The Psychology Of Customer Retention And The Impact Of Loyalty Programs – Customer retention is a key part of sustainable business growth. According to a Harvard Business School study, increasing customer retention by just 5% increases a company’s revenue by 25-95%.
A low customer retention rate is like filling a bucket with holes in the bottom. Sure, you can keep building them to compensate, but it’s much better to figure out what caused the hole and how to fix it.
The Psychology Of Customer Retention And The Impact Of Loyalty Programs
Customer retention is a series of activities aimed at long-term customer retention and turning them into loyal customers. The ultimate goal is to convert new customers into repeat customers and maximize lifetime value (LTV).
Customer Loyalty Influencing Factors
Paying attention to customer retention is important because it helps you understand how loyal and satisfied your customers are, how strong your customer service is, and whether there are any red flags that might attract the attention of potential customers. Focusing on customer retention will pay dividends in the long run. :
To calculate CRR, you need to subtract the number of new customers from the number of customers remaining at the end of the period. To calculate the percentage, divide that number by the total number of customers at the beginning and multiply by 100.
CRR = ((Customers at the end of the period – New customers in that period) / Total number of customers at the beginning of the period) x 100
Pdf) Implications Of Loyalty Program Membership And Service Experiences For Customer Retention And Value
Customer retention rate is the flip side of customer churn, which indicates the percentage of customers a company loses over a period of time.
Retaining a customer costs less than acquiring a customer, and both contribute to a company’s bottom line. So before you dive into tactics designed to bring new leads into your sales pipeline, consider using one of these 16 research-based customer retention strategies to increase your revenue by keeping the customers you already have.
Few customers feel connected to the brands they buy and use. In fact, a corporate executive study of 7,000 consumers across the United States found that only 23% of consumers have a relationship with a brand.
Customer Service Skills To Improve Customer Retention And Acquisition
Interestingly, 64% of consumers who say they have a relationship with a brand cite shared values as the main reason for that relationship.
Most people prefer products and companies that are similar to themselves in some way. This cognitive bias is called implicit egoism and is important to keep in mind.
If your company doesn’t support anything, customers are more likely to ignore you. If you want loyal customers, you need to build real relationships with them by letting them know what values you share.
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For example, in 2019 we completed the process to become a certified B Corp. Certification ensures that we uphold our values as a company and that our purpose is not only to benefit our employees, our communities and the environment.
“There is no such thing as being ‘above politics’ or not taking sides as a brand. It would be nice if companies didn’t have a political agenda, but they inevitably do. And if the work is necessarily political, we want to think carefully about what we stand for.”
What does your company represent? If you define your values and emphasize them as part of your brand, you will more easily retain customers who share those values.
The New Science Of Customer Emotions
The best way to find out what your customers think about your business is to ask them. Using customer surveys to gather feedback and diagnose potential pain points is a good starting point for understanding what needs to be fixed in your overall online experience.
Customers appreciate it when you ask for their opinion. It means you care and are willing to put in more effort to keep them.
When exciting product improvements are made, everyone in the company feels encouraged. But do your customers think the same?
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For example, as we prepare to roll out major improvements to the Beacon product in 2018 (eg adding live chat), we’re running a series of preview posts to get our customers excited about all that can be achieved, eg: This and This ) were executed . With new tools.
This not only builds momentum for future releases, but also helps promote new features that existing users may miss.
The last thing you want to do is force your customers to sign up and then take the responsibility on themselves. It is important to provide resources so that new customers can easily learn how to use your product.
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Help Scout offers recurring 45-minute live classes that new customers can sign up for to learn more about our products and ask any questions they may have.
Continuing to communicate with customers through their preferred channels is key to keeping customers online. Today, there are 4.2 billion email users worldwide. Although social media is very popular, email is still the preferred means of communication for clients. It’s also the top-performing channel, reporting a return on investment of $44 per dollar spent.
Regardless of where you interact with your customers, it’s important to maintain consistency and use personalization to be as relevant as possible.
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A brand’s success depends on its ability to provide customers with a unique and personalized journey. According to Salesforce, “79% of customers are willing to share relevant information about themselves in exchange for contextual interactions that are instantly known and understood.”
Requiring your customers to create an account is a great way to learn more about them and give them a personalized experience that encourages them to buy from you. Another easy way to add a sense of personalization is to use product recommendations based on customer behavior.
The concept of reciprocity is simple. People react based on how they are treated. When someone is treated well, they respond well. If they are not treated properly, they will not respond well.
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It’s no surprise that consistently good service is one of the biggest drivers of repeat purchases and referrals.
Reciprocity works very well on its own, but research shows it’s even more powerful when it’s surprising. Think of a time when someone did something nice and unexpected for you. The gesture may not be that unusual, but the fact that it came out of nowhere may have left a strong impression on you.
Think of a few ways you can surprise your customers with an act of kindness. For example, Help Scout sometimes sends handwritten notes and mementos to customers to say thank you.
Pdf) The Impact Of Customer Loyalty Programs On Customer Retention In The Retail Industry
Thank you notes are a rare throwback to old-fashioned personal customer service. It stands out as a pleasant gesture that makes customers feel special and cared for. Building relationships is worth the relatively minimal investment required.
The biggest concerns for e-commerce consumers are shipping and returns. How you manage last-mile delivery can help you stay ahead of the competition and retain your customers.
However, there may be situations where the customer wishes to return and exchange the product. Simplifying that process will give your customers peace of mind and keep them coming back to your e-commerce store.
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Discounts and giveaways are a great way to delight your customers, but they can be expensive. Instead of relying too much on these pleasures, we should embrace the frugal art of WoW, which creates reciprocity through small, thoughtful gestures.
In fact, psychologist Norbert Schwarz found that as little as 10 cents can create reciprocity between two people. What really matters is the thought.
One of the small ways we strive to continually brighten our customers’ days is by incorporating “huzzah” images into our products – fun illustrations and captions that appear when customers reach inbox zero.
What Is Customer Retention + 16 Proven Retention Strategies
It may seem like a small thing, but if you can make people feel good about using your product, they’re more likely to stick around.
Another example: In a study published in the Journal of Applied Social Psychology, researchers found that waiters and waitresses could increase their tips by 23% by the simple act of returning to the table with another set of mints.
Many companies assume that excellent customer service can only be achieved by going above and beyond. In other words, loyalty is built through extravagant gestures.
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But according to research by Dixon, Toman and DeLisi published in The Effortless Experience, the real driver of customer retention and loyalty is ease of problem solving.
Delight is not the foundation of your customer service strategy. It’s a second-order effect. First, focus on consistently meeting expectations and avoiding unpleasant surprises. Then go even further. Here are some additional tips:
Help Scout uses integration with Slack to access real-time notifications about what’s happening on the user end. By creating a support channel for all team members, we were able to improve response times by 340% (no typos!).
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Try a customer support platform for your team and customers will love it. With Help Scout, you can set up teams in minutes, double your productivity and save up to 80% on annual support costs. Start your free trial to see how you can benefit. Try it for free.
Gallup research found that customers are 9 times more likely to:
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