8 Common Customer Retention Mistakes (and How to Fix Them)
A good customer retention rate is essential for continued business success. Getting customers to come back time after time will increase your revenue (just a 5% increase in customer retention can boost profits by up to 95%!), and create a strong brand loyalty.
So how do you improve customer retention?
Customer retention looks different for every industry, but there are common mistakes I’ve seen that can affect any business. I’m going to walk through each of those common customer retention mistakes, and show you to fix them.
Why is customer retention important?
In addition to what it can do for your profits (see above), the costs of getting customers to come back is drastically lower than the cost to acquire new customers. You don’t have to pour money into advertising. Your current and past customers are already proven targets!
On average, recruiting new customers costs 5x more than retaining (or reselling) existing customers. Most businesses I know would also say it’s much harder and more time-intensive to attract new customers than it is to keep existing customers.
This means focusing on customer retention will increase your profits while making your life easier. Doesn’t that sound good?
How to Fix 8 Common Customer Retention Mistakes
1. Start tracking customer behavior and patterns.
To get your customers coming back, you have to first understand what makes them tick. Why did they come to you in the first place? What do they care about?
Knowing detailed information like this allows you to target customers with messages that pique their interest and excite them again and again. You’ll learn the most by talking to your customers directly, but you can also find answers to these questions and others in your website analytics.
There are many tools you can use:
With these tools, you can see things like user journey and engagement. What path do people take once they get to your website (what are they searching for)? Are they staying on your site a long time, or are they leaving because you aren't giving them what they want?
Are people reading the emails you send, or clicking on your retargeting ads? All these (and more) give you insight into what your targets are looking for, what they want, and what they’re trying to accomplish.
As you learn, you can tailor your site to give your customers what they're most interested in. This will help you build stronger and more profitable relationships with them.
2. Build your email list to re-engage.
Email lists are perhaps the easiest and most cost-effective way to raise your customer retention rates, but too few businesses take advantage of it. You already collect your customers’ email addresses when they purchase from you. Why not email them occasionally to re-engage and re-sell them?
You need to make sure your email practices are GDPR compliant, but there are several email platforms that are free or easy to use, like:
There are also many ways you can use an email list, but the most important thing to remember is that you have to provide value.
Value can come in many forms. For example, you can send your customers exclusive or time-sensitive deals. You can also send them exclusive research and reports, blog posts, or company updates about new features that offer value to them.
Emails can also be used to cross-sell and upsell customers. For example, if someone purchased a book, you can cross-sell them on other books covering that same topic. Or if they viewed one page on your site (which you can see in your analytics or CRM), then send them another page covering the same topic.
As much as 65%-80% of shoppers will abandon their shopping carts. In such cases, a gentle email reminder, such as “Oops! You forgot to check out. Here's 10% off if you complete your purchase today,” will go a long way.
3. Create an incentivized loyalty program.
There are probably other businesses that do what you do. Why should someone continue to work with you instead of choosing another option?
I’m sure you have a few reasons why you’re better than competitors, but do your customers agree (or care)?
Loyalty programs, encourage people to stick around with one company in order to reap eventual rewards, whether that’s a financial reward or simply a great experience. They also encourage people to spend more money with you, knowing they’ll get something in return.
There are many kinds of loyalty programs. The most popular is a points program, which awards customers points when they purchase products that can then be traded in for free items. A referral program is also common, where you get perks for each new customer you bring in.
Do sufficient research before launching your program. Then be sure to continually track your success based on your goals. Whether you’re trying to get:
- More transactions
- A higher value per transaction
- A larger percentage of repeat customers compared to new ones
- Or improve another metric
You have to track your progress in order to grow.
4. Ask for feedback to find and fix problems you don’t know about.
You are not your customers, and you do not see your products or services the same way they do. So use surveys to gather information about what your customers want, how you can improve, what you can change, and so on.
