If you have to allocate resources for your ecommerce business, developing and building loyal customers is practically the most important area you can spend more on. But what can you do to make your customers stick around for the long haul? Here are five smart ways you can do to improve customer retention:
1. Sell more to your existing customers.
Discounting, promotions and active sales efforts can deepen existing customer relationships and entice them to purchase more of your products. In addition, increasing investments in education, training and marketing your products to individuals at a customer site can increase usage, further deepening the relationship.
The most common tactics used here are the basics of cross-sell and upsell. Both of these are good approaches.
There are a wide a variety of other strategies that can be used, many ways to implement them, and little need to just focus on cross and up-sell.
For instance, a company can also deliver customer value through down-sell and usage stimulation. Take for example a Bank that, instead of sending more product cross sales offers, sends credit cards to customers and offers to increase in their credit limit. They know that, on average, when a customer’s credit limit goes up they will use at least some of that extra limit. This then is usage stimulation: same product, more sales.
2. “Red flag” high-risk customers and act quickly to retain them.
Build a process in the organization to actively monitor customers for the early warning signs of attrition – e.g., decreased usage or an increase in customer service calls. Develop specific campaign strategies to retain the most attractive ones.
After you establish your baseline or your starting point. Do the following:
DO: Put in place the actions required for improvement.
CHECK: Measure your success relative to your baseline.
ACT: Adjust or tweak your changes.
3. Address key sources of customer dissatisfaction.
Poor service can cause 78% of customers to give up on dealing with you altogether. Only 4% of dissatisfied customers complain. The rest will disappear seemingly out of nowhere. You’re up to 70% more likely to sell to an existing customer than a new one, so increasing customer retention is vital.
For instance, improving the accuracy and clarity of your billing processes can go a long way toward minimizing customer angst. Increasing the power of the service organization and the sales team to address customer complaints promptly and offer retention-oriented promotions are other ways to appease dissatisfied customers.
4. Resist downward pricing pressure among existing customers.
Slow your discounting as much as possible to improve margins while minimizing attrition.
In the highly competitive marketplace we hear dreaded phrases like, “Your fees are too high; can you do it for less?”, all of the time. The easy thing to do is to offer a discount, but that cuts into your profit margins and sets a precedent for the future.
What you can do when clients push back on your fees is to focus on your value. It’s trite, but true. If it’s worth it to the client they’ll pay for it. But when faced with price push back, many are at a loss for what to do at that moment. Don’t backtrack or talk about cost structure.
5. Focus your customer reward and incentives.
Reorient your field sales incentives to reward acquisitions of customers in key segments that exhibit the most “stickiness.” Here are a few things you can do this:
- Celebrate your customers. …
- Create an early-access program. …
- Ask for customer feedback. …
- Invite customers to a special event. …
- Offer a referral bonus or reward for recruiting new customers.
As you think about growing your customer base in the year ahead, remember that keeping your current customers happy plays a big role in growing your customer base.
Building these steps into your operations will help you to significantly improve customer retention metrics and create significant value for your business.
Additional Resource on Customer Retention and Loyalty