The Customer is always right!
You must have heard that old truism a million times. That statement couldn’t be more relevant today.
The digital world not only shapes customers’ buying experience – it puts them at the center of its universe.
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To understand the importance of repeat customers let’s look at what retention rate means.
Client retention rate is the percentage of customers kept. It’s the opposite of churn rate, which is the percentage of customers lost.
It’s pretty straightforward:
Congratulations – you have your repeat purchase ratio. This is how many clients out of every 100 you can expect to come back for another purchase.
That’s another factor to consider when calculating client retention rate. And it indicates the number of actions the consumer takes, necessary to include them in the repeat customers report.
Have they only logged in? Or have they logged in, signed up for a weekly newsletter and made a new purchase?
Lastly, you’ll need to figure out the right time span within which to measure your average customer retention rates.
That could be anywhere between a couple of days and several months, all depending on your business processes, objectives, and observations.
Let’s first look at the latest data revealing how important customer retention is for business and what’s the driving factor for us – customers.
In their latest report, Havas Group found that a staggering 77% of brands could disappear, and customers wouldn’t even be bothered. This is the highest figure reported since their research first began more than a decade ago. It’s also grown three points since their 2017 results. This clearly shows the difficulty that most brands have in presenting a meaningful image of themselves to their customers.
Managing a positive experience for buyers is becoming much more critical for ensuring that your clients’ customer journey is a successful experience – more critical even than impactful advertising. In their survey, PwC found that 65% of American consumers agreed with this statement, and an even larger figure of 75% agreed that customer experience was an important factor in their decision to purchase a product.
Most companies certainly don’t seem to be paying enough attention to this fact as less than half of the customers surveyed stated that they had a good experience with companies’ customer services this year.
Nearly 64% of those surveyed stated that a bad employee attitude would greatly influence their decision to stop buying from a brand. For the U.S., the figure was slightly higher at 67%. Other major factors that were driving customers away included unfriendly service (61%), a lack of trust in the company (49%), and unknowledgeable employees (45%).
You can probably figure that your business will profit significantly if you manage to keep your client retention rate up.
That doesn’t mean you should stop attracting new customers, of course.
But you probably need to have in mind that:
This survey found that nearly half (half!) of buyers will skip your product if you can’t make the purchase experience exciting. And that shows the importance of originality for customers.
If you can’t turn your prospects into buyers, you won’t be able to turn them into loyal brand ambassadors either.
This is one of the reasons why companies lose customers.
And it’s not surprising the loss businesses suffer due to poor service amounts to $1.6 trillion.
Another interesting number businesses need to consider is:
We can all agree that makes sense, given that cellphones have become an extension of ourselves, in a way.
So it’s only logical that:
Customers do expect companies to meet a high standard of service. That’s not enough, though – apparently speed is also a factor:
(Google Marketing Platform)
People appreciate speed across all stages of the customer experience. Even after they’ve already made a purchase and they need some help.
These are the numbers for 2017. Now, companies may have marked a slight improvement since then. That said, you’re still going to be way ahead of the pack if you optimize the mobile experience of your website.
Is your business mobile? How do you feel about your service?
If you haven’t put much thought into it, now is the time to look closely at how happy your current customers are. Here’s why:
I can completely relate to the frustration of having to deal with an automated answer machine.
According to a Harvard Business Review, customers turn to a business’s support team to get a quick and easy solution for their problem.
Satisfactory customer service is what customers want. When that need is not met we come to this:
Now, you may think you’re doing what’s necessary to make your customers happy.
But look at this:
So, digital customer experience becomes increasingly important as the preferred way to shop shifts to mobile.
What’s the average customer retention rate there then?
Divided by industry, mobile retention also differs by months. Let’s look at what Localytics’ findings were for 2017.
The percentage starts to drop after the first month.
The client retention rate at the end of month #3 goes down further with somewhere between 3 and 5%.
But what is a good customer retention rate?
Opinions differ but one research by Mixpanel shows that most apps and software have between 6-20% retention rate (for a 2-month time span), depending on the industry.
Now, while customers seem to prefer making purchases through a mobile device, companies need to consider that:
(Harvard Business Review)
Customers who use multiple channels to shop spend 4% more in a physical store and 10% more online than the single-channel customers. And every additional channel they use means they spend even more money.
What does that tell us about customer satisfaction and retention?
Customers like to do their research.
Not only that, but customers expect to have the same pleasant experience no matter the way they chose to shop. And unfortunately, they don’t always get it.
It becomes obvious the hard part of the job is pleasing the clients so they stick around.
The slightly unfair part is – a happy client won’t necessarily go around, sharing how happy they are with you. Unhappy clients, on the other hand, are different.:
The experience your client has is part of what you’re selling, whether it’s a product or a service. Improve the experience – and you can attract better clients and charge more for serving them.
