10 Data-Driven Customer Retention Strategies

The hard work doesn’t stop when a customer has made a purchase. In fact, the real challenge may be just beginning: getting your customers to stick around.

Customer retention is a long-term, continuous investment that companies must make in order to keep customers as long as possible. However, reducing customer churn is not easy. Customers may leave due to poor customer service, a low quality product or service, high price points, or if they don’t feel valued and appreciated.

While addressing these issues and increasing customer retention can be a costly, time-consuming effort, it pays off in the end. Why? Happy customers equal more money. In a study by the Harvard Business School, increasing customer satisfaction by even 5% can increase profits between 25-95%.

So how do you start implementing customer retention initiatives that actually pay off? This article will cover ten data-driven customer retention strategies and how you can get started with each one today.

10 Data-Driven Customer Retention Strategies

From soliciting feedback to creating a loyalty program, here are ten data-focused ways you can improve customer retention.

1. Reduce Customer Effort

Your company’s customer retention strategy won’t even matter if users can’t get through the initial onboarding of your product or service. You shouldn’t wait to improve customer retention until a purchase has been made; you should think about retention from the very first step of your customer lifecycle.

Think of it this way: if you make things super easy for your customers, they’re more likely to stick around and come back. On the other hand, if a user gets frustrated with the initial sign-up process, she probably won’t be excited to come back to your site and experience more frustration.

So, look at your onboarding process and see how you can make it easier for customers. Take a look at Tumblr’s sign up process. There are just three simple fields you have to fill out and then you’re done. Users don’t have to jump from page to page and don’t have to share extraneous information.

Tumblr customer retention

In addition to simplifying your onboarding process, make it easy for customers to reach you and to pay you. Don’t try to bury your pricing information or direct customers to call for a price quote. Users will appreciate transparency.

How to Get Started: Use data to identify the pages on your site that could be simplified. Use Google Analytics to look at traffic and bounce rates for important pages, like the sign-up page or contact us page. Pay attention to high bounce rates; this means that people are coming to the page and immediately exiting, meaning they were confused or didn’t understand something.

2. Prioritize Customer Service

Eighty-nine percent of customers have stopped doing business with a company after experiencing poor customer service. With statistics like this, it’s clear that customer loyalty and retention is directly connected to excellent customer service.

Quality support means that the customer feels heard and cared for. The support team provides timely responses, goes above and beyond for the customer, delivers on promises, and just makes life easier for everyone.

Zappos is at the forefront of excellent customer service. The online retailer has a team of more than 500 employees in a call center in Las Vegas dedicated to “wowing” customers.

Zappos customer retention

Zappos offers free shipping and up to 365 days to return an item, for free. It also gives away free VIP memberships to loyal customers, which includes free one-business day shipping and an exclusive customer service phone numbers. And that’s not all.

In 2011, Zappos sent flowers to a woman who ordered six different pairs of shoes because her feet were damaged by medical treatments. And, they overnighted a free pair of shoes to a best man who arrived to the wedding without shoes. The stories are endless, and they showcase how connected customer service is to the Zappos brand.

How to Get Started: Improve your customer service by first doing an audit to see where things stand. Track how many tickets the support team receives each month, how long it takes for the first outreach to happen, how long it takes to close each ticket, and overall satisfaction from customers (you can do this by asking customers to take a quick survey after they interact with the support team). Then, once you have your benchmarks, you can start establishing new KPIs. Do you want to increase the number of closed tickets by 15%? Or have the first outreach happen 25% faster?

3. Anticipate Problems Before They Occur

Anticipatory services, also called proactive support, is when a company foresees a potential  issue and solves that issue for customers before it gets out of hand. Many airlines do this by texting or emailing you when your flight is delayed. Instead of your getting to the airport and angrily having to wait around for your flight, the airline is warning you ahead of time about the issue.

Walgreens has also perfected anticipatory services. They email you when it’s time to refill your prescription and all you have to do is respond to the email. Walgreens wants to avoid angry customers who forgot to refill their medication, so they proactively mitigate this issue.

