Businesses tend to think of customer retention as a metric, losing sight of what matters the most: their customers.
It’s true that improving customer retention positively impacts revenue—research by Bain & Company found that increasing customer retention rates by just 5% can boost profits by up to 95%. But at its core, customer retention is about building lasting relationships with your customers that make them feel valued. This requires you to think of your customers as people, as opposed to a percentage, conversion, ticket, or sale.
Fostering the kinds of customer relationships that last through times of prosperity as well as uncertainty starts with building a set of skills and strategies to reduce customer churn and build loyalty. They include:
Customer retention strategies
Customer retention skills
Retaining customers isn’t a responsibility that falls on any single part of your organization. It involves all teams bringing their unique expertise together to create a great experience. This includes:
- Your customer service team’s ability to “read” a customer’s emotional state.
- Your sales team’s ability to build rapport.
- Your marketing team’s ability to be agile during a crisis.
Each team brings a different flavor to your customer experience recipe. But improving customer retention starts with building a few essential skills—or ingredients—across the business.
Putting the focus on customers means adjusting your focus from the needs of the business to the needs of the customer. It requires teams to evaluate the customer journey from the outside-in. Zendesk’s Chief Information Officer, Colleen Berube, puts it best: reframe the conversation to start with “what is the experience our customers should have?”
From the customer’s perspective, transparency builds trust. For customer service, this might mean owning up to mistakes when customers complain.Or, responding to negative reviews with a solution rather than removing them from your website.
In retention marketing, it involves committing to honesty in campaigns. In sales, it includes refraining from over-selling a product or service you’re unsure the business can deliver on.
Companies with high customer retention rates are constantly strengthening their empathy for their customers. If you can feel the pain points of your customer, you’ll understand them better. You might be patient with a difficult customer or extra cautious of the tone of your marketing campaigns during a pandemic.
6 examples of customer retention strategies that work
Businesses often narrowly focus their strategies on growth and what it takes to get a potential customer in the door. But only investing in customer acquisition and not prioritizing your existing customers doesn’t build loyalty and isn’t budget-smart. In fact, acquiring a new customer is five to 25 times more expensive than retaining an existing one.
Retaining customers shouldn’t be random—it requires teams to use their customer-focus, transparency, and empathy skills while being strategic in how they do so.
“Customer retention strategies are programs or activities put in place to reduce customer churn and retain as many customers as possible.” Stephanie Lee, Sr. Lifecycle Marketing Manager, Zendesk
Here are 6 examples of strategies to elevate your customer retention game.
Implement a Voice of Customer (VoC) program
Build trust through knowledge and community
According to Zendesk’s Customer Experience Trends Report, 2020, customers prefer to help themselves—yet only a third of companies are delivering on customer expectations when it comes to self-service.
Harnessing the power of self-service with a knowledge base builds trust. It empowers your customers with a one-stop-shop for information they know they can turn to whenever they get stuck. And forums build in peer-to-peer support, fostering brand loyalty through community.
Canva regularly updates its knowledge base with content tailored to where a user is in the customer journey. This includes specific articles where a new customer can find tips for getting started during the onboarding process.
Focus on the human touch
A study by Deloitte revealed that emotional connections are drive customer loyalty—and even outperform discount incentives like loyalty rewards. This requires brands to think beyond the kind of “buy five coffees, get one free” loyalty program. Instead, they need to build real, human relationships.
“Making personal connections with customers that go beyond your actual product is essential to retaining customers,” said Lee. “The most successful retention efforts build interpersonal rather than transactional relationships with your customers.”
Since your agents are on the frontlines interacting with your community of customers directly. They play an important role in fostering human connections with your customers.
Thrive Market trains its agents to become knowledgeable about natural foods because its members value understanding where their food comes from. This enables its customer service team to relate to customers on a more human level. Agents engage customers in topics customers are passionate about.
As part of Birchbox’s Service Recovery Program, agents follow up with customers who rated an interaction poorly. Zappos sends customers flowers when they need help returning shoes for a loved one they lost.
“The most successful retention efforts build interpersonal rather than transactional relationships with your customers.”
Stephanie Lee, Sr. Lifecycle Marketing Manager, Zendesk
Leverage AI to create proactive experiences
Another important retention strategy is being proactive. 89% of companies competing on the basis of customer experience. Reacting to customers’ needs isn’t enough to stand out. Customer expectations are higher than ever—so much so that customers today expect you to provide them with what they need before they even ask for it.
Technology can help—48% of customers are more likely to be loyal to the brands that use the latest technology to engage and connect with them. Ultra Mobile deployed a chatbot on its website to connect customers with the right person, right away, before they bounce. Pinterest’s agents use AI to predict customer satisfaction during support conversations, before a customer takes a survey.
Communicate quickly and according to your customers’ channels of choice
Zendesk research found that communicating quickly and according to your customers’ channels of choice is a powerful driver of loyalty. A great customer experience is an effortless one. Customers increasingly expect your business to meet them wherever they are, whether that’s on your mobile app, social media, or other popular messaging apps like Whatsapp.
Delivering an effortless experience across channels requires a connective layer of tissue that arms agents with context and conversation history. If someone has to repeat themselves three different times to three different departments they aren't likely to become a repeat customer.
Airbnb meets its customers wherever they are across the globe. It does so by providing help through the phone, email, social media, SMS, and social messaging channels. It’s able to deliver an effortless experience on the front through its sophisticated customer support software on the back that connects channels with the full view of the customer.
Agents have context to effectively help a customer no matter what channel that customer reaches out on. This gives them insight into the urgency of the problem, if a customer is on a trip or if they’re preparing for one, and their history with Airbnb.
Use data to personalize the customer experience
80% of customers are more likely to give their business to a brand that delivers a personalized experience. But to reap the power of personalization, you’ll need to eliminate silos and connect data from across the customer journey.
This involves combining customer data from different sources, such as your customer support software, marketing automation system, or order management tool. Building a connected ecosystem of customer data opens up possibilities like sending personalized promotions to customers with recently closed tickets. You can also ensure that your support team doesn’t offer a customer a promotion if another team already did.
“Personalization is an important retention strategy. This means delivering the right message, at the right time. You might tailor an email to where a customer is in the customer journey. This is generally a better strategy than sending an email blast across your entire customer base,” said Lee.
Freshly sends recently canceled customers messages tailored to the specific reason they canceled, offering them to reactivate.
Customers aren’t likely to stick around if they don’t feel heard. A VoC program enables you to foster a feedback loop with your customers by making them active participants in your brand. This involves using insights from your customer service analytics and satisfaction surveys to capture customer feedback.
The next step is to incorporate that feedback across the business. “VoC programs are an important customer retention strategy because they give customers a seat at the table,” explained Lee.
At Vimeo, support team members are looped in before every product launch. They look at designs, anticipate pain points, and voice common feature requests from customers. After launch, the support team shares how customers are receiving the new feature or product, tracking any pain points or issues.
Improving customer retention starts with building better relationships. When you treat your customers like humans as opposed to a number, they’ll feel a deeper connection to your business.