After a transaction, ask customers how they felt about it. Is there something they wish you’d done differently?
Once they answer, take steps to improve. If there’s nothing to improve, then you can ask the customer to give you a great online review.
When a customer cancels their membership, ask them why they left and what would have to change for them to stay. For non-membership business models, you can do the same for inactive customers. E.g., ask them how you can do better and offer an incentive if they stay.
Surveys should be quick and easy to fill out. Include three to six questions, and mix it up between multiple choice questions and open-ended questions so that you can hear from customers in their own words.
5. Use social proof to build stronger customer relationships.
“Social proof” is just taking one person’s experience or opinion and sharing it with others, and its one of the most important pieces in marketing to customers at any stage.
You see it in practice all the time - in online reviews, social media posts, videos, personal recommendations or stories, etc. It works, because people want the same good experiences others have had.
It’s difficult to attribute specific revenue and customer retention rates to social proof, but there’s plenty of evidence that it plays an important role in customers’ decision making. So how do you use social proof to keep customers coming back?
The easiest way to build social proof is to get great reviews on the platform your customers are most active. That could be Facebook, Amazon, Twitter, Instagram, Angie’s List, Yelp, or any other site.
86% of people of people read online reviews for local businesses, so it’s only a matter of time before you see a big impact in your customer retention (and new sales). It also gives you an opportunity to create stronger relationships with your customers.
If one customer sees another customer talking highly about your brand, the two will share their experiences with each other and have a bonding moment with your brand at the center.
6. Make your customer experience consistent.
People tend to favor what’s comfortable and expected. Unfortunately, many businesses offer inconsistent customer experiences. Sometimes you might have a great time, sometimes you might wish you’d gone somewhere else.
That’s the last thing you want for your business. Take restaurants as an example.
It doesn’t matter how gourmet the food is or how spiffy the service is. There are just as many thriving dives as there successful 5-star restaurants (and vice versa). What matters is a consistent experience - that customers know they’re going to get the same thing every time they go.
Offer a consistent customer experience that people can rely on time after time, and your customers will keep coming back to you instead of trying their luck with your competitors.
There aren’t many tips you need to fix this mistake. All you have to do is do the same thing consistently.
7. Be available to customers whenever they need you.
Some customers are inevitably going to have an issue, and you need to make them feel like they have somewhere to turn when they do.
When your customers know you care about them and are ready to make changes to ensure they’re happy, they will be thrilled to work with (or buy from) you again. They might even tell their friends.
To provide this kind of service, invest in a high-quality customer service team. Your representatives should be trained in resolving issues and must have an empathetic attitude.
It’s very easy for customers to educate themselves online these days. Your reps need to be at least as educated and be able to share information with a smile.
You also need to make it easy for people to get in touch with you in the first place (and at any reasonable hour). This means letting customers contact you in whichever way they are most comfortable, whether that be via:
- Phone call
- Live chat
- Screen sharing
- Social media messages
- Text messaging
- Or email
Finally, try to reduce waiting times as much as possible.
Even if you have separate teams monitoring separate channels, remember to keep communication open between them so that they can all access a particular customer request, as customers often switch between channels.
8. Stand by your company mission and values.
A commonly overlooked aspect of customer retention is the need to stand for something that binds your customers to you through a shared ideal or goal. This doesn’t have to be something drastic - you don’t have to save the world or end global warming.
Stand for a simple idea, such as:
- Making clients feel financially secure
- Turning boring shopping experiences into one-of-a-kind stylings
- A commitment to creating the best experiences for a certain kind of product
- Being honest and on-time
Every customer has their own set of values. If your company’s values align with your customers’ values, you’re going to build a strong relationship that keeps them coming back again and again.
Improving your customer retention rate is a process that requires consistent effort and dedication. It requires you to pay attention to the small details have a drastic impact over the long-run.
At times it can feel like you’re fighting an uphill battle, but the long-term rewards are well worth the effort.