“Increasing customer retention rates by 5% increases profits by 25% to 95%”. – Harvard Business School
Given the statistics mentioned above, it would seem that every company would go all out to ensure customer retention. This is not something that will happen on its own – companies must be proactive and relentless in the pursuit of keeping their existing customers. We have discussed several times and as a business owner (and customer), you would know that customer loyalty, and ‘attention span’ for a single company is now fleeting. For a company this implies that it should make the most of its existing customer base and use every opportunity to enhance its revenue, increase profits, and forge ahead of its competitors. The good news is that there are several tools and strategies now available to help companies extract data and use them to retain customers for the longest time. Surely companies are using some or most of them – the key lies in consistency and using the data as effectively as possible.
Despite the importance of data to ensure customer retention and strengthen the overall business, some companies are still unable to manage the sea of customer information. Most of it simply lies in their database, wasting an extremely valuable asset. Research shows that while 64% companies believe that such data can help them with acquiring and retaining customers, at least 77% of top leaders believe that this data is not optimally used. As companies continue to come into being, the newer ones are expected to prove a serious ‘threat’ to at least 53% companies because the new companies seem more aligned to using the customer data. With such fiery competitors, providing even more choices to customers, there does not seem to be much reason for customers to stick with a single company for too long. All these factors put together are the reason that companies need to ‘shake things up’ and start using data to ensure customer retention, and consistently keep customers happy. It is imperative for companies to know how to use this data to enhance personalization, customization, and time their communication to align with customer requirements.
In everyday life too, the more we know about someone, the easier it is for us to communicate with those people. In business too, knowing ones customers is the route to success since every offer, message, product, and anything that goes out to them, would serve a purpose, alleviate a pain, and satisfy some emotional need for the customers. All this amounts to top class customer service – the reason that customers are now staying with a company (or leaving if they do not get it).
The companies that see the utility of a customer database invest in CRM systems that enable the data to remain centralized and accessible to anyone who would require it in the company. This database can be updated easily, allowing a company to remain abreast with any new information about its customers, while continuing to have access to the customer’s ‘history’ with the company. By understanding a customer’s past and current ‘behaviour’ and buying patterns, a company would better equipped to increase the relevance of its offers, provide customized solutions, and personalized products and service, such that customers stay with the company since they would receive whatever they expect from it. Customers prefer to ‘stick’ with a company because as the relationship progresses, customers need to expend lesser effort to get what they want, while the company understands exactly how to keep them happy. This is the shortest but most effective route to ensure customer retention.
Customer data also helps a company to ‘target’ prospective customers, who may seem interested in its products but would not have ‘converted’ to actual buying customers. Using information about such prospects, a company could put together special incentives and offers that would entice them into actually buying from the company. A CRM system helps a company collate all the information about such ‘prospects’, thereby increasing the possibilities of a company to gain more customers.
Customers love to feel important – more so if they are long-standing and profitable ones for the company. We know that such customers prove to be more valuable in terms of profit for a company than new ones. It would make sense therefore to divert resources of time, money, and human effort towards such customers such that not only do they continue to provide business, but also provide referrals bringing in more customers. Customer data used effectively would allow the company to segment its most profitable customers and ‘reward’ them to show gratitude. These ‘rewards’ could be special offers, incentives, discounts, or even a special event to recognize their contribution to the success of the company. These strategies work effectively to increase – their loyalty, spending with the company, and advocacy of the company. Making your most loyal customers feel special and valued, is a great way to retain them and keep them profitable, while also ensuring that they enthusiastically recommend your company to others.
With the advancement of technology, there are now several channels through which, customers interact with their friends, other customers, and with companies. In order to stay competitive and retain their customers, companies need to use the customer data available on these channels to understand their customers even better. Getting to know customers would ensure that companies send relevant information to the particular customer when they need it the most, and using the most preferred channel of communication. Social media for one is now an extremely popular and highly utilized platform, through which companies can gain insights into their existing and prospective customer’s lives, interests, preferences, hobbies, and other such data that a company can use to personalize products and services, which would be immediately useable and relevant for the customers. A company that can address its existing and target customer base’ needs and reach out to their emotions, is more likely to gain more customers and succeed in its customer retention endeavours. It is important to build a rapport and create a connection with customers – the sooner and more effectively a company can do this, the greater its chances of keeping its existing customers and making customers out of prospects.
The good news for companies is that the CRM systems are constantly being updated and upgraded, making them stronger and more supportive of the customer retention strategies of companies. Companies that have a stronghold on customer data would know their customer needs, the best time to send out information, greeting them on special occasions and on accomplishments, providing them with value-added content on topics that would interest them, and other such actions. The key to ensure customer retention is to know customers and staying abreast with their evolving needs.
The very foundation of top class customer service is giving customers what they want and as speedily as possible. A robust and updated database would allow companies to target prospective customers and ensure customer retention with personalized promotions and campaigns. Relevant and timely offers, products, and information are what drive customers toward a company and keep them there. It is not hard to see that a meticulously managed database would not only ensure customer retention but also attract prospective customers – both these factors are indispensable to a sustainable business.
