We have shared this thought in many of our blogs and will remind you again. Customer retention is more budget-friendly than investing your time and money in finding new customers.
For business owners, clicks and conversions will always increase their costs.
When businesses start out, they do not have much to start off.
They make marketing strategies; they pool their resources for converting potential clients into paying customers from their target customer base.
Once they attain optimum customer conversions, they move on to hunt for new customers. They make fewer or no attempts to re-engage their old customers.
Research done by the Harvard Business School proves that improving customer retention by 5% increases profit by 25-95%. – Harvard Business School
For any business to survive and manage a healthy profit margin, retaining older customers is really crucial.
And to do that, it is really important that businesses must re-engage their old customers.
Before we proceed further, we would like to dig deeper into customer retention.
What is customer retention?
A good retention strategy helps maximize the profitability of customers and businesses.
Customer retention involves activities businesses carry out to increase their repeat customers. Such activities are targeted for increasing the profitability of businesses and customers alike.
Successful customer retention strategies help business owners provide more value to their existing customer base.
Small businesses know they have worked really hard to acquire the current customer base.
This means they must work harder than their acquisition efforts to re-engage and retain their customers. Businesses can do so by maintaining the value their products provide to customers with other add-ons.
Customer acquisition is the foundation for businesses; customer retention is the key to remaining in the business and keeping the inflow of cash constant.
Retention strategies take up time and resources; the trick is to distribute the customer retention effort.
How can businesses do that? Well, the answer resides inside the CRM software that manages the contacts, their purchase and product interaction history, and their conversations with the business.
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Let’s dig a bit deeper into customer retention before sharing the tips businesses need to re-engage their old customers.
Customer retention metrics for businesses
Businesses can work, rework, and enhance their retention strategies by simply understanding the key customer retention metrics.
What are these metrics? How do you measure them? More importantly, how do you improve them?
If you have these questions after reading the opening line, then you are at the right place and time.
Once we help you get the answers to these questions, it will allow you to equip yourself with the best customer retention strategy to enhance your business’s profitability.
Let’s have a look at these three important retention metrics and tell you why they matter.
1. Repeat customer rate
The repeat customer rate is considered a retention marketing backbone. This metric will allow businesses to measure the percentage of customers willing to make a second purchase.
If businesses are keenly measuring their repeat purchase rate, it is easier to evaluate how well their retention strategy works.
The higher the repeat customer rate is, the more customers are willing to make a second purchase.
The number of customers with more than one purchase / The number of unique customers
2. Purchase frequency
Repeat customers are responsible for 40% of the average store’s annual revenue. This metric helps business owners see how often customers return to make another purchase.
The number of orders placed / The number of unique customers
3. Average order value
Once business owners have the data from the above two metrics, they can calculate how much value each purchase brought in for the business. This metric refers to the amount of money an individual customer is spending on each transaction.
The total revenue earned / the number of orders placed
When should a business focus on customer retention?
Whether you should focus more on acquisition or retention is heavily influenced by where your store is in its lifecycle. A store that started yesterday is vastly different than the one that’s been up and running for many years.
This stage witnesses the inception of a business that emerges after ideation, mixed with the business model and process.
When business owners start out, there is only one goal in their mind; getting paying customers on board.
This stage is critical as the acquisition is really important for generating the initial break-even revenue for the survival of a business.
This is when businesses must only focus their efforts and strategies on growing a loyal customer base.
2. Working with traction
In this stage, businesses generally have achieved a regular sales cycle based on their recently acquired customers.
Businesses must start introducing retention elements at a regular time interval that will encourage and entice customers to make more purchases.
Start with retention emails, the sole purpose of which will be to encourage your past customer to come back and buy from you again!
3. Working with consistency
In this stage, the sales figures are ascending, and the revenue cycle looks healthy.
Business owners must focus on strategizing and mixing their acquisition and retention efforts. Start a simple yet beneficial loyalty or a referral program and take the help of CRM to automate your marketing efforts.
