Customer Retention Tactics to Keep Customers Coming Back

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customer retention tactics

Do you remember your first sale?

Of course you do.

You remember the hard work you put into finding the perfect customer. You remember the hoops you jumped through to get them to convert. You remember the elation you felt after they agreed to buy from you. And you remember feeling annoyed once you realized you’d have to do it all over again each time a new prospect hit your radar.

Yes, finding your first customers is incredibly difficult, but turning one-time buyers into return customers isn’t nearly as hard. It’s also less time-consuming, and actually much more profitable.

Check out some of the following statistics:

  • Loyal customers are worth an average ten times as much as their initial purchase,
  • The cost of getting new customers to the same level of profitability as long-time customers is 1600% higher,
  • 1% of a retail website’s users can generate as much as 40% of the company’s overall revenue,
  • A 5% increase in customer retention can result in anywhere from a 25-95% increase in profit.

Put simply: once you build a solid customer base, it’s essential that you shift your focus toward retaining customers and ensuring they remain loyal.

4 Main Tenets of Customer Retention

Each of the strategies we’ll discuss throughout this article fall under one of four main principles:

  • Knowing your customers
  • Forging relationships
  • Adding value
  • Creating evangelists

Let’s start from the beginning.

1. Know Who Your Customers Are and What They Need From You

Before we dive into all this talk about customer retention, let’s look back on a typical interaction between Cheers bartender Sam and loyal patron Norm: “-Beer, Norm?” “- Have I gotten that predictable? Good.”

Good ol’ Norm could hit any watering hole in the Boston area after a long day’s work. But he goes to Cheers because, well, everybody knows his name there. And he knows he can count on Sam to serve him up a cold pint the minute he walks in. Sam knows how to keep his customers coming back for more.

But so you don’t live in a sitcom fantasy world. And you probably don’t see your customers every day, which makes it a little more difficult to get to know them as well as Sam knows Norm. But it’s not impossible.

In fact, customer segmentation and relationship management software have made the process of learning about your customers and understanding their needs relatively easy – no matter how large your customer base is.

Using Segmentation Data

As your customers can potentially come from all walks of life, it’s essential that you don’t take a “one size fits all” approach when interacting with them.

Segmentation data helps you build your ideal customer profile by narrowing down the “type” of person a specific customer is by analyzing the following pieces of information:

  • Demographic data: Information related to a customer’s age, gender, occupation, and socio-economic status
  • Geographic data: Information related to where a customer lives and the type of area they live in
  • Behavioral data: Information related to how a customer uses a product, their shopping habits, and propensity to become loyal
  • Psychographic data: Information related to their personality and lifestyle
  • Socialgraphic data: Information related to how customers behave and interact using social technologies.

By grouping individuals based on these data points, you can reach out to members of each segment with a specific offer that you’re certain will be of value to them.

Using a Customer Relationship Management System

As your company begins to take on more and more customers, it’s essential that you keep track of where each individual consumer is in their personal customer journey and life cycle. In turn, you’ll be able to provide exactly what a specific customer needs – at exactly the right moment – to keep them moving through the stages of the cycle.

Customer relationship management helps you do just that.

While a company that implements CRM will certainly benefit from doing, the company’s customers actually stand to gain the most in the process.

customer retention tactics

Both customer segmentation and relationship management provide valuable data to a company about its customer base. But collecting such data is merely the first step of successfully retaining your most valued customers. It’s what you do with the data that really matters.

2. Forge a Relationship

Forget all about business, customers, and entrepreneurship for a moment. Instead, think about the strongest relationships you have in your personal life.

Now, think about some of the relationships in your life that you could take or leave. What are the main differences between the two?

For one thing, your strongest relationships are authentic. These aren’t your drinking buddies or softball teammates; they’re your true-blue friends. Your closest friends are also accessible. They aren’t the type to avoid your calls when you’re in need; they’ll gladly drop what they’re doing to help you out of a jam.

While forging relationships with your customers is not exactly the same as doing so in your personal life, your clientele certainly does expect some level of authenticity and accessibility from your company. If you don’t provide these aspects of service, they’ll simply find a company that does.

Be Authentic

There was a time when companies could make subjective claims about their products and make empty promises to their customers… and still make a killing.

Those days are long gone.

Authenticity has quickly become an essential quality for companies looking to increase their customer retention rates. Digital Intelligence Today defines brand authenticity as “the extent to which consumers perceive a brand to be faithful toward itself, true to its consumers, motivated by caring and responsibility, and able to support consumers in being true to themselves.”

Authentic companies don’t focus on business-to-consumer relationships; they focus on human-to-human relationships in which they have something of value to offer to a fellow human being. Authenticity means putting your customers’ needs, wants, and values ahead of making a sale. It also means being open and honest about your purpose.

Take TOMS shoes, for example. TOMS’ main unique selling proposition is to help a person in need by making a donation for every pair of shoes they sell (in addition to any other TOM product sold).

Not only is this a noble undertaking, but it also allows loyal TOMS customers to know they make a small difference in the world every time they buy a new pair of shoes. And it most likely goes a long way toward generating loyalty among its customers.

But imagine what would happen if the entire thing was exposed as a sham. Not only would the company lose its USP, but its loyal customers – feeling tricked and betrayed – would almost certainly never purchase another pair of TOMS again.

