Customer Retention Management: Tips to Reduce Churn and Increase Loyalty

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Each year, new platforms and businesses join the ecommerce arena, making it more crowded. This eventually leads to an increase in the cost of clicks and conversions, which is why it is far more economical to get existing consumers to place a repeat purchase than it is to acquire new buyers.

However, have you ever evaluated your marketing techniques and engaged with your customer base to entice them to return to your store? If you believe you have not done enough, now is an excellent opportunity to develop comprehensive customer retention management strategies. Let’s start with the basics.


What is Customer Retention Management?

The concept of customer retention management centers around how a customer continues to engage with a business and how that business may gain additional value from its returning customers. According to experts, learning how to manage client retention is critical to a company’s long-term viability.

Customer retention is important in both contractual and non-contractual relationships. Client retention in a contractual relationship is defined by whether or not the consumer agrees to renew the arrangement, whereas the customer has the flexibility to just stop transacting with a business in a non-contractual relationship.

In a nutshell, customer retention management is ensuring that the consumers you fought so hard to stick with you, have a high level of customer satisfaction, and continue to cherish your products and services. In some circumstances, it may also entail ensuring that the consumer does not flee to your competitor.

Churn, on the other hand, is the polar opposite of customer retention. This is when a customer decides to stop doing business with a company. When it comes to retention management, churn is your number one enemy.


What Metrics Help You Measure Customer Retention?

Measuring customer retention is crucial for businesses since it helps anticipate how long someone will be a loyal client and, ultimately, calculates a company’s long-term profitability and value. It can also be used to assess the health of a business.

There are different formulas used by experts for measuring retention. However, the traditional equation focuses on the number of customers at the beginning (CS) and end of a period (CE), as well as the number of new customers you get (CN).


Customer Retention Formula

The formula for calculating customer retention is as follows:

((CE-CN)/CS)) X 100

Don’t be concerned if you’re not a math genius. We will use a short case study to assist you to learn how to use the formula.

Assume you own a barbershop with 200 repeat clients at the start of last year. Throughout the year, you notice that 20 of those customers are missing, but you also have 40 new customers that come to your place every month. This means you’ll have 220 loyal clients by the end of the year.

Let’s do the math and enter the numbers into the formula

((220-40)/200)) X 100

You should get a 90 as the answer, which indicates your customer retention rate for the period is 90%. Is it suitable for a barbershop? It all depends on the industry and the data from previous years.


Important Factors for Customer Retention

Measuring customer retention is important because if you cannot measure it, it simply means you cannot manage it. However, besides the formula, below you will find some other important factors when measuring your customer retention strategies.


1. Product engagement

Customer retention is heavily influenced by how frequently and intensely your consumers buy your service or product. As a result, the greater the frequency and intensity, the higher the product engagement will be.

Big companies like Facebook and TikTok rely heavily on product engagement to maintain a high number of loyal customers. They accomplish this by creating habit-forming technologies that are intrinsically engineered to keep people encouraged to return.


2. Service quality

Service quality is the next most significant element influencing customer retention. While quality is a somewhat subjective concept, certain characteristics, such as a smooth shopping experience and a high level of customization, can positively influence it.

Customers in the ecommerce industry are concerned not just with the things they purchase, but also with the process of purchasing them, which is why a pleasant shopping experience is essential. To put it another way, the fewer steps required to purchase the product, the more likely the client will return.

Customers also like it when a company understands exactly what they are looking for. If you’ve ever wondered why large ecommerce companies invest so much money to create an algorithm that knows what someone is looking for, this is the answer.


3. Relationship quality

Quality relationship development begins the first moment a consumer walks into your store. Luckily, a warm greeting, a discount coupon after purchase, or even a simple “thank you” should help you make a lasting, positive impression.

Of course, you should deliver excellent service along the way. Offering multiple communication channels, training your personnel to execute operations effectively, and never ignoring any customer request are some of the keys to accomplishing this.

Having a specialized customer service team will greatly assist you in creating strong bonds with your client base. This team should not only ensure that the consumer is satisfied, but should also look for ways to win the hearts of your customers.


4. Branding

One thing any entrepreneur should understand is that people tend to stick with brands they are familiar with. This is why putting significant effort into your branding should help you get more repeat consumers.

Clearly presenting your brand helps people in determining whether or not they would think about buying your items. Aside from that, branding will help clients understand what your company advocates for. As a result of these elements, many buyers can make a more informed purchasing decision.

Knowing how to develop compelling and educational material is also critical. It keeps your clients up to date on your products and, hopefully, keeps them engaged in a continuous and participating cycle.


5. Switching cost

If it costs a fortune to get an alternative to your goods, a customer will not move to another brand. Maintaining a loyal consumer should not be difficult if an entrepreneur can give great products, quality service, and strong branding while keeping costs reasonable.


Best Practices to Improve Your Customer Retention

Every new consumer represents a potential long-term customer. Even if a customer does not return, you should make every effort to leave a positive impression. Certain best practices below can help put you and your company up for success in terms of customer retention.

The first practice is to make it a priority for your team to maintain and improve the customer experience. It is never only about how much your clients can spend on your products; it is also about what your staff can accomplish for them.

Your business plan should also be more focused on becoming scalable and capable of supporting the company’s shifting objectives. You must develop ways of measuring the impacts of these adjustments and continue to respond as needed. More importantly, your staff must be adaptable to these developments.

