get their loyalty.
Customer satisfaction revolves entirely around how customers perceive and feel about your product, which boils down to the experience they have with you.
Customer satisfaction is one of the best predictors of customer loyalty. However, it isn't the only one.
For instance, a customer may not be wholly satisfied with your product, but they will remain loyal to you because of something you offer that competitors aren’t providing yet. Maybe you are the only environmentally conscious manufacturer on the market, or your product includes a unique feature.
Alternatively, a customer may be wholly satisfied with what you are offering, but might not be loyal to you because you are too pricey.
Nevertheless, if you can increase your customers' satisfaction, you are paving a way toward increasing their loyalty and retaining them for the foreseeable future.
8 Things You Can Do To Increase Customer Satisfaction And Loyalty
High customer satisfaction comes from an exemplary customer experience. With that said, you should do a few things to manage this experience and make sure that it is always outstanding.
1. Map The Customer Journey
Before you can start managing the customer experience, you need to be clear on what that experience entails. In other words, you need to clearly understand what the customer journey is and what are the touchpoints that your customer goes through.
The touchpoints should include social media interactions, your website, conversations with your customer service team, and follow-up surveys after every purchase or interaction.
2. Set Expectations From The Start
One of the biggest reasons behind negative experiences is unmet expectations. We measure our satisfaction with experience by comparing the outcome to what we pictured in our heads. This is why the old business adage says, "Always underpromise and overdeliver."
3. Be Authentic
One of the biggest factors that drive both satisfaction and loyalty is trust. The more your customers trust you, the more likely they are to enjoy their experience with you, leading them to come back to you again.
To gain your customers’ trust, you want to be both authentic and transparent. If you are pretending to be something you are not, your customers will sniff that out and refuse to do business with you in the future.
If you come across as too secretive, your customers will think you have something to hide, making them second guess your products and your motives.
So, when in doubt, be yourself, be truthful, and be ethical.
4. Treat Your Customers Like Royalty
Some will argue that you should treat customers the way you want to be treated. But, better yet, you should treat them like kings and queens. This means putting their needs ahead of yours, listening intently to them, and always giving them what they want in a prompt and timely fashion.
Remember: More than four out of five consumers have walked away from a company due to poor customer experience.
Moreover, customers who have a bad experience are much more likely to share this with their friends than those who have had a positive experience, giving a visceral meaning to the expression “Bad news travels fast.”
5. Use Referral Campaigns
While looking at how you can improve your customers’ experience, we touched on the importance of trust. Authenticity and transparency can indeed increase your trustworthiness, but what about first-time customers? How are they supposed to trust you without knowing you?
This is where word-of-mouth comes in.
The most effective type of marketing is word of mouth. This should come as no surprise: People are far more likely to trust the recommendations of their friends and acquaintances than to messages coming out of your company. After all, the messages you send to the public are bound to be biassed and self-serving.
In addition to trusting you, customers who come to you through a recommendation are more likely to be loyal and stick around. And, best of all, word-of-mouth marketing is cheaper than almost any other form.
So, how can you harness this powerful form of marketing?
First off, provide your customers with an unforgettable experience. Secondly, create a referral campaign. Find your biggest fans, who can't stop talking about you, and recruit them into being brand advocates, acting as megaphones that amplify your message. You can give them juicy announcements to pass on to their friends, and you should reward them for every referral they bring in.
6. Make Sure To Use Email Series
Although we live in a fast-paced world where social media, online videos, and interactive blog content have taken over, emails are still relevant for reaching your customers. In fact, email marketing can be one of the most powerful tools in your arsenal.
While videos and blog content are great tools to talk to your customers, email is an excellent tool to promote customer engagement with your brand and community.
Furthermore, email allows you to personalize your communication with your customers, making them feel special.
7. Work On Lead Nurturing
Earlier, we talked about the importance of understanding your buyer’s journey and optimizing every touchpoint. However, it’s not enough to know what your customers go through as they purchase from you; you also need to know everything you can about the customers themselves.
So, you have to know their wants and needs, likes and dislikes, and average spending patterns.
You should have a clear idea of their budgets as well. Once you've gathered enough information about your clients, you will be able to create different customer profiles and personas, each one representing a customer segment.
Armed with your profiles and personas, you can target your customers, reaching out and starting a conversation before they are even aware that they need your business. You can target customers at the very top of the sales funnel, hovering at the awareness stage.
Upon ushering potential customers into your funnel, you will qualify your leads. In other words, you will be able to invest your time and effort with those most likely to make a purchase, which will maximize your ROI.
Over and above, you will be able to tell who is most likely to become a loyal customer and who will be a fickle one, ready to jump ship at first sight of trouble.
Finally, knowing who your best customers are and what they want will help you design the optimal customer experience.
8. Keep Your Employees Happy
We keep coming back to the importance of customer experience and the pressing need to optimize every touchpoint.
Yet, almost every touchpoint the customer goes through relies on your employees in one way or another: Every time the customer interacts with your brand via social media, they are actually interacting with your employees.
When a customer has a complaint, they reach out to the employees working in customer service. And, whenever a customer refers to the people at your company being so nice and pleasant, that is all thanks to your employees.
Therefore, if you truly want your company to be customer-centric, you should start with your employees. Engage your employees as best as you can and strive to keep them happy and fulfilled with their job.
You should also empower them and equip them with the skills and tools necessary to do their job. Simply put, do whatever you can to bring the best out of your employees every day.
The Difference Between A Good Company And A Great Company
We’ve seen how a company that focuses on customer satisfaction can increase customer loyalty. But, what we never talked about was the importance of consistency.
It's not enough to delight customers every once in a while or during their first interaction with you. To truly earn a customer's loyalty, you need to delight them every time they interact with you.
That's the difference between good and great companies: Good companies are worth trying out, whereas great companies are impossible to leave.
Ashley Wilson is a content creator, writing about business and tech. She has been known to reference movies in casual conversation and enjoys baking homemade treats for her husband and their two felines, Lady and Gaga. You can get in touch with Ashley via Twitter.