One of the points that businesses should consider to be successful is creating a loyal customer base. Crowded e-commerce businesses with loyal customers are in an advantageous position to maintain and expand their market share. So how do you retain customers? Which metrics should you consider?
What Is the Customer Retention Rate?
Customer retention measures how many customers stay in your business over the long term. It’s a metric that shows your business’s ability to encourage customers to make repeat purchases and spend more money on your products and services over time. Retaining customers increase customer lifetime value (CLTV) and stabilize product revenue over the long term.
How to Increase Customer Retention Rate?
Customer retention starts with satisfying customers. According to research, %77’ of customers report being more loyal to companies that provide a good customer experience, and %72 of customers say they’re willing to spend more on a company that offers a good customer experience. Therefore, to increase customer retention, you need to implement strategies that increase customer loyalty and improve customer CLTV. These methods are as follows:
1) Pay Closer Attention to Existing Customers
Retaining existing customers is easier and more economical since you have a relationship. It’s also an intelligent way to increase customer retention as you’ll have more data on the current customer.
2) Take Customer Feedback Into Account
Gather direct feedback from your customers through surveys, comments on social media, and what they say about you in online forums. You’ll also learn a lot about your customer’s needs when you analyze how they interact with your company at different touchpoints.
3)Personalize the Customer Experience
A personalized interaction shows that you’re interested in establishing a human relationship, not just a transactional one. You need to make loyal customers feel that you value them. Creating special personalized offers can motivate people to continue trading with you. That’s further supported by the fact that personalization can increase customer retention or reduce customer churn by 25%.
Metrics for Customer Retention
You should know what success metrics you need to monitor to measure the viability of your customer retention efforts and adjust business strategies accordingly. Important metrics at this point are:
1) Customer Churn Rate
The churn rate is the percentage of customers who stop doing business with the company over a period of time. It’s the inverse of the customer retention rate. The churn rate is essential; because it helps you understand how effectively you can retain customers. If the churn rate is high, you need to figure out what steps to take to understand why customers are leaving.
2) Customer Lifetime Value (CLTV)
Customer lifetime value shows how much profit the customer has made to the company during his time doing business with the company. CLTV is a critical metric; because it signals whether your company should encourage customers to make additional purchases. If CLTV is low, you can make existing customer retention efforts.
3) Income Fluctuation
Income fluctuation refers to what percentage of monthly recurring revenue (MRR) you’ve lost over a period of time. Income fluctuation is significant; because when customers leave your business, you learn the exact dollar amount you lost. The actual number of customers is meaningless unless you calculate how valuable each customer is to your company.
4) Ratio of Net Supporters
This ratio shows how many customers are more likely to recommend your product or service to someone else. It’s a tool to measure customer loyalty and your product or service’s popularity with your customers.
5) Repeat Purchase Rate
The repeat purchase rate is the percentage of customers who repurchase with you after completing their first purchase. This metric is helpful for companies that don’t have fixed contracts with customers, such as online retailers. You can measure how many customers are repeat buyers and how many aren’t. So you can put them in a position to start optimizing recurring purchases.
Easy Way to Retain Customers: Infoset
Infoset allows you to manage all your support channels from a single platform. With the customer service automation it provides, it helps you determine the needs of your customers quickly. In this way, you can follow every point in the customer journey and create a good customer experience. Thus, you can retain your existing customers. Start using Infoset today to take your customer experience to the next level and increase your sales!