Thankfully, TOMS is true to its word. Because the company is built on authenticity, its customers are more than happy to shell out a little extra cash whenever they need a new pair of shoes.

customer retention tactics

Be Accessible

There also was a time in which the the company-customer relationship was a one-way street: the company would sell its wares to the customer, and that would be that. Sure, companies might have had an 800-number consumer could call. But most customers didn’t actually expect anything more than a pre-recorded answer… right?

Nowadays, communication between a company and its customers is pretty much the norm. If a customer reaches out to your company through social media, email, or a blog comment, you can be certain they expect a personalized and timely response.

According to Mike McCormac of Sales, Success, and More, customers seeking a response from a company judge said company based on:

  • Acknowledgement: How quickly they can make contact with the company
  • Proximity: How soon the company responds
  • Preparation: The ability of the company to respond appropriately
  • Execution: The quality and follow through of the response

Consider the following infamous example of poor customer service on the part of British Airways.

customer retention tactics

First of all, it took the company about eight hours to respond to a complaint. Secondly, when a representative did respond, it was an excuse as to why it took so long – not an actual solution to the passenger’s issue. Although it’s likely the passenger’s luggage was eventually tracked down, you can be pretty sure it was the last time he ever flew British Airways.

Now, check out how Whole Foods handles even the most innocuous (and even lighthearted) customer complaint.

customer retention tactics

Within a half-hour of the customer’s tweet, a representative from Whole Foods responded to their message and provided a quick and easy solution to the oh-so-minor problem the customer faced.

By making their customer service department accessible through social media, Whole Foods all but guaranteed this customer – and surely many others – remain loyal fans for some time to come.

3. Provide Added Value Whenever and Wherever Possible

It’s one thing to provide incredible value to your customers once they pay for your goods or services – it’s literally what they expect to get in exchange for their hard-earned cash. But if you really want to “wow” your prospects and customers – and give them more reasons to return in the future – you need to provide added value before they give you their money, and even after you’ve made a sale.

The two best ways to provide this added value is by providing your customers with opportunities to learn more about (or do more with) your product or service, and opportunities to save money when doing business with your company.

Supplemental Material

Whether provided before or after purchases, supplemental materials can go a long way toward showing customers how much your company truly cares about them as people – not just dollar signs.

Before they’ve made a purchase, you might provide prospective customers with material that prepares them to get full use out of your product or service. For example, if your full product is a guide to healthy eating, you might provide prospects with a free pamphlet that describes other ways in which they can live a healthier life (such as quitting smoking, exercising more, etc.).

Once a customer has gone through with a purchase, you’ll want to provide them with much more than they expect. Using the example from the previous paragraph, you might include a full guide focused on one of the additional topics mentioned (such as a full-length guide on how to quit smoking).

By providing more than your customer expects at all stages of their journey, you not only show that you care about their success, but you also position yourself as a true expert in your industry.

customer retention tactics

Freebies, Coupons, and Other Deals

“If it’s free, it’s for me.”

It doesn’t matter what industry you’re in, if you can provide your newly-introduced products or services at a discounted rate, your customers will appreciate it – and be more likely to continue doing business with you.

Use the segmentation data you’ve collected over time to determine which segment of your customers would be most interested in a specific offer or new product. That way, you can send out targeted coupons and deals to those that are most likely to appreciate it, instead of sending out the same offer to everyone and hoping they jump at the offer.

Along with this, make sure you send these offers out in a way that ensures your customers see them. If a specific customer segment hates getting coupons in the mail, chances are they’ll just chuck whatever flyer they get from you in the trash without a second thought – no matter how valuable your offer is.

At the very least, offering discounts on future purchases immediately or after a period of inactivity plants a seed to help keep your brand at the front of the customer’s mind. If it reaches them at just the right moment, you can be confident that they’ll return to do business with you again in the near future.

Of course, we can’t forget the importance of loyalty programs. Sure, by the time a customer signs up for your loyalty program you can be almost 100% certain you already had them “on the hook”; but the act of them actually signing up for the program makes it official. And, because they’ve been so loyal to your brand, they deserve the deals you’ve reserved for your absolute best customers.

4. Convert Loyal Customers into Evangelists

Your most loyal customers are not only a major source of recurring revenue, but they can also be leveraged to increase your customer base, as well.

In fact, leveraging brand evangelists can be up to ten times more cost-effective than using traditional marketing tactics and can lower the cost of customer acquisition by about 50%.

Along with the aforementioned loyalty programs, referral programs can also drive customer loyalty. The above link mentions a 2010 study that found that customers who were referred to a specific company tend to refer said company to others, who in turn will continue the referral chain. It stands to reason that a customer who is willing to recommend a specific brand to a friend or family member is much more likely to remain a loyal patron of said company in the future.

You can also use positive customer reviews, testimonials, and surveys to your advantage in a number of ways. For one thing, you can take note of the factors your satisfied customers mention when lauding over your service and focus on making them your unique selling proposition. You can also use testimonials as a form of social proof to show how those who have used your services have overcome obstacles and improved their lives over time – making new customers more likely to stick with your brand for the long haul.

What Else Can You Do?

While this article discussed a number of effective customer retention strategies, it’s in no way meant to be exhaustive.

But that’s because, as with all things marketing, customer retention tactics are constantly evolving with your customers.

The main thing to keep in mind is that, if you want your customers to keep coming back, you need to “wow” them whenever possible. Keep them interested, engaged, and surprised, and you’ll have a customer for life.

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