Further stats show that:
Yup, get used to it. Unhappy clients are always more vocal. You’re inevitably going to see negative feedback, even if your business is actually doing fairly well.
Let’s now look at what will actually make customers become part of your brand loyalty statistics.
So, it’s actually possible to build a lasting relationship with your clients.
And the right service will lead to:
The good news is that customers also like to share their positive experiences.
However… turning consumers into loyal brand ambassadors means tending to their needs.
What does that mean?
Here’s what Forbes reports:
There is a 72% correlation between content effectiveness and a brand’s meaningfulness. Despite the importance of quality content when it comes to customer retention, roughly 58% of the content created by the world’s leading 1,800 brands is “falling massively short of consumer expectations.” This is true about more than 473,000 generated tweets and 4 million videos that are being watched on YouTube every minute.
(Source: Small Business Trends)
As per customer retention statistics, 80% of businesses rely on email marketing for customer retention. Over half of them considered it to be the most effective method of realizing their customer retention goals. Other important marketing channels for customer retention included paid searches (43%), social media (44%), and retargeted ads (37%). Mobile marketing was found to be the least effective with a figure of just 8%.
According to a HubSpot study, it was found that marketing and sales professionals have a terrible image among the general public, only being considered slightly more trustworthy than lobbyists, politicians, and car salesmen. Unsurprisingly, in another report, it was found that when it came to making purchasing decisions for business software, only a minority (22%) of customers were influenced primarily by the salesperson compared to word of mouth (55%) and customer references (46%).
Consumers like to be engaged with your brand in a way that makes them feel like you know them.
And buyers are ready to pay for that personalization.
Consumers understand that personalized experience means they’ll need to share a bit of personal information.
And according to Accenture, they don’t seem to mind it.
Now, sharing data comes as part of an agreement that businesses will be transparent about how they use it.
By 2020 we expect to have more than 30 billion IoT devices, which will rise to 80 billion by 2025. Business will need to transition into a digital-first business model.
While this will help companies optimize their processes, it will also mean customers will have the upper hand when communicating with brands.
Consumers will need to be shown the value of the service you offer and in a much more personal way.
And that can be tough.
But don’t worry, there’s a light at the end of the tunnel.
Ask and listen to what your customers want. They genuinely want you to know what that is, so they can buy it from you.
Today, buying increasingly becomes a political act, with more than half of all consumers believing that brands now play a bigger role than the government in shaping the future. Customers are making strategic use of their collective buying power to influence and initiate change by rewarding (or punishing) brands based on what effect they have on the world and what views they are supporting.
Being meaningful is becoming crucial for business since brands perceived as making the world a better place outperform the stock market by a remarkable 134%. Brand activism is now a necessary condition for business success, especially when it comes to maximizing customer retention and revenue.
What do you need to do to make customers stay?
The future is digital. Companies need to make use of that and turn to technology to help them start an online conversation with their customers. This is where using data to predict the best experience is useful. That way, a business can offer its customers exactly what they want.
Everyone likes a good deal and that remains valid for consumers in a data-driven age. Customer service studies show that people are willing to share more information with a company if that means better experience. This includes personalized price discounts.
A bad customer journey can be an issue for any business. If a customer gets disappointed with your service, you won’t see them coming back. So, you should invest in creating platforms that are able to “wow” your customers.
One thing that is crucial, according to loyalty statistics, is speed. You need to address your customers’ concerns and address them quickly.
That together with helpful employees and friendly service matter the most.
Interacting with a real human is important to clients. Regardless of the technology that supports the customer journey, consumers like to know there’s someone there they can actually talk to.
When you create your customer experience, bear in mind your clients will be using different means to shop. Provide convenience, so clients will have the same great experience shopping on their phones, tablets, or in a physical store.
Business and personal life are now becoming one. Clients expect to be targetted in a way that is relevant to them.
You can go around offering discounts for rollercoaster rides to seniors but they’re most probably not interested. (Although, how awesome would that be!)
More than that, it’s no longer enough to assume someone will be more engaged with your product just because they’re in that demographic group.
People want to feel personally involved and if you want to be on the positive side of the customer retention statistics, start spelling “personal” right.
The importance of customer retention to businesses mainly boils down to three reasons – cost-savings, increased profits, and productivity. It helps cut costs because you have to spend less on marketing as retained customers already know about your products and services as well as act as your brand advocates in their circles. It helps increase profits because repeat customers, on average, spend more. It helps boost productivity by reducing the work burden on employees since long-term customers act as an invaluable source of information for honing products and services and spotting new growth opportunities.
(Small Business Trends)
Data on customer service statistics show that almost 7 in 10 customers within the U.S. end their relationship with a business due to poor service. Nearly half of the customers are also likely to make a switch to a competitor within a day of experiencing poor customer service.
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