Six techniques for reducing turnover and five best practices for customer retention

The largest potential, as well as the biggest difficulty, for organizations today is customer retention.


While many businesses concentrate on acquiring snazzy new logos, the acquisition is only one component of the larger picture. Even with a low customer acquisition cost, if you routinely bring in new clients but they only stay for a month or two, you’re in a leaky bucket zone and won’t be able to establish a long-term business or generate positive word-of-mouth for your brand.


Customer retention is the first step to happy, brand-loyal customers, and increasing customer loyalty will minimize the cost of acquisition. Enhancing client retention is especially vital during difficult economic times, when it’s more important than ever to create a robust company with a consistent revenue stream.


But how do you keep clients? The secret is reaching out to them with the appropriate message at the appropriate time and location. You can design retention strategies that keep your customers engaged and satisfied by using sophisticated targeting to make sure you reach the right individuals and multichannel, integrated campaigns to assist in driving the proper action when and where it’s most successful.


Continue reading to find out more about client retention, including what it is, why it’s important, and our top tips and best practices.


Customer retention: What is it?

The rate at which your company can maintain it’s paying clients over a specific time period is known as customer retention. Customer retention is crucial for any business because it shows how successful they are at both finding new customers and keeping their current ones happy. This makes it an essential metric to track, regardless of what stage of development your company is in.


Why it’s crucial to have a client retention strategy

Most people believe that the main reason retention is so important is because it prevents user loss. A strong retention strategy, however, is one of your most effective tools for expanding your clientele and developing lasting business partnerships.


“The power of customer retention can be more than twice that of customer acquisition.”


According to a Price Intelligently study, a 1% increase in customer acquisition lowers your profit margin by a little more than 3%. However, increasing client lifetime value by 1% by reducing gross turnover will boost your bottom line by about 7%. Yes, retention has the potential to outperform client acquisition by a factor of more than two.


Additionally, compared to new consumers, these repeat customers spend 67% more on average. They’re also more likely to recommend you to their friends and family, which is one of the best ways to get leads. According to research, referral leads are even more important because they convert 3-5 times more frequently than leads from other marketing channels, have a 16% higher lifetime value, and continue on to have a 37% higher retention rate.


“You can increase customer satisfaction and the chance that a user will stick around by reaching out to them with the right message, at the right time, and in the right place.”


Lifecycle messaging is one retention strategy that works very well. Lifecycle messaging entails getting in touch with users and sending them relevant, valuable messages depending on their actual usage (or lack thereof) of your program. These messages are targeted and sent over various media, frequently as a component of a planned multichannel campaign.


This means you can contact them inside your app or product or outside, wherever they are most likely to act. You can boost customer satisfaction and increase the likelihood that a user will continue around by engaging them with the appropriate message, at the appropriate time, and in the appropriate location.


Best of all, you don’t need a “retention hacker” to generate these messaging schedules. A few hours are all that is required to put together a straightforward messaging campaign that will pay for itself many times over and establish a retention marketing culture throughout every facet of your company. The secret to raising retention rates is creating these client relationships from day one and perfecting the ideal experience.


How to comprehend consumer loyalty

The secret to a successful retention plan is recognizing churn’s early signs among your current clients. When consumer engagement gradually declines, you’ll know you’re losing a customer. It’s critical that you take action during this window because it’s incredibly challenging to get a user (and the associated lifetime value) back once they’ve left.


How to comprehend consumer loyalty


The six best methods for keeping customers

We advise establishing a retention culture inside your organization rather than viewing loyalty initiatives as compartmentalized retention programs. Every connection provides an opportunity to develop long-lasting customer relationships, which produce long-lasting customers, by prioritizing customer involvement at every point of the customer journey. By empowering your customer-facing personnel in this way, you may increase client retention while also identifying and reducing potential churn.


You can start using one (or more) of the following tactics to increase client retention rates today by keeping the underlying idea in mind:


1. Reduce time to value to protect against churn.

When you gain a customer, the seeds of churn are already there. You shouldn’t anticipate a new consumer finding out how to use your product on their own because everything about it is still new, even after initial onboarding. This is why it’s crucial to start off by offering a fantastic customer experience. By speeding up time to value and assisting clients in experiencing their “aha! They will be more likely to feel the impact and stick around if you can help them see the return on investment of your product or service right away.


