Most businesses endeavour to comprehend customer desires and accurately define consumer values. However, while the price customers pay for specific goods remains important, what they expect to receive in return – beyond the products or services they paid for – holds much more significance.
In the post-pandemic era, the concepts of responsibility, customer satisfaction, and customer experience play a different and more substantial role. That is why introspection and re-evaluating priorities have become the new normal for consumers.
The same holds true for brands aiming to provide an elevated customer experience (CX) and journey, establish long-term relationships with clients, and prevent customer loss.
In most instances, marketers are committed to retaining existing clients and encouraging them to make repeat purchases. Certainly, driving high-quality leads, converting them, and perfecting your new user retention experience is always worth the effort. However, at some point, brands must blend customer retention tactics even during the acquisition phase.
It’s no secret that low retention and high churn are ominous signs for any company. More often than not, they indicate issues with your customer engagement and retention strategies.
Let’s delve into the importance of customer retention and shed light on the three most common marketing approaches that can lead to losing client interest and customer attrition.
Why Customer Retention Is Important
Customer retention entails a company’s ability to satisfy and motivate existing customers to make repeat purchases.
From a business perspective, establishing lasting relationships with current customers is crucial to the health of operations. Marketers channel their efforts into driving more high-quality leads and boosting conversion rates to achieve this.
The reality is that it’s far more economical to keep a current client satisfied than to win the attention and loyalty of a new one. This raises the question, “why do brands keep investing in customer acquisition versus retention?”
While retention rate statistics may differ by industry, they may also vary depending on where your product is in its lifecycle. If it has been up and running for several years, the retention rate should be one of the critical indicators to monitor.
It’s worth mentioning that businesses must also consider how well the customer journey is mapped, assess the approaches marketers use to acquire new customers, and identify some of the reasons that existing customers may churn. These and many other factors can significantly affect customer retention.
How Customer Retention Rate Is Calculated
High customer retention results in customer loyalty, word-of-mouth referrals, increased marketing ROI, and heightened brand awareness. It is essential to measure and evaluate the current situation to determine whether you need to enhance the customer retention rate (CRR) and concentrate on re-engagement.
Examine the CRR or customer retention rate formula and consider some examples.
Before computing CRR, it is necessary to specify a period, such as a week, month, quarter, or year. Next, follow this formula to measure customer retention over a specific timeline:
# Customers at the End of Period – # Customers Acquired During Period)
Retention Rate (%) = 一一一一一一一一一一一一一一一一一一一一一一一一一一一一一一一一一一一一一 x 100
# Customers at the Start of Period
Imagine that your company began the quarter with 40 clients, acquired 13 new customers during the mentioned period, and experienced seven customer churns. The CRR will look something like this:
[ (46 – 13) / 40 ) ] x 100 = 82.5% retention
Once you gauge your CRR, it can be beneficial to scrutinise the churned customers. This will help you identify the reasons for their departure or the types of customers that are more likely to leave.
Businesses frequently encounter challenges in enhancing their customer retention rates. One of the reasons is their failure to acknowledge the role and closely examine the customer experience. Since customer-facing interactions are fundamental to brand loyalty, it’s crucial to comprehend how brands communicate and manage customer relationships across various channels.
Let’s delve deeper into how the following approaches can influence customer expectations, experiences, and retention rates.
3 Approaches to CX and Retention
More than anyone else, marketing experts understand that they must improve the customer experience to enhance customer retention. So, here are the most common approaches you must avoid when devising strategies to elevate customer experience and retention rates.
1. Domination of Manual Processes
Many companies still grapple with automating manual tasks and processes. However, automation works wonders when deployed correctly.
Marketers in the financial services or insurance sectors often seek straightforward ways to qualify leads, ensure speedy contact strategies, facilitate fast and efficient invoicing, or pinpoint the most profitable marketing channels.
In fact, around 77% of businesses that adopted automation reduced their marketing overhead by 12.2% and increased sales productivity by 14.5%. Such a shift enables enterprises to focus on data accuracy, improve customer retention, and refine customer interaction across all marketing channels.
Brands armed with marketing automation solutions like Phonexa’s lead management and distribution software, LMS Sync, can streamline the process of converting leads into customers by leveraging automated lead flows and insights into real-time data analytics.
Ultimately, employing a comprehensive marketing automation solution can help your brand make every interaction more personal and rewarding for your clients while significantly increasing loyalty.
2. Inadequate Customer Support
In today’s landscape, poor customer service and support are unacceptable. Customer satisfaction relies heavily on the overall experience, service consistency, and personal interactions.
Calls remain integral to the conversion journey, as some consumers remain sceptical about new technologies such as chatbots or self-service portals. However, since around 95% of customers seek proactive communication from businesses, enterprises must keep pace by offering multiple contact options and ensuring that customers can quickly reach live support agents.
Source: PEGA Research Report
Considering that access to customer data can significantly enhance the overall marketing strategy and CX, companies need to comprehend the reasons behind calls and the origins of all inbound calls.
Integrating a call tracking solution like Phonexa’s Call Logic into your daily operations and embedding it with cloud-based telephony systems like Cloud PBX will assist you in providing timely on-call support to your customers. This integration offers visibility into the customer journey, real-time performance insights, and the ability to attribute call outcomes to a given marketing strategy.
Moreover, the call analytics features within Call Logic can help brands identify trends, develop more successful acquisition and re-engagement campaigns, and enhance overall customer retention.
3. Lack of Customer Engagement
When grappling with elevated customer churn rates, many companies recognise that a lack of customer engagement is often the root cause. This frequently involves brands struggling to identify the most effective marketing channels and customers feeling disconnected from the brand’s offerings or core message.
This is where re-engagement becomes crucial. Encouraging customers to interact with your brand can be challenging. In such cases, understanding your clients better is essential.
As most customers expect a satisfactory level of proactive communication, companies must tackle this challenge with a proactive rather than a reactive approach. The proactive approach should include the following tactics:
- Launch loyalty programmes: These programmes provide tangible incentives to clients, enhance customer satisfaction, and encourage clients to remain loyal to the program’s goals, your product, and your brand.
- Automate email marketing: Staying in touch with the target audience is crucial for the success of acquisition or re-engagement campaigns. Leveraging email marketing is one of the most cost-effective and straightforward ways to refine your customer retention strategy and increase CRR. Brands equipped with E-Delivery, Phonexa’s email and SMS marketing software, can refine and manage email lists, personalise messages to specific customer groups, and enhance inbox performance.
- Give customers a voice: Without customer feedback, brands have little chance of improving customer retention. To understand what works or doesn’t work for your clients, you need direct input from your customers. One of the most effective ways to gather feedback is by creating and running IVR surveys.
Stay Competitive
When it comes to retaining customers, there’s always room for improvement. To stay competitive in a hyper-saturated business marketplace, companies must arm themselves with exceptional customer retention strategies and support these tactics with comprehensive and dynamic marketing automation technology to ensure customer satisfaction at all costs.
Did you know that Phonexa onboards new clients in an unprecedented 10 days? Get in touch or book a demo to discover how Phonexa can assist you in enhancing your customer retention strategies, refining your call centre operations, and converting more leads into engaged customers.
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