Customer retention what is

The way a business collects, groups and ultimately acts on data is vital to its success. Sales CRM software usually allows the segmentation of prospects and customers into groups based on how they interact with your brand.

Businesses can use these insights to tailor marketing campaigns to the individual level of awareness of its customers and prospects. When it comes to retargeting efforts, email segmentation is the key to delivering the right content at the right time. A loyal existing customer does not want to receive offers for an initial purchase. Companies, such as Perkbox have witnessed great success by using email nurturing campaigns based on segmented customer and prospect data.

One way to increase retention is by ensuring customers are as active as possible. If a user has remained inactive for a while, an automated email through your CRM system can induce this user to take action.

For example, if you are tracking how users interact with your product and notice that they have only used a small array of the features, an email explaining how to use other features could re-ignite their interest. Emails could include educational content such as best practice guides or successful case studies from other customers.

This strategy is best aimed at relatively inactive users. Users that are already comfortable and active with the product will not appreciate a barrage of automated emails. Upselling is a great way to boost customer retention amongst loyal customers.

By convincing them of the need for a premium or upgraded service, they become more invested in your brand. Using existing content assets such as ebooks and whitepapers is a great way of reminding existing customers about all the features product offers while ensuring that they remain as active as possible. One strong argument for basing KPIs around customer satisfaction is that it makes it easier to identify customer that are are likely to churn.

Often, there are many warning signs before a user churns, including level of activity. If a user has not used the product for 30 days, a business should look into this and find out why.

Some businesses use a traffic light system. Green signifies users that are happy with the product and very unlikely to churn. Amber is reserved for users that potentially have an open issue, but that this issue is not critical. Red is for users with a serious risk of churning. This could be due to a serious complaint levelled against the company, or simply that they have expressed that they are not satisfied. Efforts should be prioritised to keep the at-risk users from churning.

A customer loyalty programme is a great way of giving something back to customers while at the same time offering a chance to build a personal connection.

Companies like Belly are enjoying great success in providing retailers with a trackable loyalty points programme and insightful analytics into customer behaviour. A referral programme can incentivise satisfied customers and increase customer loyalty.

By offering upgrades, credits or other extras to existing clients, you can greatly increase the number of new signups while engaging your existing users at the same time. Actively turning your most loyal customers into brand ambassadors increases their emotional connection to your brand - and that boosts retention.

Why net promoter score NPS is important? What is customer retention? Watch Demo. What is Customer Retention? What we will cover:. Why is customer retention important? Very often, an effectively resolved complaint or problem can turn an unhappy customer into a loyal, repeat customer. And that's to say nothing of the value of customer feedback, which can help you improve your products and your overall shopping experience.

Data suggests that while delight has its place, customers see fast, friendly, and consistent customer service as the gold standard. Depending on your niche, product mix, and margins, sending a small gift to your best customers can be a great way to remind them to return while adding the element of surprise and delight , which can increase customer satisfaction.

Giving an unexpected gift also plays to the law of reciprocity , which refers to our tendency to respond to a positive action with another positive action. For example, in a world where everything is instant and done over the internet, sometimes people just want a change of pace. A handwritten thank-you note is a thoughtful way to show customers you care and can encourage them to come back and purchase from you again. This attention to detail will help you stand out from the deluge of automated receipts and one-size-fits-all order confirmation emails.

These considerations go a long way and can potentially create a loyal customer for life. Loyalty programs, sometimes referred to a customer retention program, are an effective way to increase purchase frequency because they motivate customers to purchase more often in order to earn valuable rewards. This becomes a profitable exchange for both you and your customers: they get more value each time they shop, and you benefit from their repeat business. You can encourage customers to continue investing in the program by giving them welcome points when they create an account.

Creating a loyalty program can be as simple as rewarding customers on their second purchase, or after a set dollar figure. Your store reports make it easy to see who your best customers are by dollar value and total number of orders. Additionally, you can opt for automated loyalty apps which can reward your customers for a variety of actions they take in your store. If purchase frequency is the backbone of customer retention, email marketing is the backbone of customer engagement and your retention toolkit.

Emails give you the opportunity to continue building a relationship with your customers before and after their initial purchase. Shopify data from Black Friday Cyber Monday also shows that, relative to other sources, email has the highest conversion rate at 4.

It's clear email is a channel that converts. A great way to get started is with follow-up emails. This type of acknowledgement helps customers feel good about their decision to buy from you, and makes your brand more approachable. You can make this initial email even more impactful by recommending products that complement their initial purchase. Finally, you can even start including customer reviews as well.

After this initial follow-up has been sent, you should make sure to send personalized messages regularly. Beard King does this beautifully, sending personalized emails that offer new products or sales every two to three weeks. Making additional product recommendations and sending invitations for upcoming sales and promotions for new products are great ways to keep the conversation going with first-time buyers.

