“Our customer retention rate has decreased…badly. Help!”
First, don’t panic. Customer retention is one of those metrics that can take a dip now and again. But we get it—the drop in customer retention has probably created a pit in your stomach because you know how important loyal customers are to the success of a business.
The truth is, even the best businesses go through rough patches when retention is down. And the good news is: There are steps you can take to increase customer retention again and gain loyal customers who support your business racking up a high lifetime value.
The fact that you are going to an effort to measure customer retention in the first place is a good start because you can act sooner rather than later with a thought-through customer retention strategy that will get you back on track.
Before we delve into customer retention strategies, let’s first discuss why you’re not retaining existing customers at the moment.
What Causes Low Customer Retention?
Simply put, existing customers don’t have enough of a good reason to stay or even worse, are attracted to competitors instead.
This could be because of a lack of usability so new customers aren’t able to achieve the results they were hoping for with the product or service and therefore don’t see the point in staying. The initial purchase didn’t fulfill their expectations.
Or maybe there’s a lack of customer satisfaction due to a poor customer support experience. They found it an uphill battle to access the service they needed. Any feedback that was given didn’t seem to be listened to or implemented.
Alternatively, the low customer retention might be because current customers don’t have much of a connection to the brand. They aren’t particularly unhappy but they don’t feel pulled to be loyal either. There’s no appreciation that would build their relationship with the brand.
What’s Considered “Good” Customer Retention?
Let’s talk about customer retention metrics. When you measure customer retention, you might be wondering whether your rate is good or bad. While you want to have as many repeat customers as possible, no one is perfect so not all new customers will become retained customers.
Generally, you’re aiming for an above 50% customer retention rate. The average customer retention rate does depend on the industry but somewhere between 60% and 80% is very good.
Whatever number you produce when you calculate your customer retention rate, each year, you should aim for an increasing customer retention rate even if it’s just by a couple of percentage points. Progress and improvement is the priority when you’re aiming to retain customers.
Here’s How to Improve Your Customer Retention Rate
Now that you know why your customer retention rate has dropped and what a good customer retention rate is, here are some customer retention strategies to bridge the gap from where you are now to where you want to be.
Customer Retention Strategy #1: Decrease Response Times
No one likes waiting forever on the phone. It’s a faux pas not even your most loyal customers will put up with, no matter your hold music. Plus, it stresses out the team to be overwhelmed with customer calls. It’s just not a cost-effective way to deal with customer queries and will definitely up your customer churn rate.
Fix this by directing inquiring customers to other channels of getting their questions answered. Live chat and text messaging are great alternatives as they are accessible and convenient without any chance of being stuck on hold.
Consider call deflection to reduce response times and keep customers happy.
