What good is your holiday revenue surge if sales go right back to normal after Dec. 25? Who wants to hustle as hard as you did in November and December, just to go back to business as usual?
Don’t settle for yearly sales spikes. Arrange your business now so that increases are spread out over timeless like a series of ups and downs, and more like a staircase of ups and overs. How? By adopting customer retention strategies like these.
Set up a loyalty program and enroll customers
According to experts at PDI software, an incentivization system is “the best way to profitably influence consumers’ buying habits.” Over 90% of all companies use a loyalty or engagement program, which equates to 29 per U.S. household. Wow!
When people receive a loyalty reward, three-quarters of them say that they’re likely to make another purchase.
Grace Martin, founder, and president of Edens Garden says her business’s customer retention strategies have more than paid for themselves. When shoppers accrue store credits, artfully called “Aroma Notes,” they’re incentivized to buy more. It also motivates them to refer their friends.
“Since we launched our Aroma Notes program in 2017, we’ve seen a higher level of customer retention and gained a wave of new customers,” she says. “More than 3,000 customers have been referred to Edens Garden through our program. And of all purchasing customers, members of our Aroma Notes program have about an 80% repeat purchase rate. Aroma Notes has been hugely successful for Edens Garden.”
“Of all purchasing customers, members of our Aroma Notes program have about an 80% repeat purchase rate.” —Grace Martin Founder and President, Edens Garden.
Clearly, rewards programs work.
To get started, consider your business’s sales volumes. If you serve fewer than five customers per month, then consider handling the data yourself. Any more than that and the DIY approach will quickly become too much.
For example, a professional local photographer like Nebraska’s Kelley Leigh Photography may book three events per month. This business owner needs just a spreadsheet to keep track. But famous Los Angeles bakery La Monarca may serve 80 curbside takeout customers per day. They must adopt a tech tool to manage their customer retention strategies.
If you don’t have a budget set aside for a robust loyalty system, that’s okay. Start with a free rewards option, like Goody or Smile. Be sure you choose a starter program that lets you (eventually) graduate to a paid option with more capabilities. Once you realize which features you need most, you’ll be glad you planned for that flexibility.
Read user reviews, and strategize for a tool that scales with your business. One of those features should be increasing (but compliant) data collection. Grabbing transaction details lets you analyze consumer behaviors and preferences as they change.
Joshua Kanter, PetSmart’s EVP of customer experience, says the data they collect is used to support their customer retention strategies.
“Building and maintaining relationships with our customer base is a top priority, and we’re excited that PetSmart Treats will allow us to truly recognize and reward our pet parents for their continued loyalty,” he says.
Finally, prioritize digital rewards. These days, touchless isn’t a buzzword or fringe trend — it’s table stakes. Body Energy Club did this by offering rebates on online orders for every increment spent with their business. The move allowed them to keep building loyalty while staying safe and compliant through the pandemic. Tap tech-savvy employees to help you choose, implement, and run a future-forward program if needed.
Add a subscription choice to your purchase options
Consumers view product subscription boxes and services as automated purchasing — and a way to simplify their lives. To businesses, that means expected loyalty.
Subscriptions are among the most recession-proof customer retention strategies. Harvard Business Review reports that during the Covid-19 pandemic, 90% of subscription businesses are either holding strong or growing.
Here’s how to think about it: Let’s say a customer costs you $10 to acquire (that’s their customer acquisition cost or CAC). If that customer continues giving you revenue until they exceed that number (that is, their long-term value or LTV surpasses $10), then your business can grow.
Repeat business is the key to LTV outperforming CAC over time.
Source: Corporate Finance Institute
Customers who sign up for subscriptions assume future deliveries, unlike one-and-done transactions. Small business Freshly Picked noticed this and launched a subscription program called “Fringe,” which landed them over 100,000 new customers within its first three months.
And they’re not the only ones. Small-business owners who leverage subscription-based models, on average, have seen nearly triple the sales growth of conventional retailers (and S&P 500 companies).
Source: Zuora’s 2020 Subscription Economy Index Report
Subscription models are so powerful that even if a customer cancels, their chances of re-upping are around 60%-70%, compared with just 5%-20% of new customers.