Sit back. Relax. Let the automation do the job.
Automation marketing campaigns and processes with Salesmate.Explore Marketing Automation
Sales is growing, and your customers are regularly coming back to make more purchases. At this stage, the business has established itself in the market with a growing and loyal customer base.
However, this stage comes with its share of issues. Now that the business is established, the hunger to grow even bigger comes into play.
This stage calls for retention strategies that will allow businesses to increase the lifetime value of the customers.
Sure the acquisition strategies will bring in more one-time purchases or none at all, depending on how you make the play. The true value of growing your business still remains in your old customer base.
This is the ultimate stage.
This is the moment where you know that you have touched the name of “industry giant”, yet, you will need to invest heavily on your retention strategy.
When a business becomes big, it often forgets the customers who were part of the journey to its current success.
The business is now technologically advanced and has much automation that keeps a close eye on customer satisfaction, inventory management, outreach emails, marketing, sales, etc.
Investing a little more time and resources in refreshing the old clientele will not hurt as much as investing cash on new acquisitions.
A CRM system with all the customer information stored in ain a single place is the best tool businesses can use to re-engage their old clientele.
They know their habits, they know what they want, and they have seen their purchase patterns.
Pushing a discount coupon on the businesses’ current achievement with a simple note crediting them for being part of the success will do wonders for the retention strategy.
Some customer retention statistics
- Once businesses establish a relationship with customers, their spending grows alongside trust. Loyal customers spend 67% more than newly acquired ones.
- Only 19% of businesses report having a dedicated customer experience team for managing their experience. Source: Genesys
- 9 out of 10 consumers are impressed with the businesses that know their account history and current activities. Source: Genesys
- 50% of customers will churn every 5 years. And only 1 out of 26 unhappy customers complain; the rest will simply churn. Source: Kolsky
Tips for improving customer retention
We hope the article is helping you move along smoothly towards the goal of having a strong customer retention strategy that will re-engage your old customers.
1. Reach out on special occasions
Wishing your customers special occasions is easier with CRM and the integrations that enable real-time notifications about their social media activities related to your product’s social media page.
CRM software notifies sales reps and professionals regarding upcoming birthdays, anniversaries, and even designation or job changes.
Businesses must surprise their old customers by mailing them physical birthday greetings. However, many companies are starting to use this tactic.
We will suggest providing an add-on to the same so that it can help your upsell or cross-sell strategy too.
Send out emails to your customers with the latest product information and an attractive discount just for their special occasion. Take this opportunity to upsell or cross-sell your product or service to them too.
This way, you can re-engage them to make another purchase from you.
Wish happy birthdays right on time!
Try Salesmate's date-based workflows and build stronger relationships with customers.Explore Workflow Automation
2. Getting timely customer feedback
Send out emails to your old customers, asking them to give their feedback regarding your product or service.
A CRM software will come in handy in carrying out this activity as all the customer information you require for composing your email is stored inside the software and at a central location.
The CRM also stores all the communication businesses have had with their customers in the past.
Asking your old customers to provide feedback on their experience using your product or service makes them feel important, valued, and important to your business.
Businesses make a grave mistake by not asking for the customer’s feedback. Feedbacks are the best way to know if your customers are using your product or service for the intended purpose.
If you have the data regarding how your product is used and how it is helping the customers get rid of their problems, you can really great content based on their experience and present it on your own website.
Feedbacks also allow you to improve upon the loopholes that may be present in your product or service.
Customers love it when a business asks them for an opinion regarding their offering.
Create a calendar, add it to your CRM, and schedule timely emails to your customers asking for feedback.
3. Call them, but with a reason
Even with your customers without a solid reason, communicating can rub off wrongly upon them.
They may take offense that you do not respect their time or their private life. Never call your customers and open the conversation with sentences like “Hi, I’m just checking in to see how everything is going on.”
He will surely annoy the customer, and they will start screening your calls.
