Did you know that it costs five times more to attract new customers than it does to retain current ones? This makes customer retention a crucial component of your business!
After completing nearly 100 episodes of The Customer Experience Podcast, we’ve learned from some of the top experts in the space. We also have a team dedicated to improving customer retention at BombBomb who knows quite a bit about what works – and what doesn’t.
In the post below, you’ll find suggestions on how to improve your customer retention from not only our BombBomb team but also top industry experts who have appeared as guests on our podcast.
What Is Customer Retention?
Customer retention is the ability of a company to retain their current customers. These efforts need to begin as soon as a prospective customer makes contact with a company.
Why Is Customer Retention Important?
According to a study by Frederick Reichheld of Bain & Company, increasing customer retention rates by just 5% can increase profits by 25% to 95%. Moreover, in improving customer retention, you’re also increasing your number of repeat customers.
These customers are much more likely to recommend your product and become brand advocates than new customers. In fact, according to Smile.io, “On average, retention rates can climb by up to 27% when current customers refer to new ones, and brand advocates tend to spend two times more than first-time shoppers.”
8 Customer Retention Strategies
Below you’ll find some of our favorite strategies that will help you improve your customer retention rate, and increase your customer loyalty. These strategies are all based around improving your customer experience through a more relatable and humanistic approach.
By taking a more humanistic approach, you are able to show your customers that you really care about them, their unique situations, and their individual goals and needs. By doing this, you are well on your way to making them into loyal, longtime customers.
Moreover, in many cases, these customers will be willing to frequent your business every time they need a similar solution because of the personal attention you give them.
Now, let’s get into those top customer retention strategies!
1. Identify Right-Fit Customers
Josephine Trenkler, BombBomb
At BombBomb, we have a team dedicated to customer retention and it’s led by Josephine Trenkler (or Josey, as we like to call her). Josey is often the last touch for many of our customers as she listens and guides them through the cancellation process.
In many situations, Josey can bring clients back to their goals and the reason they wanted to use our product in the first place, preventing them from canceling our services.
However, there are other situations where Josey explains that the customer was sold a product that was not the right fit for them, and because of this, they are not worth saving. Our sales team does an excellent job vetting each person and making sure the product is right for them, but there are some occasions when someone slips through the cracks.
A good way to identify right-fit customers is through research. “At BombBomb, we went through a process where our forward-facing employees identified our best-fit customers and what was most important to them. We even identified best-fit customers through data and sent them surveys to better understand them,” Josey explains. “Once we had this information, we were able to disseminate it to the rest of our team so they had a better idea of how to sell, help, guide, market, and build products for these individuals.”
2. Set the Right Expectations
Daniel Hall – BombBomb
While it’s important to sell to right-fit customers, it’s equally as important to set the right expectations of the product during the sale. If your product isn’t meeting the initial expectations of your customers, they will leave, despite the impeccable product and record ticket times.
Understanding your ideal customer’s expectations – and how your product and team can help meet these expectations – needs to be a critical piece in your customer retention strategy.
We talked to BombBomb’s Director of Sales, Daniel Hall, on how he encourages his team to set the right expectations. The first suggestion Daniel had was to push teams to get curious early on in the sales process. “I encourage my team to ask questions to determine whether our product is both a good fit for the customer and also to uncover what problems the customer is hoping our product will solve.”
This goes hand in hand with our first strategy of selling to right-fit customers. If our sales team can identify that our product and team can solve a specific problem for these individuals, we know that they will see an immediate return on investment. “Once these customers see value, they’re going to continue using your product and renewing your services for a very long time,” Daniel explains.
If your product can’t solve their problems, it’s best to move forward and be transparent. Daniel continues,
“Transparency is pivotal to open communication in the customer and sales representative relationship. Without it, you run the risk of breaking trust and losing the credibility you were hoping to save.”
3. Provide Value to Encourage Usage and Decrease Churn
Kevin Andrews – BombBomb
Providing value through training and education is an excellent way to retain your customers. In fact, a CX Solutions Study showed that providing your customers with information on how to get the most out of your product creates a 32% average lift to repurchase or recommend.