For example, Luxy Hair mentions in their FAQ section that their hair extensions will last three to six months on average, or up to a year depending on wear. Knowing this, Luxy could set up a series of automated emails to go out after three months, six months, and one year that explain to customers the benefits of a fresh set of hair extensions.

These emails would help educate a first-time buyer, keep Luxy top-of-mind, and encourage repeat business, all while providing customers with a great experience. In all of your post-sale marketing communications, remember to remind customers of why they bought from your brand in the first place. Getting them to come back rests on your ability to show them why an additional purchase is worth their time and money.

Ecommerce expert Drew Sanocki shares his method for launching automated email marketing campaigns that build relationships and make sales. Generally, I would tell you to be wary of discounting. When you discount your products you enter a perpetual race to the bottom that conditions customers to expect dropping prices, which ultimately results in a loss of revenue for your store.

When margins are tight, discounting is even more of a risk. However, when discounts are sent to a first time buyer I actually love it! Sending a discount code for their next purchase with a first time order is a great way to nudge them to come back. You may also want to experiment with offering credits to use at your store i.

Your current customer base is the best asset your store has. Customers already know your brand, they know your products, and they appreciate your service. Focusing your time and energy on improving the experience for this group as oppose to always trying to find new customers can be a powerful way to supercharge revenues for your store. He blogs frequently on ecommerce, customer loyalty, and customer retention on the Smile.

Get free online marketing tips and resources delivered directly to your inbox. They know each other's favorite restaurants, what sports their kids' play, and other seemingly inconsequential details. But change puts these relationships at risk — and, in turn, your company's customer retention rate. If the customer success manager leaves or is promoted, the relationship is at risk.

If the relationship is extremely friendly, the customer might not be happy with anyone else. The bottom line is, if the customer's sole connection to the company is based on one relationship, there's a risk of churn during periods of employee turnover — a natural part of professional development within an organization that customers just aren't always privy to.

This is a risky place to be in terms of retention, so your company needs to make it a goal that customers build relationships with multiple members of the team for cases like these. Send the customer pictures of the entire team working on the latest project, or whenever there is a customer lunch, make sure there is another member of the team present. Reciprocity is a social construct that has been found to increase loyalty. Acts of kindness create a feeling of obligation in the person who instinctively wants to repay the kindness.

There are two types of reciprocity: surprise and trumpeted. Both of these can be used in customer service to increase loyalty. Surprise reciprocity is obviously a surprise gift or gesture. An example of this would be when your company sends over tickets for a game the day of or when a goal is achieved earlier than anticipated.

Trumpeted reciprocity is when the person giving or doing something beneficial does so in a way that reveals that they are going above and beyond. It doesn't mean you document and put all the great things you do in a monthly report, but it is obvious to the customer that what you are doing is outside the normal scope of the relationship. This could be as simple as taking behind-the-scenes photos at a video shoot and packaging them in a memorable way as a gift for the customer's team.

One of the wisest ways to foster customer loyalty and retention is by providing even more value to them — and this can take the form of a customer loyalty or rewards program.

User-generated content, loyalty bonuses, gamification, and rewards for customer referrals are simple customer retention tools that can go a long way towards fostering loyalty — read about more examples of successful customer loyalty programs in this blog post.

Nobody likes to wait around for support or assistance. Nobody likes to sit around searching how to accomplish specific tasks on their own either. So, instead of creating long customer support and service waits for your customers and creating more work for your support team , empower them with the tools and resources they need to succeed.

There's a wide range of ways you can empower your customers to help themselves and find the support they need individually. You may also share a list of your blog articles to help them accomplish their specific business goals. Ready to get started making your customers happy to improve your company's outcomes? Follow the customer retention management strategies we covered and consistently keep track of your business's retention rates to keep an eye on how you're doing.

You can also read more about how real brands are using these customer retention strategies here. Editor's note: This post was originally published in October and has been updated for comprehensiveness. Originally published Feb 26, PM, updated June 15 Logo - Full Color. Contact Sales. Overview of all products. Marketing Hub Marketing automation software. Service Hub Customer service software. CMS Hub Content management system software.

Operations Hub Operations software. App Marketplace Connect your favorite apps to HubSpot. Why HubSpot?

Marketing Sales Service Website. Subscribe to Our Blog Stay up to date with the latest marketing, sales, and service tips and news. Thank You! You have been subscribed. Start free or get a demo. Free Customer Retention Rate Calculator Easily determine your business's key metrics and KPIs for customer support, service, and success with this free calculator template. Get it Now. Download for Later. Customer Retention Customer retention is a company's ability to retain its customers over time.

Why is customer retention important? Topics: Customer Retention Ticketing System. Don't forget to share this post!