What's the connection between compounding in finance and customer retention? Well, the longer the relationship, the better the customer lifetime value (also referred to as "LTV").
Businesses that have stood the test of time can vouch for the fact that retention is more challenging than acquiring new customers. Today, customers are spoilt for choice, with plenty of options to choose from in any sector. Add the global pandemic and associated challenges to the already heady scene, and things are increasingly complex. Businesses are cutting costs and new investments and customer interactions are being done remotely. Many stakeholders are suffering low morale and are feeling cautious about adding to expenses, which is all the more reason why existing customers should gain more attention.
Building your customer retention strategy
There's no secret sauce to getting your customer retention strategy right. The closest one can get is to step into the shoes of the customers and understand what they go through at every step of their 'lifecycle' experience.
For instance, a promising onboarding experience could easily be overshadowed by a poor interaction with customer support. This could result in a wide gap between expectations and reality. This, if left unattended, will eventually lead to customer churn.
Here are four tenets that businesses can adopt to increase and continuously improve customer retention:
1. Think long-term, right from the get go
First impression matters, and by that we mean onboarding. Research shows that the right onboarding experience will boost customer retention, while poor on-boarding is one of the leading causes (23%) for customer churn .
Take, for example, the software industry. A well-designed on-boarding experience helps customers leverage product features that can solve their business problems. It is particularly important to get it right the first time, because of the complexities involved with changes and rollbacks. Also, proper implementation upfront reduces the risk of major support issues later. We all know that undoing a mistake ends up being more expensive.
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For a more personalized onboarding experience, it's important to have a pool of well-trained, dedicated experts who handle select customer accounts. The ability to assimilate customer requirements quickly in order to set up the right solution is an essential trait of an onboarding expert. Their expertise also helps to identify potential opportunities for up-sell and cross-sell.
It is also important to record these initial interactions in the company's customer relationship management software. That way, the relationship can continue seamlessly and the sales teams can approach the customers with contextual offerings, down the line. In software, for example, as and when a customer business expands to new locations, it's imperative to reach out and propose an increase in the number of user licenses.
2. Be empathetic and highly responsive in post-sale support
Customer experience impacts retention more than any other factor. Statistics show that 59% customers leave a brand due to poor customer support experience, which is more often than leaving due to an actual bad or mismatched product.
Every support interaction is an opportunity to win over the customer. Continuing the software product example, customers may overlook some of the product capabilities or need training to make the most of them. This can result in dissatisfaction if it goes unaddressed. Support teams should be able to spot these signals early. Helpdesk systems offer solutions to track customers' support experience—use this to ascertain the quality of support offered to customers over time.
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