Most businesses strive to understand customer wants and define consumer values accurately. However, while the price customers pay for specific goods still matters, what they expect to receive in return – besides the products or services they paid for – matters much more.
In the post-pandemic era, the concepts of responsibility, customer satisfaction, and customer experience play a different, more significant role. That is why looking inward and re-evaluating the priorities is now the new normal for consumers.
The same is true for brands looking to deliver an elevated customer experience (CX) and journey, build long-term relationships with clients, and prevent the loss of customers.
In most cases, marketers are determined to keep current clients and motivate them to make repeat purchases. Sure, driving high-quality leads, converting them, and getting your new user retention experience right is always worth the effort. But at some point, brands must mix customer retention tactics while still in the acquisition phase.
It’s no secret that low retention and high churn are bad omens for any company. But, more often than not, they signal that something is wrong with your customer engagement and retention strategies.
Let’s explore the importance of customer retention and highlight the three most common marketing approaches that can cause the loss of client interest and the loss of customers.
Why Is Customer Retention Important?
So what is customer retention? Essentially, customer retention describes a company’s ability to satisfy existing customers and motivate them to make repeat purchases.
From the business perspective, building lasting relationships with current customers is crucial to the health of operations. And to supply that, marketers focus their efforts on driving more high-quality leads and boosting conversion rates.
The reality is that it’s far cheaper to keep a current client happy than to win the attention and loyalty of a new one. That leads one to think, “why do brands keep investing in customer acquisition versus retention?”
While retention rate statistics may differ by industry, they may also vary by where your product is in its lifecycle. If it has been up and running for several years, the retention rate should be one of the critical indicators to pay attention to and track.
It’s worth mentioning that businesses also need to consider how well the customer journey is mapped, determine the approaches marketers use to acquire new customers, and identify some of the reasons that existing customers may churn. These and many other factors can significantly impact customer retention.
How To Calculate Customer Retention Rate
High customer retention leads to customer loyalty, word of mouth referrals, increased marketing ROI, and increased brand awareness. To understand whether you need to improve the customer retention rate (CRR) and focus on re-engagement, you need to measure it and assess the current situation.
Take a closer look at this CRR or customer retention rate formula and some examples.
Before calculating CRR, you need to define a period, e.g., week, month, quarter, or year. Then, you should follow this formula to measure customer retention over a given timeline:
# Customers at the End of Period – # Customers Acquired During Period)
Retention Rate (%) = 一一一一一一一一一一一一一一一一一一一一一一一一一一一一一一一一一一一一一 x 100
# Customers at the Start of Period
Imagine that your company started the quarter with 40 clients, gained 13 new customers over the said period, and had seven churned customers. The CRR will look something like this:
[ (46 – 13) / 40 ) ] x 100 = 82.5% retention
Once you measure your CRR, it might be helpful to audit the churned customers. This way, you will determine the reasons for leaving or the types of customers that tend to leave.
Businesses often struggle to improve their customer retention rates. One of the reasons is that they fail to recognize the role and get a closer look at the customer experience. Since customer-facing interactions are at the heart of brand loyalty, it’s crucial to understand how brands communicate and manage customer relationships across different channels.
Let’s examine in more detail how the following approaches can impact customer expectations, experiences, and your retention rate.
3 Approaches That Can Make or Break CX and Retention
More than anyone else, marketing experts know that to improve customer retention, they need to improve the customer experience. So here are the most common approaches you must avoid when creating strategies geared toward better customer experience and higher retention rates.
1. Domination of Manual Processes
Many companies still struggle to automate manual tasks and processes. But automation works wonders whenever deployed correctly.
Marketers in the financial services or insurance sectors often look for simple ways to qualify leads, ensure speed-to-contact strategies, facilitate fast and efficient invoicing, or identify the most profitable marketing channels.
As a matter of fact, around 77% of businesses that adopted automation reduced their marketing overhead by 12.2% and increased sales productivity by 14.5%. Such a shift allows enterprises to focus on data accuracy, improve customer retention, and refine customer interaction across all marketing channels.
Brands equipped with marketing automation solutions like LMS Sync – Phonexa’s lead management and distribution software – can streamline the process of converting leads into customers by leveraging automated lead flows and insights to real-time data analytics.
Ultimately, implementing a comprehensive marketing automation solution can help your brand make every interaction more personal and rewarding for your clients and, as a result, substantially increase loyalty.
2. Poor Customer Support
Today, bad customer service and support are intolerable. Customer satisfaction depends heavily on the overall experience, service consistency, and personal interactions.
Calls are still fundamental to the conversion journey, as some consumers remain skeptical about new technologies like chatbots or self-service portals. However, since around 95% of customers are looking for proactive communication from businesses, businesses must keep up by offering multiple contact options and ensuring that customers can reach live support agents quickly.
Source: PEGA Research Report
Given that access to customer data can substantially improve the overall marketing strategy and CX, companies need to understand the reasons behind calls and where all the inbound calls originate.
Integrating a call tracking solution like Phonexa’s Call Logic into your daily operations and embedding it with cloud-based telephony systems like Cloud PBX will help you provide timely on-call support to your customers and gain visibility into the customer journey, gain real-time performance insights, and attribute call outcomes to a given marketing strategy.
On top of that, call analytics features within Call Logic can help brands identify trends, develop more successful acquisition and re-engagement campaigns, and improve overall customer retention.
3. Disconnect in Customer Engagement
When dealing with increased customer churn rates, many companies realize that the reason for the churn is a disconnect in customer engagement. It often involves the inability of brands to identify the best-performing marketing channels and the customers’ lack of connection to the brand’s offerings or core message.
That’s where re-engagement comes in. Giving customers a reason to interact with your brand can be tricky. What you need, in this case, is to get to know your clients to understand them better.
Since most customers seek a satisfactory level of proactive communication, companies need to overcome this challenge and adopt a proactive approach instead of a reactive one. The proactive approach should involve the following tactics:
- Launch loyalty programs: Such programs provide tangible incentives to clients, increase customer satisfaction, and encourage clients to remain loyal to the program’s goals, your product, and your brand.
- Automate email marketing: Keeping in touch with the target audience is crucial to the success of the acquisition or re-engagement campaigns. Utilizing email marketing is one of the most cost-effective and simple ways to refine your customer retention strategy and increase CRR. Brands equipped with E-Delivery, Phonexa’s email and SMS marketing software, can refine and manage email lists, personalize messages to specific customer groups, and drive inbox performance.
- Give customers a voice: Without customer feedback, brands have little to no chance to improve customer retention. If you want to know what works or doesn’t work for your clients, you need to hear it directly from your customers. One of the most efficient ways of getting feedback is by creating and running IVR surveys.
To Wrap It Up
When it comes to customer retention, there’s always a way to do better. To keep up with the competition in a hyper-saturated business marketplace, companies must equip themselves with excellent customer retention strategies and back these tactics with comprehensive and dynamic marketing automation technology that ensures customer satisfaction at all costs.
Did you know that Phonexa onboards new clients in an unprecedented 10 days? Get in touch or schedule a consultation to learn how Phonexa can help you improve your customer retention strategies, refine your call center’s operations, and convert more leads into engaged customers.
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