How to Get Started: In order to identify unseen problems, you need to truly understand your customer experience and journey. Let’s say you work for a software company. You should understand exactly what happens after a customer buys the software, how long it takes to learn the software, which features are the hardest to learn, at what point the customer tries to onboard the rest of the team, etc. By understanding this journey, you can start to identify patterns and offer proactive support. For example, if you know that customers start to feel frustrated by the tool after two or three weeks of purchasing, offer a free training session. Or, if you know that annual reports are a big thing for your customers, host a free webinar offering tips and tricks.

4. Create a Loyalty Program

Not only does a loyalty program increase spending, it also makes your customers feel special and appreciated. Two of the most successful loyalty programs include Amazon Prime and Starbucks Rewards.  

Amazon Prime motivates customers to purchase its yearly membership by giving them exactly what they want: free, two-day shipping, instant access to video streaming, unlimited music streaming, and more.

Amazon customer retention

Similarly, Starbucks Rewards allows members to receive free drinks and food based on points earned with every purchase. Customers also receive a free drink on their birthday, free in-store refills, and more.

These two loyalty programs also build relationships with customers. Take Amazon Prime for example. Customers will grow accustomed to free, two-day shipping and will be less likely to leave Amazon and go to another retailer (who won’t be able to match the same promise).

How to Get Started: Loyalty programs are primarily designed for the “super customers.” Those VIP customers who are already evangelists for your company and who are most likely to use the program and spend more. Before creating your own loyalty program, make sure to collect data on these super customers. You want to make sure you’re meeting their actual needs and not just offering another fluffy promotion that no one will use. Send surveys, organize focus groups, and have conversations with your key customers to identify their wants and needs.

5. Research and Get to Know Your Customers

Whether you’re developing a customer service strategy or trying to design the best user experience on your website, there is only so much guessing you can do. The best thing is to truly get to know your customers.

Interact with your customers whenever possible. During the onboarding process, make sure to ask about any hang-ups or issues they may have encountered. Document every question asked and track every customer support ticket in one central location.

On the marketing side, advocate for as much testing as possible to see what your customers respond to the most. For example, do they react better to videos or text? How many emails do they want to receive and when?

How to Get Started: Ask the right questions during every interaction with a customer. Try to unearth any challenges or problems they may have faced and make sure to also ask about the positive aspects of their experience. In addition, do user testing with sites like UserZoom or to see how people are interacting with your site and identify ways you can make the experience easier and more seamless.

6. Build a Calendar to Keep in Touch

Make sure you stay in contact with customers by creating a calendar. Establish a cadence of emails, phone calls, special offers, and follow-ups that happen automatically during the pre-sale, sale, and post-sale process. This communication makes your customers feel valued and appreciated, deepening the relationship. There is no magic formula for this kind of calendar, it all depends on your customer base. So, make sure to test different messaging and timing to see what leads to the most engagement.

In addition to the automatic communication, make sure to track more personal details (if possible). You could track things like customer birthdays or big events. For example, if you knew your customer was using your software to manage a conference, you could follow up and ask how the conference went. Also, make note of your customers’ interests and challenges. For example, if your customer recently purchased an analytics add-on to your software, you could alert them of a paid training on analytics.

How to Get Started: Before rushing to create a completely new calendar, first understand what you have been doing. Use a free calendaring tool, like Google Calendar, to map out your current communication flow with customers. Make sure to track every point of communication, from voicemails to emails. Then, once you have the big picture, look for any holes. Do you see weeks go by with no communication? What happens in month five or six after purchase? Identify these gaps and start thinking of ways to fill them in and reach out to customers.

7. Take Advantage of Automation

While developing a calendar is extremely beneficial to help you map out your communication, you just won’t be able to do everything yourself. That’s where marketing automation tools come in. They streamline manual processes and save you time.

For example, you can create an automated email campaign for customers who have just purchased your product, educating them and providing tips and tricks on how to use it. If you offer a free trial of your product, you could set up a different email campaign targeting people who did not convert after their trial. This would be a nurture campaign, where you send helpful content to users to keep the relationship going. Both these email campaigns take the burden off the sales team and give them more time to make meaningful connections.

