Are customer loyalty and retention still key in 2020?
By now, you’ve probably heard the phrase that acquiring new customers costs way more than retaining existing ones. Depending on your industry, it’s actually up to 5 times more expensive- and it’s not a story, it’s a fact.
In this article, we’ll define what customer loyalty and retention are, what are the key differences, and why you need to have (at least one) strategy in place to retain your customers and turn them into loyal advocates of your brand.
Then we’ll look at 9 popular strategies to increase customer loyalty and retention in 2020 starting with the sales process and down to winning back the customers you lost on the way.
Excited? Let’s get started!
What is the Difference Between Customer Loyalty and Customer Retention?
Simply put, customer retention indicates that a client continues to conduct business with you. Depending on your business, it can either be that they buy from you multiple times or keep their membership active.
On the other hand, a loyal customer is someone who’s not only happy to continue buying from you but who will resist (to a certain extent) buying from your competitors.
This means that even if they are similar concepts, they’re not the same. A retained customer isn’t necessarily a loyal one.
But, you may ask, how can I gather intel on whether my customers are retained or loyal? And how can I move them from A to B?
In the next section, you’ll learn which are the key indicators you need to keep in mind when analyzing your customers – and how to keep track of their level of satisfaction. Then, you’ll read about some of the best strategies to tackle customer loyalty and retention to maximize growth.
On the Concept of Growth
Let’s focus for a second on the concept of growth. Why is growth so important?
In short, your goal as a business is to sell more to more people. But when you focus on growth, the focus is on more – not sell.
Focusing on growth for all aspects of your business will definitely make you a growth hacker – but don’t be scared, it’s not a bad thing. It only means that your true north is growth.
Growth hacking revolves around all aspects of running a business, including content and creative marketing but also product features and experimentation.
When you look at customer retention and loyalty, maximizing growth means using strategies to increase the number of people that continue to buy from you and, more importantly, move retained customers into happier, loyal ones.
The Customer Journey
Speaking about customer loyalty and retention with a growth mindset, we have to (at least briefly) mention the customer journey and at which stage this all comes into play.
To help us with that, we can use the growth hacker funnel identified by Neil Patel.
Retention (and loyalty) happen at the very last step, once you have attracted visitors to your website and activated them (aka turn them from visitors into members) and the strategies we’ll see in this article will all refer to the third stage of this funnel.
In order to find out what strategies to use to do more of what you do best, you have the most powerful tool of all: a customer base.
Keeping Track Of Your Customers Satisfaction
There are a number of ways to get to know your customers and track how satisfied they are with your product or service other than staring at the number of sales you got on a screen.
It’s called Customer Experience (CX.) Basically, this term is used to describe all the interactions and perceptions your customers have with your brand.
Within CX, there are many indicators you can use to gauge your customers' satisfaction, such as Customer Effort Score (CES), Customer Satisfaction Score (CSAT) and Net Promoter Score (NPS.)
Sales are pretty important, we know – but if you want to really learn about how your customers interact and perceive your brand, you should try and get (at least some of) these indicators in place.
This is important because you can use the intel to look at customer loyalty and retention strategies to improve how your customers look at your product increase the number of buyers and/or purchase frequency.
Customer Satisfaction Score (CSAT)
When assessing Customer Satisfaction Score (CSAT), you’ll ask your customers how satisfied they are about your product or service.
It’s commonly used to gauge customer support satisfaction but since it’s pretty straightforward, you can use it to touchpoint with your customers during their journey with your product:
- after the onboarding to identify AHA moments
- approaching renewal of contract (if applicable) or membership to leverage on strong points
Customer Effort Score (CES)
To dig deeper into your customer satisfaction, you could use Customer Effort Score (CES.) It measures how difficult it was for a customer to solve an issue with your product. Usually, customers can choose an answer ranging from “very difficult” to “very easy.”
You can use CES in broadly three situations. In all cases, you should aim at presenting the survey right after an interaction with:
- a specific feature of your product, either consolidated or new
- your customer support
- any of your brand’s properties to gauge the overall perception of user experience
However, the best use of CES is to assess how your customers interact with a specific part of your product, rather than the overall user experience.