Call the customers when you have a solid reason to communicate with them. It may be to inform them about your business’s latest offering or to let them know about an exclusive deal.
4. Repost their social posts
Modern sales reps and professionals must be connected with their customers on social media. This will help your business in two ways.
One, you can easily keep in touch with them and enhance their customer experience.
Second, you can always see what they have shared regarding your product or service on social media. If they share something positive about your offering, provide them special vouchers occasionally.
If they share something negative regarding your offering, you can swiftly connect with them and try to resolve the issue they are facing with the help of proper resources.
Sharing their social posts related to your offering on your official social page will help build a better rapport with your customers and develop a better business friendship.
5. Introduce them to your loyalty program
Customer loyalty is hard to earn. As a business, you must ensure that your resources are amply utilized on the retention strategies.
Once you successfully carry out the retention tactics, you can expect your customer base to be loyal to you.
Businesses must invite their old customer base to join a loyalty program.
Businesses can carry out the invitation via email or SMS.
Modern CRM software has a built-in virtual phone system that enables the sales reps to compose attractive text messages (SMS) and send them out in bulk to the contacts.
Send personalized text messages in bulk!
Experience the true power of SMS and automation in Salesmate. Sounds interesting?Explore SMS in Salesmate
The same can be done using the email automation feature of the CRM.
Once they are in your loyalty program, businesses can encourage the customers to visit the revamped site to explore the new content and engage with it.
If there is a relevant reward related to the loyalty program, who will say no to it?
Sometimes customers make one-time purchases and switch to other service providers once the subscription is over.
Sometimes, customers just forget about your product or service, and the lack of a customer feedback strategy allows them to be lost into the oblivion of new customers.
CRM software can help you with that too. Using automation, you can plan an outreach program for your old clientele. Modern CRM software even allows you to be reminded if the customers have not replied to your emails.
This way, you can bifurcate the list and make more efforts to reengage with those who have not responded yet. There is no money involved in re-establishing a connection.
Salespersons and sales professionals tasked with the reconnection must remember this.
Customers who cancel their subscriptions or have moved on to other providers can be the best source of honest product feedback.
They can be turned into the best brand advocates and maybe, with the right strategies and tactics, become the best future customers.
6. Develop a lasting bond
Prospects have multiple choices when they set out to make a purchase.
They have a list that results from their initial research for finding an apt solution to their problem.
Always remember this; you are just a name on the list of your customers. Businesses often forget the fact that modern customers have more options now.
In such scenarios, their task doesn’t end at the first paycheque they generate with the help of their customers.
Modern customers also go with a business that resonates with their personal beliefs.
They will make purchases from a more involved business with their customers and their problems.
You will fail miserably if you are out there in the market with the notion that the customers are just sales figures inside your spreadsheets or just other contacts inside your CRM system.
A business must work on developing a personal connection that makes the customer feel more empowered when they are loyal to a brand.
If this feeling is present in your customer, they will definitely make a second purchase and remain loyal.
Wrapping this up
Acquiring new customers is a good habit and is needed for expansion.
However, working in synchronization with the needs and requirements of the loyal customer base will bring in more profit by cutting down the marketing expenses.
Re-engaging with the old clientele is a cost-effective way to experience long-term success.
We hope this article has shed enough light on the matter at hand you will be compelled to create an apt customer re-engagement strategy based on the reading.
Here, we are sharing a small example of what your re-engagement content can look like.
Of course, you will have to make the necessary edits depending upon your business process, pricing model, and the sector you cater to.
I hope all is well at your end! We have been busy making the product more appealing and helpful for you. I am sure 2019 has been a busy year for you too till now.
I was on LinkedIn when I saw your post “Managing contacts inside a messy spreadsheet”. I can share my calendar so that we can discuss the issues you are facing on the call and talk about your contact management strategy for the current year.
We’ve recently revamped our product and it comes with more features and add-ons. I am hopeful that it is the best solution to your problems.
Hope to hear from you soon.
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