Plan out customer touchpoints
Keep your product or service top of mind by reaching out to customers at key moments throughout the year.
Email customers strategically
Too many small businesses use email marketing to push products, annoying customers, and eroding the relationship. Instead, use email wisely. Include interactive content, which performs 300% better and has a 73% higher chance of being opened. And choose smart times to make contact:
- To check in on a recent purchase: After transactional emails like order confirmation and delivery, ping customers to ask for feedback right away. If there’s no initial response, offer incentives for feedback.
- To respond to all feedback: Always thank a customer who gives you their opinion.
- During special times: Make contact on birthdays, their purchase anniversaries, or when their subscriptions are about to renew. Personalization like this goes a long way: If you know customers’ names and preferences, 75% say they’re more likely to return and purchase again.
- To help onboard and educate them with helpful videos or tutorials: Analysts at Saasquatch say that the customer life cycle should look like this:
But instead, because of the business’s failure to help customers activate their product use, the life cycle often look like this:
Email is a great way to ensure your customers use your product or service to its fullest potential.
As you plan how and when to contact customers, use software to notify you of customer interactions and calendar occasions. You can even be alerted of non-events, like inactivity. But act quickly! The average read rate for emails sent soon after the inactivity is discovered is 12%. Compare that with the 1.8% read rate of “long inactive” customers and you’ll see time is of the essence.
Discern when to leave customers alone
Customers increasingly want to “help themselves.” And giving them the resources to answer their own questions helps free up your own team to handle more meaningful interactions. So equip customers by creating a robust, easy-to-navigate knowledge hub.
Research shows that customer service teams that perform the best are twice as likely to prioritize AI-based chatbots that help customers navigate support hubs. Again, the time you free up can be used for more meaningful customer interactions.
Set clear expectations for future customers — and then outperform those expectations
What do you think is the number one reason people stay loyal to a favorite brand? Is it an easy shopping experience? Pricing? Value?
Product quality is what drives loyalty more than any other factor.
Source: KPMG’s “The truth about customer loyalty”
Fulfilled or exceeded expectations make the foundations of lasting loyalty. When you perform true to customers’ expectations, then perceived value, satisfaction, and loyalty follow.
Source: Reve Chat
Snowbird ski resort nailed this in a recent ad campaign. They used bad reviews from their misaligned visitors (pampered, noncommittal, comfort-seeking tourists) to show their target audience (adrenaline-addicted, die-hard adventurers) exactly what they want:
The visual clarifies expectations. Beginners may not appreciate Snowbird’s main attractions.
Likewise, you can fight the temptation to overpromise your product’s features and benefits in marketing materials. Instead, maintain genuine honesty throughout the sales process.
Also, assess your market regularly — monitor your competitors’ claims to know your customer expectations. The more you do, the more you’ll see that effective customer retention strategies begin long before the purchase.
Automate what you can to devote your attention to customers
Customer experience (CX) experts at CustomerThink say personalization will be among the top three tactics that winning small businesses will use in 2021 to gain customer loyalty. Philipp Wolf, CEO of Custify, summed it up well when he said, “No year may have been worse for chatbots than 2020.” That’s because most automated messaging ignores current headlines. These days require a more human touch.
To personalize customers’ experiences at scale, you must drop other menial, time-consuming, automatable tasks — for example, your back-office processes. Accounting is an especially ripe area for automation.
Neat’s bookkeeping app does the repetitive tasks for you so that you can focus on customer-facing activities. Try it for 15 days for free to see how much time you can save on tedious bookkeeping work.
Customer retention strategies swap the holiday spike for the holiday step
A simple spike in revenue is not an achievement worth celebrating. A step up — and then another, and another — that is what will grow your business over the long haul.
Researchers at Bain & Company have found that companies that prioritize loyalty and achieve healthier Net Promoter Scores (NPS) in their industries experience revenue growth at 2.5 times the speed of loyalty laggards. That’s because smaller, consistent steps over time amount to greater heights than occasional short-lived spikes. So prioritize your current customers, and reap the long-term rewards.