7 Customer Retention Strategies for the 2020s

Customer retention is key when managing a successful business. You want to keep your customers coming back again and again. You want to create a fan base, loyal brand ambassadors, your very own cult. Well, maybe not that far…

A study from SAS and Loyalty360 showed that around 68% of new sales come from existing customers. At first glance that sounds like great news. If over two thirds of your sales are from existing customers then that’s customer retention sorted, right? Not quite. The same study showed that 65% of companies currently have a dedicated customer retention team. A further 13% of companies are planning on creating such a team. Customer retention is big business, and you need to be a part of it. If you’re not currently focusing on customer retention, you can bet your competitors are.

Bain & Company found that a 5% increase in customer retention produces more than a 25% increase in profit. With figures like that, you’d be foolish not to get a customer retention strategy put in place. That’s easier said than done, though. There is intense competition in almost all industries. Customers have more choice than ever when deciding who to spend their money with, and they’re willing to shop around. So how do you increase customer retention? Read on to find out more.

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1. Look after the customer

This one may seem obvious, but it’s important to remember that customer service remains key when it comes to customer retention. Unless you offer an extremely niche product, you’re going to have competitors. These competitors will be doing everything they can to try to poach your customers. You need to stop them.

The seven steps listed here can certainly help ward off that competition. However, if your customer is unhappy then you’re already fighting a losing battle. 91% of unhappy customers will simply never shop with you again. 91%. That’s a lot!

To offer the best customer service, streamline the user experience. Once a customer has decided to buy, they should be able to check out in as few steps as possible. Offering checkout options like PayPal allows the customer to pre-fill their billing and shipping info. This not only offers a smoother process, but it’s also what customers expect. 56% of customers want to see a variety of payment options at the checkout.

It’s also important to build trust. Consumers are becoming more and more privacy-focused and are reluctant to give away pages of personal information. Consider adding features like guest checkout and Sign in with Apple for a more privacy-friendly checkout.

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2. Don’t be afraid to spend money

Whether you’re keeping on top of the latest e-commerce trends or investing in real-time accounting, you will need to spend money to stay ahead of the competition. No one wants to spend more money than is necessary, but keeping up with the latest software is essential for customer retention.

You need to paint an image of success when it comes to your company. You need your customers to know that you’re better than your competition. Rocking a retro ‘90s website might be fine for a movie that came out in ’96, but it doesn’t exactly scream “successful” when it comes to an e-commerce company. 79% of shoppers who are dissatisfied with the performance of a website said they would be less likely to buy from that site again.

Spending a little extra on web design and marketing strategies can transform your image. A simple way to keep customers coming back time and time again.

3. Invest in a marketing strategy

A strong marketing strategy isn’t just important for generating new business, it’s vital for keeping existing customers too.

We’ve all seen those ads that seem to follow you everywhere you go. You visit a website once and for the next month you’re seeing their products everywhere. While retargeting ads like these can be annoying when done poorly, they’re a great way to boost customer retention. Customers who are served retargeting ads are 70% more likely to convert on your website.

Once you’ve got a customer’s details, marketing becomes even more important. You can use email and SMS marketing tools to follow up post-sale. A thank you email with a discount code is a great way to make sure the customer comes back again.

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4. Manage your stock levels

Letting an item go out of stock is a great way to lose customers. It’s frustrating for them, and it’s costly for you! Nearly $1 trillion worth of sales are being missed out on due to items being out of stock. Managing your stock properly can prevent lost sales and dissatisfied customers.

There are two key ways of managing stock. First in, first out (FIFO), and last in, first out (LIFO). Whether you use FIFO vs LIFO will depend on the type of product you’re selling. Whichever method you use, adopting a stock management system is extremely important for customer retention.

5. Find the right suppliers

Finding the right wholesale suppliers can make a huge difference to customer retention. The right supplier can be the difference between a 7-day lead time and a 7-week lead time. Customers want their purchases as soon as possible, so a longer wait will mean they’re less likely to return.

Even once you’ve found a supplier with a short lead time, you still need to make sure they’re reliable. A delay from your supplier will have a knock-on effect for your customers’ delivery time. A survey by Voxware found that 69% of shoppers were less likely to place a future order if their purchase was not delivered within two days of the date promised.

Your supplier will also directly affect the quality of your product. You need to ensure that your supplier has rigorous quality control. Any slip in standard is going to reflect back onto you and could result in lost customers.

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6. Find a good warehouse management system

Running a warehouse smoothly is hard work, that’s why it’s important to find a good warehouse management system. There are many benefits of warehouse management system implementation. These benefits will not only streamline your warehouse but will also help boost customer retention.

A strong warehouse management system can speed up delivery times. Processing will be faster because your pickers will know exactly where to look for each item. Automated systems can then speed up the shipping process and provide minute by minute tracking. As we mentioned in the last point, shipping time is very important to consumers so this is key for customer retention.

There are also likely to be fewer wrong orders sent out with a quality warehouse management system. Using barcodes and scanners reduces the chance of any mistakes being made, ensuring that your customer gets the right product the first time around.

Returns are part and parcel of online shopping. Consumers return between 15 and 40 percent of online purchases, which means you need to be prepared to process a lot of refunds. Fortunately, a warehouse management system can help here, too. An integrated warehouse management system allows you to track returns with ease. You can also update product numbers in real-time, allowing for easy stock management of resaleable returns.

7. Invest in people

2020 is definitely the year of automation. Robots are on Instagram, cars are driving themselves, and AI is managing supply chains. Despite this, humans still play a key role in your business. From the marketing team who are driving new business, to the accounts team who are crunching the numbers, you rely on people to keep things running.

Invest time and money into these people to make sure they are properly equipped for their jobs. Send them on training courses, buy them new software. Make sure that they love coming to work every day. This will result in happy, motivated staff who see themselves as integral to the business.

You might think that your staff’s happiness has nothing to do with your customer retention, but you’d be wrong. Employees who are happy and engaged are more likely to improve customer relationships, which can boost sales by as much as 20%. Spending just a little time and money on your employees can reap big rewards from your customers.

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By following these strategies you’ll be able to build strong relationships with your customers and boost their retention. Remember though, this is a constant process. You can’t just ‘fire and forget’ when it comes to customer retention. You need to be constantly working to improve. Some of the strategies here weren’t possible a decade ago, and some of them will be redundant in another decade. Keep reading and learning to stay ahead of your competition throughout 2020 and beyond.

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