At BombBomb, we have a team dedicated to helping our customers use our product. We do this because we know that if we can help our customers see success, they will ultimately continue to use our product and remain on as customers.
We provide value to our customers in a few ways. Firstly, all new BombBomb users are encouraged to join a “Getting Started Webinar” when they first sign up to go over some of the most basic BombBomb functions in their industry. We also offer free customer webinars each month on video best practices, as well as a “BombBomb Academy” with a variety of specialized courses that can be accessed inside their account.
These training sessions are all created and led by our Client Enablement Manager, Kevin Andrews. He explains, “It’s really hard for a customer to succeed with a product if they don’t know how to use it. If you don’t have a strategy in place for training and educating your clients successfully, then they are not going to be able to reach the goals they originally had when they signed up for your product in the first place. Ultimately, this will lead to churn.”
4. Establish and Stay True to Your Company Values
Jonathan Bolton – BombBomb
Core values are imperative to a company’s success. Not just for their internal efforts, but their external efforts as well. According to a LinkedIn study, “58% of companies with a clearly articulated and understood purpose experienced growth of +10%, compared to just 42% of companies that don’t prioritize purpose.”
When you’re committed to your core values, or even have bigger long term goals, your customers will be more likely to latch onto this and feel more emotionally connected to your brand. At BombBomb, we are not only focused on our core values of relationships, humility, service, flexibility, and fun – but also our B.H.A.G. (Big Hairy Audacious Goal) which is to rehumanize the planet.
We inspire our team members to live by our core values. Meaning each time a customer has an experience with one of our team members, these values are present in that interaction.
Even our B.H.A.G. reflects our core values of service and humility, while also relating to a core problem BombBomb can help solve. We work towards this goal by partnering with nonprofits who help “rehumanize individuals who have been dehumanized.”
BombBomb’s Senior Vice President, Jonathan Bolton previously ran our Customer Success Team. He still works consistently with the CS team and is often working on improving our customer experience at BombBomb.
“I think customers like to do business with companies that they know, like, and trust. Our core values really help move all three of these elements along. I’ve also seen our customers feel more connected to us because of our B.H.A.G.,” Jonathan explains. “At our live conference, we asked our attendees to nominate nonprofits in their area who are ‘rehumanizing the dehumanized.’ With these submissions, we were able to give free accounts to many nonprofits that aligned with this mission. This allowed us to build deeper relationships with our customers and helped our customers feel more connected to our people, our goals, and our mission. As a result, many of these people are now longtime customers and brand advocates.”
5. Track and Share Customer Feedback
Michael Redbord – SaaSWorks
Tracking and collecting current customers and canceled customer feedback is an excellent way to improve your retention rate. Your canceled customers are an ideal place to start.
After these customers have decided to part ways with your product, send them a quick email asking them why they canceled. Collecting this data can give you insights into the challenges that impacted their experience and led to their cancelation. If you can address those specific challenges, you can decrease your chances of customers canceling for the same reasons in the future.
However, you shouldn’t just stop at canceled customers. You should ask current customers how likely they are to recommend your product or services on a scale of 1-10 with an NPS (net promoter score) survey. Inside this survey, you’ll also want to leave space for your customers to leave a comment to explain their answer further.
Michael Redbord, Senior Vice President, Operations at SaaSWorks, joined us on The Customer Experience Podcast to talk about how to better understand your customers.
He talked to us deeper about collecting feedback from clients. “If your customer indicated that they had a good experience with your product, there’s no reason not to ask them if they’d like to become an advocate, write a review, opt into a future case study, or join a referral program,” Michael says. “If they’re a fan, let them shout it loud and proud!”
“An approach like this is an excellent way to ensure your customers are on track, solicit important feedback, and translate the positive experiences into public advocacy. It’s modern, leans into the transparent nature of today’s customer experience, and gives you, as a business, proactive outreach levers to pull and direct how things are going. Give it a try!”
6. Surprise and Delight Your Customers
Joey Coleman – “Never Lose A Customer Again”
A study by the Harvard Business Review found that people are designed to crave the unexpected. They love the thrill of a surprise. Moreover, the feeling of surprise is addictive, capable of changing behaviors, and inexpensive to create.