“Many customers will focus on the one or two qualities of your product that appeal to them the most and won’t investigate additional characteristics. That implies that consumers are skipping through some of your product’s top features.


For instance, a lot of customers will focus on the one or two characteristics of your product that appeal to them the most and neglect to investigate the others. They are therefore missing out on some of your product’s best features. The initial stages of the customer journey must demonstrate value to those first-time customers. Getting customers to use those other features and discover fresh value within the first few days of signup does wonders for retention.


Several methods exist for doing this:


Initiate an in-context product tour that walks customers through the features they need to know about, tailored to how those features can help their business, right when they’re in your app or product.

Invite users to a webinar or demo that highlights key workflows and concepts for their particular industry (we’ve found that new customers who attend a webinar are 6x more likely to activate than those who don’t). Bonus: This also gives them the opportunity to ask questions unique to their use case at the moment and get more tailored advice from your internal experts.

Create a “Getting Started” guide that’s brief, clear, and preemptively answers questions about features they might not be familiar with. Proactively serve this guide up using targeted messages or as part of your multichannel onboarding campaign, so users don’t even need to search for it; it’s right there, right when they need it.

Users can shorten their time to value by sending proactive help content, which helps with client retention.


2. assist them in acquiring product mastery

For every passionate user who will do everything they can to upskill on your product and make the most of your self-serve support options, there are several others who will be less likely to seek that knowledge out on their own. They are known as “grazers” in educational philosophy. Unlike the hunter, they rely on being “fed” information to upskill them on a specific topic, such as your product.


People learn how to use your product successfully over time by actively teaching them how to do so. This mastery breeds customer loyalty, making education an extremely important retention strategy.


Customer success starts in the user onboarding process. The deep knowledge they gain allows them to be drastically more productive using your product. When this mastery is achieved, the cost to the user of switching products becomes even higher, making churn much less likely.


Help customers improve their product mastery with helpful messages that teach them new skills


3. Embed your product into their workflow

Facebook, Twitter, Google, and Slack These companies all have one thing in common: they create habits among their users. So how do you create these habits in your own product? If your product has a browser extension, desktop application, or mobile app, promote it via email or in-app message, and make sure it’s easy to add.


By getting new users to integrate your product across multiple platforms, you’re increasing the likelihood that your product will become a recurring part of their lives. For example, new Dropbox users who fail to install the mobile application won’t experience the full value of being able to access files anywhere. They will upload fewer files, use less space, and be less likely to pay for more storage.


Encourage customers to use your product in their everyday workflow to improve customer retention


4. Embed your product into their organization

Encouraging new users to build shared connections in your software is one of the best ways to make your product resistant to churn, especially for collaborative, team-based products like Asana, SimpSocial, and Slack. By embedding your product deep into a company’s workflow, the product becomes an integral piece of how these companies operate and produce results, making it expensive to rip out.


“By making their workflows more seamless and efficient, customers can reduce time spent switching between apps and enjoy effortless productivity.”


It’s important to know when to bring other people into the fold. You should only ask new customers to invite colleagues or teammates once they’ve reached a milestone or indicated they’re sufficiently engaged with your product (e.g., have used a feature X number of times, have imported custom data, and so on). Making such a heavy “ask” too early in the relationship will likely mean your request will be ignored.


Another way to embed your product into your customer’s organization Encourages them to integrate your product with the other tools they use every day. By making their workflows more seamless and efficient, customers can reduce time spent switching between apps and enjoy effortless productivity.


Encouraging users to invite their teams to your product helps everyone see the value of it, improving customer retention


5. Motivate them with new features

Customers don’t forget to use your product; they lose interest in it. So you have to motivate them. By offering churning customers a glimpse of what’s coming down the line, you can excite them about future releases. Things that inspire people to stick around are usually features that save time (such as better importing), increase adoption or efficiency (such as integrations with third parties), or offer additional value for no extra work (such as weekly reports).


“Try tagging feature requests so you can easily target customers with personalized, relevant messages when that feature is released.”


