Why is customer retention so important, and how can a business improve retention rates?
Most business owners understand retention is crucial to continue scaling their businesses. But many do not fully understand how to foster long-term relationships with existing customers or the consequences they might suffer if they fail to do so.
That’s why we’ve put together this complete guide to retention sourced from our many years of experience in helping businesses to successfully increase their retention rates through content marketing.
What Is Customer Retention Marketing?
This may seem like an obvious question, but in our experience, that isn’t always the case. Sometimes, business owners who are normally quite savvy with customer acquisition draw a blank when it comes to keeping existing customers.
To put it simply, customer retention marketing includes any formal business efforts to strengthen your relationship with existing customers. This can come in the form of loyalty programs, personalized deals, content marketing, and more.
Unfortunately, business owners lack education on why this type of marketing is so critical and, more importantly, how they can weave it into their current marketing strategy.
But why is customer retention so important, especially when compared to lead acquisition?
Customer Retention vs. Lead Acquisition
When businesses invest in lead acquisition, they focus on getting brand-new customers into their business. While finding new customers is a very important part of any business’s marketing efforts, it is often prioritized at the expense of investing in current customers.
This is a critical mistake for any business.
When you invest in retention marketing, you’re investing in customers who are already interested. They have already made it obvious they want what you’re selling and are willing to pay the price you have set. In the grand scheme of things, they are vastly more important than potential customers who may or may not want to do business with you.
That may sound shocking, but it’s true. Here are just a few of the key statistics that prove it.
- It is 6–7 times less costly to keep your current customers than to attract new ones.
- A mere 5% increase in customer retention rates has been shown to increase a business’s overall revenue by 25%–95%.
- Current customers are much more likely to buy from you, closing sales 60%–70% of the time.
- Current customers spend more on average than new customers (30% more).
So, when you neglect your active customers in favor of chasing theoretical future sales, you are making a costly mistake.
Our founder, Shaun Buck, often makes the following comparison.
“Chasing after new customers and leaving old ones behind is like chasing after nickels and dimes while leaving a sack of cash unattended on your porch.”
So why is customer retention so important? Well, 100% of your profits come from current customers, which should be reason enough. But it is also a critical factor in scaling your business over time.
How do you keep more of your current customers? It all starts with putting the customer first and considering how you can improve their experience.
Improving The Customer Experience
You can improve your customer retention rates in dozens of easy ways. Some of them require more planning and careful execution, and some are simple tweaks you can make tomorrow.
Here are some of the easier ways to improve your customer retention rates.
- Improve your customer service protocols. Ensure your staff knows how important the customer experience is, and train them according to your expectations. Some people will always be impossible to please, but training your staff to go the extra mile can have long-term payouts for retaining customers.
- Improve the customer’s in-office experience. That could mean investing in updated decor for your waiting room, improving the layout of your store, or providing refreshments at the check-in area. Brainstorm ways to make your business space more comfortable for the clients, then implement them.
- Offer freebies if appropriate. Throwing in a freebie every once in a while is a great way to encourage return customers. This can be as simple as offering dental clients a free toothbrush or giving out a free branded stress ball to physical therapy clients.
- Take time to make a personal connection. This might look different depending on your business, but it’s a great way to make clients feel special. If you’re a restaurant owner, get to know your regulars and check in with them occasionally. If you’re a contractor with repeat clients, make small talk about shared areas of interest.
Additionally, a few more challenging ways to increase retention rates require planning and forethought. Here are some of the top methods.
- Add value for your clients through consistent content marketing. Content marketing can greatly improve your perceived value as a company when done correctly. We will cover this topic more in-depth below.
- Provide personalized offers through email and direct mail. If you consistently keep track of your client’s interests and tastes, you open up unique opportunities to give them personalized offers. This can be as simple as a coupon for their favorite product or a notice that they are overdue for a service (with a discount attached). This will help keep you top of mind and encourage customers to return to your business consistently.
- Offer unique events and opportunities to frequent customers. Hosting seminars, webinars, or even lunches is a great way to reward regular customers for their loyalty. If you are positioned to add value for your client base through events, they can help build in-person connections with your customers.
- Implement a tiered rewards program. Rewards programs encourage repeat business and show appreciation for your most loyal customers. What makes sense for your business may vary by industry. Not all businesses are suited to having rewards programs (like medical offices). But if it is appropriate for your business, it can greatly increase customer retention.
