March 14, 2017
Customer Retention Strategies
Most marketers know that investing in customer retention pays off. After all, there’s no shortage of research on the subject, and credible organizations like Harvard Business Review, Bain and Company, and Forrester have been urging companies to prioritize their retention efforts for years. Despite this, many marketers continue to concentrate on acquiring new customers—a puzzling phenomenon. One explanation might be that customer retention doesn’t belong to any one department: Product, marketing, customer success, and customer support all play a significant role in whether customers choose to stay or go. The thing is… **if your current customers don’t stick around, you can’t expect to grow. **At best, you’ll maintain your current customer base and the revenue that comes with it. At worst, your business will experience a slow and painful death. That’s why it’s imperative that you ditch the departmental silos and rally your entire team around customer retention in 2017. Below you’ll find 7 customer retention strategies that will help you enhance your customer experience, maximize retention, and boost your bottom line.
1. Be proactive in providing customer support
Customer retention efforts are most effective when they’re _pro_active as opposed to _re_active. In other words, it’s much easier to set customers up for success than to rescue at-risk customers down the road. That’s why you must anticipate issues and attempt to resolve them _before_ they become a problem. Exceptional customer support begins on day one and continues throughout the entire customer relationship. Early on, you’ll want to help get customers set up for success. For SaaS businesses, that might include the following:
- A kick-off call where goals, KPIs, timeline are agreed on
- Onboarding emails that guide customers through key milestones
- Personalized product training from a technical team member
For example, when someone signs up for Autopilot, they receive a welcome email that provides four ways to get started.
- Sign up for a product demo, where they can ask questions and get answers in real time
- Follow a step-by-step guide to create their first journey, regardless of whether they want to start from scratch or use one of our standardized journeys
- Learn customer journey marketing best practices in Flight School
- Contact customer support, where they can get personalized attention from one of our team members
It’s also important to set clear expectations. Customer satisfaction (which has a large impact on customer retention) ultimately comes down to how well you perform in comparison with how well the customer expects you to perform. By setting expectations early in the relationship, you gain control over how you’ll be perceived down the road. Pro Tip: If you’re worried about your performance, aim to under-promise and over-deliver. By setting the bar a little lower, you’ll reduce the amount of pressure on your team while increasing the likelihood that you’ll exceed your customer’s expectations. If and when issues do arise down the road, your support team must adequately resolve them in a timely fashion. In other words, they must have the _authority_ to resolve issues independently. Otherwise, you risk alienating customers.
2. Map your customer lifecycle stages
Thinking about your customer retention efforts within the context of your customer lifecycle stages helps you deliver the right message, at the right time. It also helps you maintain focus on the objective at hand. Customer lifecycle stages vary from business to business. For example, e-commerce customers typically transition through at least four stages:
- one-time customer
- return customer
- repeat customer
- loyal customer
SaaS customers may go through different stages, but they nonetheless transition from prospect to advocate:
By breaking the larger customer journey down into lifecycle stages, you can more easily identify what messaging is appropriate for that audience at that point in time. For example, discounts that escalate over time may be appropriate if your goal is to encourage a one-time buyer to make a second purchase, but they’re not appropriate for repeat customers who have already developed a purchasing habit.
3. Carve out meaningful customer segments
Effective customer retention efforts are highly targeted, which is why it’s important to first divide your customer base into meaningful segments. You can use a method like RFM modeling or have Autopilot’s smart segments tool do the work for you. It’s your choice. Depending on your business type, you can divide your contact database into segments based on usage data, transactional data, or both. For example, e-commerce businesses might find value in cross-referencing RFM data to create meaningful segments:
- Purchase recency ®. How recently have they purchased your product or service offering?
- Purchase frequency (F). How often do they purchase your products or services?
- Monetary value (M). How much revenue have they contributed to your company?
SaaS companies might find value in analyzing usage data in conjunction with customer lifetime value:
- **Level of activity. **Do they login frequently or infrequently? How long do they stay logged in? How engaged are they when they’re active?
- **Knowledge. **Do they perform only basic actions? Or do they demonstrate an understanding of advanced functions?
At minimum, this data can help you determine which segments are valuable, engaged, and at-risk. But the possibilities are endless, so don’t be afraid to get creative. For example, by including Net Promoter Score data in your analysis, you can identify groups in desperate need of attention, like high-value detractors: customers who make significant contributions to your bottom line but are so unhappy that they’ve begun to spread negative word of mouth.