Net Promoter Score (NPS)
Another metric that can help you assess your customer loyalty and retention is Net Promoter Score (NPS.) You can use it to measure customer loyalty towards your product and service.
The typical question you’d ask your customers, in this case, is how likely they are to recommend your business to a friend or coworker on a scale from 1 to 10.
Why You Need (At Least One) Strategy
After you gather intel about your customer satisfaction, you should be able to identify at least one pattern or trend in the data you collect.
That’s when strategy enters the field. As we’ll postulate in the next section, you’d need to have at least one strategy in place – perhaps more than one.
The best option you have is to pick the right strategy according to the data you have and not on a hunch.
Keep that in mind when reading out next chapter (and when analyzing your data) on the best 9 customer loyalty and retention strategies.
Top 9 Customer Loyalty and Retention Strategies
So far, we have gone through the theory of why having customer loyalty and retention strategies can help you grow your business and how you can gather the right information to analyze where you’re at.
In this section, it all comes together.
While reading it, keep in mind that we have listed the strategies miming the journey your customer experience when entering the last step of the growth hacking funnel: it starts right after activation to win back strategies to get your unengaged or lost customers back on board.
Customer Loyalty And Retention Strategy #1: Assess the Business Model
The first assessment you need to make when deciding to market your product is picking the business model to use. By that, I mean deciding how your customers are able to buy from you.
Even if you have e-commerce selling individual products, you may want to consider devising a subscription model.
This can be a scheme to buy the products again or a box, either surprise or with the ability to change the items you sell within a specific range.
Similarly to Leo’s Box, it will allow you to buy in bulk and save on costs – while helping the environment.
Customer Loyalty And Retention Strategy #2: Streamline Your Sales Process
Depending on what comes out from your business model analysis, you may need to have a specific sales process.
Even if a more customized approach can be used for your top customers only, you would benefit from having a plan for all your customers.
Key points to make sure while you plan your strategy are:
- Set expectations early on (even before the sales is closed)
- Deliver on the expectations you set
- Report results often
- Plan a roadmap for future interaction
A good sales process does not end when the deal is done. It builds after each interaction you have with your client.
Customer Loyalty And Retention Strategy #3: Optimize Your Thank You Pages
Thank you pages should say more than just thank you.
First off, it’s a page all you customers will see – don’t dream any longer about 100% open rate from your most enthusiastic users, this is what you get on a thank you page!
We all know how difficult it is to get people to buy from you in the first place. If they already have, it’s more likely they’ll do it again while they’re engaged and excited about your company.
Some tactics may include:
- Truly thank them. A heartfelt thank you and a welcome onboard will strengthen your relationship with your newly acquired customers, plus a plan about what they can expect from you moving forward.
- Give them more (free) content. Links to your best content can help you profile them better. It will tell you if they have additional pains your products can help solve.
- Entice small but significant (social) actions. Depending on your business model, you could ask them to engage and share on social to unlock additional (free) content or special benefits.
- Up-sell or cross-sell. We’ll discuss this in a later paragraph, but you can certainly use the thank you page to show additional products that are similar to what your customers have just purchased.
Customer Loyalty And Retention Strategy #4: Onboarding
Onboarding new clients on how to use your product or services in the best possible way is key to increasing customer loyalty and retention.
Some of the key tactics to take into consideration when planning your onboarding strategy:
- Identify your customers' behavior right after they purchase from you. The best way is to reach out and ask what their AHA moment was or why they never purchased again/canceled their subscription. Hint: you can do it automatically with CX indicators.
- Pick the customer category(ies) to onboard. You can’t onboard everyone individually, but it’s a good idea to have a plan for everybody. I.e. you can design different types of onboarding depending on the customer categories.
- Monitor results and optimize. This item on the list is valid for all tactics – you should set your KPIs, monitor them, and adjust depending on results. Don’t forget that onboarding is a process that you’ll continue to refine over time.