A great customer service experience is essential to retain your customers. Otherwise, your other retention efforts will be in vain, so be sure to take it seriously.
Standing Out From The Competition
Another great way to ensure you stay competitive within your industry is by keeping an eye on what your competition is doing. This is especially important if you are in a smaller local market with limited competitors where it’s easier to stand out successfully.
At any given time, you should be aware of the unique appeal of your competitors, what they are offering, and what their shortcomings are. You can act on that information to ensure you remain a leader in your local market. You should attempt to elevate your offerings above theirs and address pain points they cannot.
For example, suppose you’re a real estate agent. Your main competitor is known for bringing bottled water to open houses and having long wait times. One way to respond is by offering freshly baked cookies at your open houses and hiring an assistant to ensure your wait times are as low as possible.
Or perhaps you’re a chiropractor, and your lead competitor is known for having an HD television in their waiting room and a rude front desk assistant. You might respond by offering more entertainment options in your waiting room. You may also refresh your front desk assistant on your expectations for kind and effective customer communication.
You should do whatever you can to provide a better customer experience than your competitors. This will help to reduce losing customers to other businesses, improving your overall retention rates.
Building Relationships Through Content
The root of any long-term customer loyalty will always be a solid relationship with the business or brand they patronize. But as you can imagine, that is often easier said than done when you have hundreds, maybe even thousands, of customers.
So, how can you successfully build personal relationships with all of them?
We happen to be specialists in this area. For over a decade, we have helped businesses to connect with their audiences through print newsletters. These newsletters contain captivating, entertaining content that readers find valuable. Many clients we serve have used their campaigns to form meaningful relationships with their audiences, some of which last a lifetime.
Here’s how we do it.
We start with a custom cover article. This requires an interview with the business owner or preferred point of contact. During this interview, we ask for personal stories about the business owner’s life — and no detail is too small. Whether it’s about a Saturday stroll with their family or the adoption of a new pet, we have found that no detail is too minute to build a great story around.
We then write a personalized cover article for our client. The more relatable, the better. This helps the readers get to know the business owner as more than just a business owner but also a person. That connection, once formed, is worth its weight in gold.
We have heard from countless business owners about how helpful their cover article is when forming personal connections. Often, readers will express how they feel like they know the business owner personally as a friend because they have heard so much about their lives.
That’s a real boost. People don’t typically want to leave a business owned by somebody they like and consider a friend.
Beyond that, we know how to fill our clients’ newsletters with captivating content readers enjoy. Sometimes, this content is directly related to our client’s niche. But more often than not, it’s written with the reader in mind, not the industry.
For example, we have law clients who share playlists with their clients through their newsletters. We have physical therapy clients who share recipes and dentists who share columns written from the perspective of their dogs. None of these topics are directly related to their industry, but they are tailored to their specific audiences.
That’s the sort of content that resonates with customers and makes for a compelling newsletter.
That doesn’t mean we never include industry-specific content; it just means we won’t do so at the expense of the overall newsletter. We can’t tell you how often we have seen clients attempting to do their own newsletters while forcing boring, overly specific content into their articles.
Take it from us when we say readers hate that.
They would rather read about their chiropractor’s recent trip to the pumpkin patch and a recipe for low-fat cheesecake bites than endless articles about the best way to perfect their posture and align vertebrae.
But how can a business consistently brainstorm, write, design, and distribute compelling newsletters every month on top of what they already have going on? Well, if that sounds like a tall order, it is.
That’s why we’ve been so successful as a business. All the entrepreneurs we’ve worked with eventually concluded that high-quality, valuable retention marketing was worth the price and they enlisted our help. Now, they can relax knowing their newsletters will be custom curated, written, designed, and distributed by experienced experts in the field of content marketing. They only need to worry about one short monthly interview and final approvals.
So, why is customer retention so necessary?
Because emphasizing customer retention is one of the easiest ways to scale your business over time. Existing customers tend to spend more, close sales more easily, and even become great brand ambassadors for your business. By comparison, potential customers are not yet reliable or nearly as valuable. That’s why providing a competitive customer experience, rewarding customer loyalty, and building long-term relationships with your base are so important.
If you want to learn more about the power of retention marketing, fill out the form below to download our free Retention Guide.