Customer retention is one of the key ingredients of any successful business.
Companies with high customer retention rates have greater profitability, higher customer satisfaction and faster growth rates than other companies. So how do you go about improving your customer loyalty? The good news is that it’s easier than you think, much easier than recruiting a new customer for example. So in this guide, we are going to look at five methods you can use to boost customer loyalty in your business no matter the size or industry.
How to calculate your customer retention rate
Before implementing any strategies to improve your customer loyalty, you need to work out what your existing customer retention rate is. Fortunately, this is easy to work out using the following formula:
- Start by determining the period, this could be one year, one quarter or one month.
- Count the total number of customers at the start of the period. (S)
- Count the total number of customers at the end of the period. (E)
- Subtract all new customers you have acquired during the period. (N)
- Once you have compiled this data, input it into the formula below.
Customer retention rate formula: [(E-N)/S] x 100 = CRR
5 strategies to improve customer loyalty
Now you know where your current retention rate stands, you can look at implementing strategies to improve your number. There are 5 key strategies to improving customer retention, which are carried out and approved by a number of businesses in many industry sectors. From asking for feedback to exceeding your customer expectations, see what your business can do to go above and beyond!
The importance of asking for feedback
It may seem obvious but the best way to find out what makes your customers happy is to ask them. There are several ways you can do this, including surveys, questionnaires and customer reviews. So get into the habit of asking customers what they think about your business, service and products. And make sure you read any negative customer reviews left online, this will give you a great idea of areas you need to improve.
Implementing a rewards program
Everyone loves to feel valued, and there is no better way of making sure your customers keep coming back than rewarding them for their custom. The most effective way of doing this is to offer rewards for your most valued customers. Most EPoS systems allow you to create rewards and loyalty programs for customers, you just need to set the reward threshold and the level of reward offered and the system will do the rest for you on autopilot!
Companies like Independent Merchant Services can help you set up your own business EPoS systems that allow you to easily build tailored customer reward programmes to build loyalty with your customers. These systems can also be integrated with merchant services thereby creating a complete back-office management system for your entire operation!
Why your business should exceed expectations
You may be surprised to know that customers have perceived expectations about you before they even do business. This is the reason they chose to do business with you in the first place! One of the best ways of keeping their custom once you’ve got them is to exceed these expectations. So consider hosting an appreciation party for new customers, or offering a discount for no reason. Anything that makes people feel appreciated should do the trick.
The benefits of using reciprocity
Reciprocity is the act of giving customers something in the hope that they will return your generosity. Rewards are a type of reciprocity, but they are typically generated by reaching payment thresholds. True reciprocity gives something for nothing. Reciprocity can take the form of an informative blog post, a charity donation or even free return labels. You can be as innovative as you like, here just make sure your offer is genuine and you don’t expect anything in return.
Customer service is key
It goes without saying, but great customer service is key to customer loyalty, and the importance of improving customer experience is vital. You can implement all of the strategies above, but if your customer service is below par all of your hard work will have been in vain. So make sure all of your customer service representatives are working from the same page. Create a customer charter and train all customer-facing staff to deliver the kind of service you and your customers expect. Rewarding staff for delivering exceptional customer service can also be an effective strategy- as long as you are serving your customers well, you can ensure happy feedback!