Customer Loyalty And Retention Strategy #5: Up-Sell And Cross-Sell
Depending on your business model, up-selling and (or) cross-selling may be the best option to make your customers buy again.
Up-selling is offering an upgrade to the product purchased (such integration or premium benefit.) Instead, cross-selling involves selling something that goes together with the primary product (such as a replenishment kit when buying a Roomba.)
How to get started with learning what works with up-sell and cross-sell:
- Get to know your audience. Build customer personas and listen to the CX feedback they give you.
- Identify your customers' pain. What are their needs? What problems can your product or service help them solve?
- Entice them to raise their hand. Build follow-up email series that are triggered when customers (and leads) show their interest.
Customer Loyalty And Retention Strategy #6: Customer Support
Often, your customer support team is the face of your company, and how you treat clients will have an impact on how good you’ll be able to reduce churn and turn them into loyal advocates.
- Have a great knowledge base. It will serve both customer types, the “I want to do it alone” and the “I need help.” The first will find their answers in your help center, and the second one can be directed there by your agents.
- Use bots (with caution.) Bots are there to help with the most common questions, but it should not be impossible to reach out to a human being (either via email, chat, or phone) in a few steps.
- Personalize user’s experience with data. We all process a lot of data about clients so why don’t use it to tailor offers and promotions on your customers’ profile?
Customer Loyalty And Retention Strategy #7: Rewards Programs
As we saw in the first section, loyal customers will not only continue to buy from you but resist switching to the competition.
Let’s see some facts. The Bond Loyalty report 2020 says that, because of a good rewards program, customers are more likely to suggest (72%), be loyal to (78%) and spend (64%) on a brand.
That is why it totally makes sense to have one set up for your brand too. Some food for thought about loyalty and rewards programs:
- Make it easy. Avoid requesting tons of personal information and make it simple to join and earn points.
- Make it clear. Be transparent on the rules and align expectations. It will help you gain your customers’ trust.
- Align it to your customers’ needs. A rewards program should assist in leading your customers to solve their pain.
- Don’t copy your competitors. Rather, study them in-depth but apply your findings to your specific business needs.
- Make it personal. Use the data you have to personalize the experience, they’ll be more likely to engage.
- Make it fun. Your customers will be more likely to engage in the actions you request them to do if they are not tedious.
Customer Loyalty And Retention Strategy #8: Keep The Conversation Going
If you want to be top of mind for your customers, you need to continue to reach out to them. In this way, once they need to buy again, they’ll know you’ll be able to satisfy their need.
There are many ways to continue to be relevant:
- Follow-up. Right after the purchase, to acknowledge and thank your customers but also regularly, if they haven’t bought from you for a while.
- Automate & Segment. Set up automation email series to re-engage customers and segment them based on their interests.
- Retarget. Use paid social or PPC ads based on pixel activities. You can get very specific there and target people that performed specific actions on your website (such as add to cart.)
Customer Loyalty And Retention Strategy #9: Win Back Lost Customers
If customers stop buying from you or churn from your subscription scheme, you still have a chance to change their minds.
This is what a win-back strategy is. There are a few techniques you can use to do that, depending on the reason why they churned in the first place. They include:
- Product updates. Customers may churn because of feature availability or if they were having issues. You can reach out to them with the news of the release or fix.
- Discounts/coupons. Offering discounts can be a good way to remind your customers how good your product was and that they are missing out not buying from you.
- Re-engage. Customers that stop buying from you may just need a little help to get excited about your products and services again. Reach out with fresh (free) content they can consume.
- Stop emailing them. It may sound harsh, but you may not be a good fit for them. In this case, it can be worth to remove them from your email list. Tell them and then do it, they’ll be happy you’re not a spammer. And maybe will get back when they need you.
In this article, we’ve defined customer loyalty and retention and looked at 9 popular strategies to increase customer loyalty and retention in 2020 in all the steps of your customers' journey.
Is there a strategy you’d like us to explore further? Let us know in the comments below