Client retention refers to a business’ ability to keep and hold its customers, usually over a long period of time. It is built on strong business-customer relationships, and it is what drives repeat purchases. According to the Harvard Business Review, acquiring a new customer can be 5 – 25 times more expensive than holding on to an existing one. Many businesses work extremely hard to get new clients and leads, and often forget about the importance of retaining their current clientele. Thus, learning how to optimize your client retention rate will not only save you money, but also increase sales. So, in this article we will go through a number of ways to optimize client retention for your business.
1. Research and Analyze
You will not be able to retain customers if you don’t fully understand them. You should be diligently tracking and analyzing the number of people who were once your customers and no longer are.
2. Customer Feedback
The key to retaining customers is to know how they truly feel. Understanding your client’s needs, wants, likes and dislikes allows you to refine your approach to better suit your target audience, so that your customers are 100% satisfied. This way, if their needs and wants are met, they will be more inclined to come back as a returning customer. Through customer feedback, your business’ can improve its decision making process while promoting innovation and creativity.
3. Calculate Customer Retention Rate
You can calculate your customer loyalty/retention rate using the Net Promoter Score (NPS). The NPS measurement is made up of one question: “How likely are you to recommend (your company) to a friend?” on a scale of 1-10. After providing a score, the customer can then use their own words in an open-ended feedback question to give an in-depth and personalized explanation for their rating. This will help your company to further refine your products/services to better serve your target market.
4. Company Newsletter
Another way to reach out to your customers and build trust and connection is through issuing a company newsletter. Through a newsletter, you can help strengthen the relationship between your business and your client. Thus, they are more likely to have a positive perception of your company and brand.
5. Incentivize Loyalty
Customers are constantly looking for a better alternative when buying any products/services. If you don’t encourage customers to return they will be more likely to look elsewhere. You could incentivize loyalty by setting up a loyalty program, or offering a discount when a customer places a certain number of orders.
Client retention rates do not drastically improve overnight. It is something that each business needs to work on over a long period of time. In saying that, if you can identify your customer’s wants and needs and know how to leverage them, the more you will be able to optimize your client retention and boost sales!