The best-performing retention message we’ve seen is an email listing all the features added in the past 30 days sent to users who have been inactive for the past 30 days. This ensures that it’s always telling people about features they haven’t heard of. More importantly, it follows the key rule of customer communication: don’t tell people to do something; motivate them to do it. Proper motivation is an underrated yet essential customer retention strategy.


Another useful tip? Try tagging feature requests so you can easily target customers with personalized, relevant messages when that feature is released. It’ll show that you’re paying attention to your customer’s needs and making sure they don’t miss out.


Sending a roundup of features customers may have missed can help with customer retention


6. Reactivate dormant users

Don’t take inactivity as a sign that people have lost interest forever. There are plenty of distractions from making the most of your product, especially if usage habits weren’t firmly established in those crucial early days.


You can offer one-time deals down the road or wait for a big product or company announcement to try to re-engage people. But even if you’re months away from the next big feature set or don’t have anything new to show off, there’s still valuable material you can offer dormant users, whether that’s educational content like books or a paid survey.


Sending a survey is one way to reactivate dormant users and get valuable feedback that can help reduce churn


5 best practices for retention messaging

Some efforts are strategic, pertaining to specific tactics. Others are more like values that you can ingrain into your organization to improve customer retention and satisfaction across the board.


1. Understand what inactivity looks like for your product

For a communication product like SimpSocial, we’ll message our users after 30 days of inactivity. But the first thing you should decide is what “slipping away” means for your business. For example, seven days of inactivity would be worrying for a daily planner app. Ask yourself, “Does a user of my product need to engage on a daily, weekly, or monthly basis to be considered active?”


Whatever “slipping away” looks like for you, you can set triggers to ensure you’re sending relevant, targeted messages at these crucial moments. These messages can help bring people back to your app or product before it’s too late.


2. Use email early on

At SimpSocial, we’re all about reaching customers at the right time, at the right moment, and with the right message. But while we firmly believe that in-context messaging is the most effective way to engage your customers, we also know that for new customers, your app probably won’t become a core part of their day-to-day lives overnight.


But email is. So if you notice periods of inactivity in those all-important first few days, behavioral emails can act like an extension of your product by relating directly to the actions your customers have taken (or have not taken). This means you can reach people with relevant, personally tailored messages that create a consistent, unified customer journey across channels. When used as part of orchestrated multichannel campaigns, these messages can serve as a jumping-off point to get them back to your app or product – where you can help them get more value in real-time.


3. Target the right customers

Retention isn’t binary. There is a difference between someone who didn’t convert after a 30-day trial and a year-long user who has started to slip away. A trial user might require more education on the value of your product, while a lapsing user might require a check-in to understand their specific use case (such as sending a survey or scheduling a call with an account manager). Don’t let them both fall into a naive “we miss you” bucket. Treat them differently.


4. Be personal

Retention messages will only work if they’re laser-focused in their accuracy. For example, if you’re speaking to a high-value VIP customer who has already contacted customer support several times this month, your message will have to reflect that. Don’t email a customer who has several open customer support issues to remind them to log in, and don’t begin your mail with “Dear Customer”. These impersonal communications are noticed and slowly add up to diminishing customer loyalty and subpar customer relationships.


5. Be thankful, honest, and respectful

Some customer churn is natural. Businesses come and go, as does demand for your product. When a customer does decide to leave, make sure they leave on good terms. If they have legitimate problems with your product, acknowledge them. Thank them for their custom and let them go. The easiest way to screw this up is to continue to spam them for months or years after their departure. It does more harm than good.


The bottom line…

If you want to ensure a sustainable, resilient business that can weather the storms of economic uncertainty, then you should be following some of the customer retention strategies and best practices outlined above before it’s too late. Engaging your customers is the most reliable and impactful way to future-proof your business. Just a 1% improvement in churn can make a massive difference to your company’s bottom line.


A focus on customer lifetime value and retention rate might not feel as exciting as the latest growth hacks or the thrilling chase for a shiny new logo, but it’s a much more effective long-term approach. Take retention and customer loyalty seriously, and your business and your customers will reap the rewards for years to come.

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