4. Design purpose-driven customer journeys
Customer retention marketing is most effective when it’s relevant and timely, which is why setting up automated customer journeys is a sure-fire way to boost your retention rate. Design each customer journey with one goal in mind. Here are a few examples to stimulate your creativity:
- Get people who abandoned their cart to complete their purchase
- Encourage one-time buyers to make a second purchase
- Reward loyal customers for engaging in a desired behavior
- Offer compelling incentives to high-value customers who’re disengaged
- Prevent at-risk customers from churning
- Win back lapsed customers
Let’s use the “prevent at-risk customers from churning” journey as an example. After discovering that customers who don’t log in for 30 days often churn, you could create a customer journey that automatically triggers after 2 weeks of inactivity. Perhaps the first few steps of the journey would contain a series of emails, in-app, and onsite messages intended to increase the customer’s engagement with your SaaS product. If these communications failed to reactivate the user, perhaps the account manager would be notified via Slack—who could then set up a call with the customer. An early warning system like this is beneficial because it can help you rescue customers _before_ they churn.
5. Get customer feedback mechanisms in place
No matter how compelling your marketing is, customer retention ultimately comes down to two things:
- The performance of your product or service
- Your customer experience That’s why getting input from your customers is so important: Because customer feedback—especially critical customer feedback—helps you identify opportunities for improvement. Once you discover the pain points experienced by your customers, you can work to solve those issues—improving your product or service offering and enhancing your customer experience along the way. How does this lead to increased customer retention, you ask? Well, for one, reducing customer effort is known to increase customer loyalty. In other words, anything you can do to make your customer’s life easier helps boost your retention rate. Plus, the very act of investing time and energy in providing product feedback strengthens the customer’s commitment to your company. Essentially, when customers provide suggestions concerning how you should evolve your product or service, they become invested in the outcome. When you then act on their suggestions in a timely manner, reciprocity comes into play. Maybe you made their life easier or helped them achieve an outstanding goal. In return, they’ll reward you with their business. Here are a few ideas to spark your imagination:
- **Send 2-question follow-up surveys to free trialists who fail to convert. **Follow-up surveys can help you discover any obstacles to success and gaps in your onboarding experience, helping you to win more customers down the road.
- **Request real-time feedback from customers who’ve recently used your SaaS product. **Once every quarter or so, send every customer who has used your SaaS product in the last 24 hours an automated email requesting feedback.
- When you lose a customer, request an exit interview. Speaking to customers who churn will help you identify why they’re leaving while providing you with an opportunity to rescue the relationship by resolving the issue at hand.
Pro Tip: Successful retention programs begin with an understanding of why your customers churn. Once you have that information, you can begin to address existing issues, which goes a long way in preventing future churn.
6. Go above and beyond to build relationships
Customer retention is easy when relational loyalty already exists. By building brand affinity from day one, you can strengthen customer relationships and protect your brand from future churn. What is brand affinity, you ask? “Brand affinity is the most enduring and valuable level of customer relationship and is based on the mutual belief that the customer and the company share common values. It’s the highest, most durable kind of customer loyalty, one that breeds unshakable trust in the relationship,” writes the team at Brand Tool Box. To achieve brand affinity, steal these tried-and-true tactics: **Stand for something. **Shared values go a long way in increasing your customer’s commitment to your company. Communicate your company values at every opportunity, whether that be on social media or in a blog post, during a speaking engagement or on your careers page, etc. **Use social proof to earn your customer’s trust. **Referrals, testimonials, and case studies all help you build the credibility that’s needed to win new customers, but they also help you earn the trust of your existing customers. **Personalize your messages. **Addressing your customers by name and tailoring both your content and their experience based on customer data helps give the appearance that you “know” who they are, what they need, and what they want. **Provide value at every touch point. **By consistently giving away free resources and expertise across every channel, you can become a trusted advisor both to your customers and within the community more generally. **Build a community around your company’s mission. **Most companies have an ambitious and inspiring mission that their customers would rally behind, if given the chance. Build an active and engaged community around your mission to achieve your goals while increasing their commitment to your brand. **Exceed expectations. **Go above and beyond for your customers, outperforming your competitors. You’ll earn their loyalty in the process and may even open the door to future business. **Engage like a human. **Whether over the phone or on social media, always interact with your customers as if you’re just another human being. This will create the appearance that your brand is approachable while helping to form a bond between you and your customers.
7. Let core retention metrics guide your actions
Customer retention efforts are most effective when they’re informed and guided by three core metrics: 1. Net Promoter Score® (NPS) By measuring your NPS, you can gauge overall customer satisfaction, spot churn risks, and identify brand enthusiasts. Here’s a visual guide for calculating Net Promoter Score: 2. Customer retention rate. Your customer retention rate is your go-to metric for measuring how many customers stick around during any given period. In this visual, Client Heartbeat breaks down a simple way to calculate your customer retention rate: 3. Customer lifetime value. Keeping track of changes to your customer lifetime value helps keep you informed about how your retention efforts are paying off. This KissMetrics infographic offers three different ways to calculate customer lifetime value: If your customer retention efforts are successful, you should see an immediate uptick in both metrics. If don’t see improvements within the first 30 days, it may be a good idea to reevaluate your efforts. **Did we miss any core customer retention strategies? Share your perspective in the comments. **