What Are the Best Customer Retention Strategies?

Customer retention refers to a set of strategies and methods used by enterprises to prevent customer churn and build customer loyalty.

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(1) Identify core customers .

The influence of core customers on the company's benefits is different from that of ordinary customers. Failure to understand and influence core customers will put the company at risk. A study of bank customers found that 20% of customers accounted for 90% of all customer profits. From retaining 80% of the customers, they either make no money or provide only a small profit, and the turnover rate of new customers is much higher than that of old customers. In terms of customer management, core customers should be different from general customers, and more attention should be paid to the former.

(2) Select the measurement index .

The choice of measuring customer retention rate indicators should truly reflect the customer's behavior (loyalty or defection) to the enterprise, so that customer retention management and strategic planning can also be handled. Therefore, factors such as market characteristics and customer income differences should be considered when determining the indicators. It is common to measure customer retention by comparing the remaining customers, contracts, or products at a point in time with the base period. When the market is growing rapidly, the company's sales to existing customers are increasing slowly, or the distributors have purchased alternative products of different brands from the company and many other suppliers. Assuming that the retention rate is measured by the number of customers who purchased the product, it will not reflect Customer churn, and in fact, both cases have latent behavior of customers, which requires suppliers to track customer purchase share compared to the average level of sales to reflect customer behavior. In addition, low customer complaints do not reflect customer satisfaction and retention. No complaints indicate that the customer either did not tell the truth or did not seek customer feedback. This all reflects the decline in trust between the two sides and the deterioration of relations.

(3) Analyze the reasons for the loss .

Customer churn may be inevitable, but control unnecessary churn. Companies need to figure out why the loss is due to the company itself? Or is it outside the control of the outside world? Is it the loss of new customers? Or the old customers? In particular, we must pay attention to the loss of core customers. Communicate with lost customers in a timely manner, listen to their opinions, find out the factors that cause the loss, and repair the relationship in a timely manner. Studies show that this can regain 30% of them.

(4) Continuously improve customer satisfaction .

Customer satisfaction is a prerequisite for retaining customers. The close relationship between customers and enterprises is due to their eager expectations of the enterprise, that is, to better meet the needs in repeated transactions with the enterprise and ensure the acquisition of their own benefits. If the company can continue to put forward a better value proposition than its competitors or allow customers to obtain unexpected value, it will enable customers to maintain a lasting and stable relationship with the company.

(5) Promote relationships in interaction .

The relationship between enterprises and customers is formed and deepened in the interaction. Each individual transaction is an interaction and an opportunity for the company to enhance its relationship with customers. Close cooperation is beneficial to both parties. HDOX is a hydroperoxide producer in the UK. A customer of the manufacturer proposed improvements to the textile bleaching process. The factory readjusted the process and replaced the hydroperoxide with chlorine. The original three processes became two. This process shortens the production cycle, reduces energy consumption, further reduces production costs, brings value to both parties, and deepens the relationship at the same time. Similarly, companies can provide appropriate products on a sustainable basis, and over time, they can facilitate the timely updating of one product to another, and strengthen their core capabilities, which will undoubtedly further improve the relationship between the two parties. Once the supplier and the customer know how to cooperate happily, the customer is unwilling to change suppliers and then coordinate and adapt with the new seller.

(6) Increase customers' conversion costs .

The customer's conversion behavior is related to the size of the initial investment cost (time, money). The larger the input, the smaller the possibility of conversion, and vice versa. Increasing conversion costs can be achieved through strategic bundling of products and services. The airline's strategy of accumulating travel discounts often attracts loyalty to the airline, and if it abandons the airline, it will pay a certain price. Software companies offer software at low or no cost to attract users to use their products. The goal is to sell other products developed based on this software, because it takes time and cost to become familiar with another new software. Making it easier for customers to do business with you than with multiple companies is also a way to increase their conversion costs. Banks provide a package of financial services to reduce customer time and money investment. Recent advances in IT technology can enable new forms of relationships to go beyond the basic exchange of services and tangible products and the structure of supplier-enterprise relationships. Customers can be attracted to the Internet service provider's webpage, which can provide super-links to multiple product suppliers or service providers, so that customers can be continuously purchased from the same supplier.