How to Get Started: When creating your automated email campaign, make sure to track key metrics like open rate and click-through rate. Then, start A/B testing your emails to increase those numbers. For example, you could test subject lines to try and increase open rates. You could test the color of the call to action button, adding a video, or including super short body text. Only test one thing at a time in an email, and record the results.

8. Unearth Customer Complaints

If you resolve a customer complaint, that customer will do business with you again 70% of the time. The problem? Ninety-six percent of dissatisfied customers don’t voice their complaints.

Although hearing a customer complaint is always a little painful, it can do wonders for retention in the long run. If your customers are experiencing a problem, you need to know about it in order to resolve it. And, it’s actually a very positive thing if your customers are willing to complain to you – it means that they are still open to having a dialogue and you still have the opportunity to make them happy.

Once you start uncovering customer complaints, you can then aggregate all the data to make bigger business decisions. If you see that five to ten customers are complaining about XYZ feature every month, you may want to consider shipping an updated feature. If customers are complaining about pricing or user experience, your priorities may shift accordingly.

How to Get Started: Whenever customers cancel their subscription or membership to your service, or decline to renew a contract, you need to ask them why they are leaving. This can be a very simple, automatic form that appears when customers cancel, with a couple questions about why they are canceling and what you can do to improve. Make sure to keep an ongoing list of all these cancellation complaints; if you ever resolve the complaints, you can reach back out to the customers to let them know.

9. Get Customer Feedback with Questionnaires, Surveys, and More

While soliciting feedback is especially important when customers leave, you should also be proactive and reach out to customers on a regular basis to get their opinions. Use questionnaires and surveys to get a quick pulse on customer satisfaction. You could also use Net Promoter Score surveys, which identifies each customer as “promoter,” “detractor,” or “passive.”

To solicit deeper feedback, consider creating an online forum for your customers or invite them to company events so you can interact in-person. Or, if you’re shipping a new feature, develop a beta program and invite your VIP customers to try it out first.

The good news is that with social media, it’s easier than ever to hear from your customers. Top brands from Comcast to Nike all have accounts on Twitter solely dedicated to listening to customers and fielding complaints.

How to Get Started: Before choosing the best platform to solicit customer feedback, first think of what kind of information you want to gather. Do you want to receive individual customer feedback or analyze broad trends over time? Do you want to gather feedback on pricing, features, customer support, or another aspect? Identify the data you want to collect from your customers first, then pick the right platform accordingly.

10. Communicate Via Social Media

Build relationships with your customers online by creating social media accounts. With the increased popularity of social media platforms like Facebook, Twitter, and LinkedIn, you now have the ability to directly communicate with your customers, whenever you want.

There are a couple secrets to building relationships over social media. First, don’t make your social media content about yourself. Don’t post about how great your product/service is and don’t constantly publish veiled sales pitches. Your posts need to provide value to your customers. They need to provide helpful tips, share interesting articles, or just be entertaining.

Secondly, don’t be afraid to infuse a bit of personality in your social media posts. Channels like Facebook and Twitter are meant to be personal, and customers will be more likely to engage with accounts that they can relate to. And lastly, always be testing. Try posting videos, images, infographics, memes, and links to see which kind of post gets the most engagement. Track all the metrics, like retweets, likes, and mentions, and after a few months, you’ll have data that shows what resonates most with your audience.

How to Get Started: You don’t need to be on every single social media channel. Instead, think of where you customers are spending the most time. For example, if you work for a B2B company, it may be more appropriate to interact with your customers on LinkedIn. Or, if your primary customers are Millennials, consider channels like Instagram and Snapchat. Once you have identified the best channels, create a content calendar. Ideas of social media postings include blog posts, how-to articles, and industry news.

Getting Started with Customer Retention Strategies

When evaluating which customer retention strategies to implement, don’t forget about the data. It can be easy to introduce a program that sounds appealing in theory, but that doesn’t actually move the needle at all. Take the time to gather data about your customers and find out what they react best to and what they actually want. Run as many tests as you can and look at your website analytics to identify challenges in your user experience flow. When you arm yourself with the right kind of data, you’ll get to know your customers better and ultimately keep them around longer.

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