87% — that’s how many customers you’re at risk of losing because they’re shopping around.
You read that right. A study found that of all consumers, only 13% stay loyal to a brand. That means out of 10 previous customers, it’s likely only one will return for more.
As if that’s not bad enough, losing customers is way more expensive than retaining them. You’d shell out five to 25% more to get a new customer than to keep existing ones happy and coming back for more.
That said, it’s time you take a closer look at your business processes. This way, you can figure out why you’re saying goodbye to customers in the first place.
We’ll make it easier for you though, don’t worry. Here, we’ve listed some of the main reasons you’re seeing a continuous drop in retention rate. Let’s dive right into it!
Not Paying Enough Attention to Customer Retention Rate
Sure, selling to more customers is crucial to the growth and success of a business. But that’s only part of the equation. Making those customers keep coming back for more is as every bit as important.
That’s where implementing effective customer retention comes into play.
So… What is a retention rate?
If you think this refers to how a company retains customers, you guessed right. It’s a mix of how many new customers you get and how many leave and never come back.
In many industries, like retail and service, this “leaving” is also referred to as “churning”. That means discontinuing their subscriptions or cancelling their contracts. You may also have heard of it as “customer attrition” or “customer turnover”.
You want to focus more on boosting your business’ retention rate because of three things:
First, it signals that you’re doing great at getting new customers. Second, it tells you that what you’re doing is satisfying your existing customers. That’s why they’re sticking with you in the first place.
Plus, as mentioned above, it’s more cost-effective to keep current customers loyal. Not only that, but also much more profitable. Even only a 5% increase to your retention rate can already boost profits by 25 to 95 percent!
So, what’s the third one?
If your retention rate is low, then that means you’re failing at either number one, number two, or both. By knowing this, you can start using strategies that work (more on this below).
People Don’t Know Your Business Exists
In short, your marketing strategies don’t work or you don’t have enough of them. That’s why you’re not acquiring more of those new customers. Which is also the reason you don’t have a high retention rate – you’ve got no one to retain after all.
If you don’t have a website yet, now is the time to put one up. For the simple reason that almost 90% of Americans are now Internet users. As such, having a website is key to raising awareness about your brand.
Also, because it’ll serve as the framework of your online identity. All other effective digital marketing techniques are moot if you don’t have a website.
Think of your website as your digital business address. If you have an actual, physical office, this virtual address will help drive customers to it.
Don’t forget to include traditional advertising methods in your branding! Tools like flyers, banners, and vehicle signs still work, even in today’s digital world.
Poor Brand Recall
You can also lose customers because the competition is doing a better job at brand recall. They’re making a bigger bang with their first impression on consumers. They’re injecting their brand in almost everything without being “spammy”.
And you know what? Something as simple as giving away promotional items is what lets them do this. They’re already giving back to consumers while instilling brand recall along the way.
So, take a page out of the books of your business competitors.
These tips for lawyers, for instance, are about injecting brand name everywhere. But they can also work with other types of business, be it retail, advice-giving, or other services.
Bad Product/Service Experience
There’s no faster way to lose business than to disappoint, even anger customers. In most cases, this has something to do with a product/service failing to meet expectations.
Put yourself in the shoes of a customer. If you bought something marketed to do a specific task, and it doesn’t, what would you feel? Most definitely disappointed, even mad!
That said, make sure all your products or services go through quality testing. If you sell goods, make sure you use only quality materials in their construction. If you “guarantee” your shipment to arrive in 24 hours, make sure it does.
Ineffective Customer Service
Businesses lose up to $75 billion because of bad customer service. Customer experience is key to gaining their loyalty after all. When businesses fail to deliver great service, this leads to customers switching brands.
That’s not the worst of it. Customers who feel unappreciated will tell their world about their bad experience. The same goes true if their problems aren’t resolved in as little time as possible.
When we said “their world”, that means them giving an average of 16 anti-referrals. You read that right — it only takes a single dissatisfied customer to lose 17 right away.
Whereas delivering exceptional customer service can lead to nine great referrals per client. What’s more, these happy customers are more willing to leave raving reviews about your brand.
So, what can you do?
One is to ensure your customer service team does meet expectations. Hold regular quality assessments and refresher training. Reward your customer service staff too, so that they’ll feel more motivated to bring in more to the table.
Stop Losing Customers with these Strategies
Losing customers, whether a single one or several, is always bad for business. That’s why as early as now, it’s time to bring your retention rate up. That’s key to becoming part of the 50% of businesses that make it to their fifth year.
Want more insider information on making your business stand out and succeed? Then be sure to check our other business advice posts!