What are you doing about customer retention?
Have you noticed how hard media companies work to retain customers? Or insurance companies? Or beauty salons? Or SAAS businesses? The economics of the business dictates that retention is one of the prime ways to ensure steady revenue and build customer loyalty. But there is an even greater reason.
Acquiring new customers can be 5 to 7 times more expensive than retaining them. So, a high churn rate decimates profits faster than many other expenses that the company may be incurring. It also indicates that service and satisfaction levels may be plummeting – all signs of imminent danger to the business that calls for emergency measures to reverse the churn
It is easier and more cost-effective to retain customers. Returning customers spend more and buy more often, as well as spread the word to friends and family. And here is the zinger. If you manage to increase retention rates by 5%, the increase in revenue can be anywhere from 25-95%. Of course, this depends on the business you are in and the frequency of purchases that are possible. But you get the idea. And the best way to do it is to implement retention strategies as diligently as marketing strategies for new customer acquisition.
The high retention businesses
Media, professional services, insurance, and IT are among the sectors where customer retention is over 80%. Banking, retail, and telecom are between 60-80%. One of the reasons is also that these businesses have a cost of switching for customers. Telecom companies fought number portability when the government wanted to make it easier for customers to switch between networks. They knew that retention depended on customers being able to retain the same number. They also knew that service levels would have to improve.
Customer retention strategies must be pursued with the same vigor as lead generation. Building long-term relationships with customers pays more dividends – apart from increasing overall satisfaction levels
Consistency in the customer experience is one of the things that helps customer retention. People crave predictability even more than delight, once the relationship is established. If a bank ensures that the experience at the ATM, the despatch of checkbooks, and the clarification of doubts at call centers are well-handled, customers are happy to carry on. They know the problems with establishing a new relationship and are willing to make some compromises. But it should not reach the point where it becomes an irritant.
At the heart of this, for companies that are transitioning from being small to mid-sized, the CRM becomes the core around which this can be built. It is even more crucial for them to retain and keep customers happy. And HubSpot’s CRM, which seamlessly integrates the record all the way from the first contact to conversion, can provide vital background for service delivery. It retains information that can be used to elevate customer experiences. Or even nuggets that can make it unique. Across customer journeys, it is possible to find patterns if the teams working can determine the tipping points. It requires going deep, pulling back, and then teasing out patterns. And the rewards can be considerable.
Gestures matter – even more than expensive gifts
Documentation of a memorable experience is not typically seen as a retention strategy. However, imagine that during the making of a TV commercial, a behind-the-scenes shoot captures what the experience was like and how the team worked together. If this is sent out as an album to those on the client team, it becomes memorable and a keepsake. Something that works far better than diaries at the end of the year.
Look at all the points of service delivery – right from call routing to offline service centers to enhance delivery. Satisfied customers are silent but potent brand ambassadors.
Now, this may not be possible across a base of thousands or millions of customers, but the digital medium does have instances when it was done creatively and succeeded dramatically. When Cadbury’s created commercials for small retailers that had Shah Rukh Khan promote their store by name during Diwali, it paid huge dividends. Not just in terms of media mileage but also the number of grateful shopkeepers who were proud to have their shop promoted by a major star. They would not have understood how complex it was to pull off, but the strategy is a classic in the retention of the retail shop base.
It probably had more impact than having a loyalty program that was built on the business the shops generated.
Loyalty is a two-way street
If a company expects loyalty from customers, it should be doing enough to earn it. Business relationships have a relatively low bar to clear compared to personal relationships.
That is why service delivery, or handling customer complaints efficiently is among the best ways to ensure that customers stay and do not stray.
Customers who feel supported by a business feel that the company is aligned with their needs. And that they can trust the company to deliver. In service businesses, this is of paramount importance. When a company solves its customers' problems, they keep coming back because the effort involved in finding a fresh solution provider is higher.
This is where your customer service department comes into play. Their speed of response, being able to direct the customer to the right department, and showing empathy instead of impatience go a long way in strengthening relationships.
For service departments to deliver, they must have access to a comprehensive knowledge base and training programs that increase product knowledge. Every time, there is a product update or a new model launch, service teams experience a surge of customer calls and they must be equipped to handle it
Talk to BlueOshan’s consultants about how HubSpot can be deployed at the most important customer interaction points to deliver an enhanced experience. Our knowledge of implementing HubSpot in a variety of scenarios can give your company the edge.
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BlueOshan is a HubSpot Diamond -Tier Solutions Partner. Delivering worldwide from India