It should be a no-brainer to consistently look for ways to both surprise and delight your customers throughout their experience with your product. This process not only helps them feel more connected to your brand and product but also helps generate one of the most effective forms of marketing – word of mouth.
Another excellent Podcast Guest, Joey Coleman is definitely an expert on creating an incredible customer experience. Joey, is a speaker, consultant, and author of the #2 WSJ bestseller, Never Lose a Customer Again. Joey explains, “by definition, these surprise and delight moments are unexpected and leave the recipient feeling elated. Surprise and delight moments aren’t mass-produced or delivered in bulk. They are the product of thoughtful consideration and meaningful personalization on an individual basis.”
Joey continues with a suggestion on how to create these moments. “Use the detailed, personal information you already know about your customers (their favorite hobbies, activities, sports teams, authors, vacation destinations, etc.) to design interactions that show your customers you are paying attention to them and keeping track of the “little things” that really light them up. If you’re not sure what your customers truly care about, it’s time to be more intentional in your interactions. Investigate your customers online (reviewing their social media profiles is a great place to start) and observe your interactions with them (take notes on the little asides and personal details they share) in order to start gathering a repository of customer details. You can then use this information to create unexpected moments of joy as you deliver a series of remarkable experiences throughout the customer journey.”
Joey then emphasizes the importance of this process.
The more connection a customer feels to you and your brand, the more likely they will remain a customer for many years to come. There has never been a better time to refocus your efforts on creating personal and emotional connections with your customers and the dividends paid by this investment of time, attention, and effort will serve you well in the future.
7. Be Slightly Better Than Average
Shep Hyken – Shepard Presentations
According to Qualtrics XM Institute, 73% of companies with above-average customer experience perform better financially than their competitors. Meaning, just adjusting your customer experience slightly to beat the expectations of your customers will make a major difference in your overall strategy.
So how do you determine what’s average, where your company stacks up, and where to focus to make incremental improvements in these areas? Fortunately, there are many companies like, Solvvy, Zendesk, and Talkdesk who have identified the ideal benchmarks for email, live chat, and phone support. Once you’ve established your own company averages compare them to these lists and see where you need to improve.
Customer Service Speaker and Expert, Shep Hypken, was another excellent guest who introduced this idea to us on The Customer Experience Podcast. One way Shep encourages CS professionals to improve their experience is by spending a little more time with each customer to always ask the extra question.
“The extra question will allow us to better understand our customers, it will allow us to better serve our customers, and even upsell and cross-sell our customers at the appropriate time. Always ask the extra question.”
He continues, “For a lot of people, loyalty means keeping customers for life. However, if we just focus on the next time, every time, ultimately we’ll create a lifetime of loyalty.” So, if you focus on improving one benchmark at a time and beat your customers’ expectations each time they experience your product, you’ll slowly move your experience from slightly above average to amazing.
8. Create a Memorable Customer Experience
Ethan Beute, BombBomb
The strategy in our roundup is essentially an accumulation of all the strategies we’ve discussed throughout this post. Each of these strategies come together to create a cohesive and well-rounded customer experience. So what is customer experience?
Our Chief Evangelist, Ethan Beute, Hosts The Customer Experience Podcast. On this show, he asks experts in the field their definition of customer experience at the start of every segment.
Many answers are similar, but some include different elements than others. After continuously hearing and comparing their answers, Ethan defined customer experience as the way you make people feel during their experience with your brand.
So how do you create an incredible customer experience that makes your customer feel great? Ethan suggests looking at your product and experience holistically. Think about every experience a customer has with your product and your people.
Think about your product or service and how it makes people feel. Is it a rewarding experience? Is it easy or even fun? Have you removed friction so that your customers are less frustrated and more productive?
Ethan explains, “As people, it is incredibly important to us to know that our feelings are seen, heard, and appreciated. When we can accomplish meeting those needs in our customer experience, we are in a great position.”
Listen To The Customer Experience Podcast
Many of the professionals featured in this piece are former guests of The Customer Experience Podcast. In this podcast, listeners hear how Sales, Marketing, and Customer Success leaders create internal alignment, achieve desired outcomes, and exceed customer expectations in a personal and human way.