After you’ve determined what your team is capable of and what your company’s goals are, it’s time to streamline your company’s operations. After streamlining processes, your team should have consistent measures in place for everything from acquiring new customers to reducing customer attrition and minimizing churn.

Finally, to build a consistent client base, you must maintain customer ties. In terms of shopping habits and experience, you should always be aware of where your buyers are as well as where they are going. This will assist you in ensuring that their path does not take them out the door.

Integrating these tried-and-true practices into your daily operations should help you prove to your consumers that you are the smartest option. Seek out developing technologies that provide early warning signals for red flags in shopping behavior and recommend appropriate next measures for the best results.


The 15 Best Strategies to Manage Customer Retention

You should never underestimate the value of a devoted consumer base. According to studies, loyal customers account for 68 percent of sales, so maintaining existing clients should be your top priority. Read on for the greatest strategies for maintaining a high level of customer loyalty.


1. Set realistic expectations for your customers

It can be unlikely to please someone you hardly know at times, so you may think it’s normal to create high expectations for them. However, if you want to set and satisfy client expectations, it is best to be truthful while making a promise.

Only guarantee what you can do and give your customers expectations that you can meet. If you are unable to fulfill expectations, apologize and recompense your customers.

If a customer expects a high-quality product and service but receives a subpar product, the disappointment will linger for a long time. They will eventually find it impossible to forget false promises and, worse, will leave negative reviews about your company.


2. Build trust slowly and carefully through relationships

Customers agree that trust is a crucial aspect of their judgment when making a purchase. However, developing trust is not a process that any company can undertake overnight.

You allow new and existing clients to trust you when you create interactions with them. Unfortunately, if clients realize you’re not trustworthy, they’ll go to your competitors.

After all, consistency in offering value to customers is a major aspect of creating trust, so your business should be persistent in meeting customer needs. As previously said, continuously delivering on your marketing promise over time will influence whether or not your clients see your company as trustworthy.


3. Improve your customer service department’s KPIs

Key Performance Indicators (KPIs) are measurable benchmarks that show how well a company is able to meet corporate objectives. These criteria are necessary so that businesses can assess their progress in meeting targets.

KPIs can be thought of as a road map to your goals. They assist you in seeing what the future brings for your company and the path you should take.

Developing working KPIs for your customer service division quantifies a variety of criteria depending on your sector. However, they mostly involve response time, conversion rate, and funnel drop rate.

The results will astound you once you start measuring these KPIs. It will be easier to determine how to better engage customers and what actions must be taken.


4. Make use of customer feedback surveys

Client feedback surveys may appear boring, and their response rate is not always high, yet they can offer you valuable customer input. It can be a great instrument for increasing customer interaction and driving business actions.

Hearing personally from clients about how they feel about your offerings is a terrific approach to strengthen the connections that already exist. When people are given the opportunity to communicate themselves, they share their thoughts and opinions about your brand.

It is critical not to frown when your consumers complain. Learn about their dissatisfaction and be perceptive enough to discover their pain points. Making changes in such areas will assist you in improving customer relationships.


5. Develop real-time customer engagement protocols

One of the most renowned client retention tactics is to use real-time customer engagement solutions. Live sessions have been shown to have a significant influence on customer satisfaction, and quick response decreases the number of client touchpoints.

Some financial organizations, for example, have co-browsing and video chat solutions in place. Their primary objectives are to promote user involvement through internet banking activities and to provide a cutting-edge digital banking experience.

Face-to-face interactions also promote individualized conversations with customers. Interestingly, research has shown that video chat solutions also help anxieties and concerns settle faster, allowing you to develop personal and dependable relations with clients.


6. Try to outperform your claims

The secret to not disappointing your customers is to under promise and over deliver. When you follow this approach, you are surpassing customer expectations, giving your company the opportunity to gain a more loyal customer base.

It is critical to keep your promises and to dare to exceed them. Never miss a chance to delight your consumers. Treat them as special individuals, and you will undoubtedly increase customer retention.

Be aware that the initial purchase of your product is a delicate stage. When they are disappointed, they can become hostile. So, something as easy as delivering your product a few days sooner than promised will make your consumer delighted.


7. Make a schedule for customer interactions

You use a communication calendar to stay in touch with your consumers on a routine basis. Even if your clients do not provide feedback, your team should be assertive in interacting with them.

The calendar is essentially a pre-programmed series of phone calls, events, and so on. Through continuous contact and exchanges, it is expected that doubts will be removed, trust levels will be increased, and the consumer will be persuaded to return.

Luckily, you can now effortlessly automate frequent contacts with your consumers. There are various communication calendar solutions available online today that enable you to deliver unique offers and appreciation messages to customers on a certain schedule.


8. Learn something from any customer complaint

Only bad business owners feel the urge to flee from complaining customers. If you want to be a successful businessman, you should go for these clients since they might be your most valuable marketing asset.

Complaints highlight what you should change and what you need to discard in your company. You may learn what your consumers care about and what they anticipate from your services by analyzing client complaints.

Some consumers leave without leaving a comment, which is bad for your business. Encourage people to share their concerns because this is how you learn about flaws in your products and services.


9. Figure out the CLV of your business

Customer Lifetime Value (CLV) is one of these critical key performance metrics that demonstrates the importance of your clients over time. For example, if you provide subscription-based online courses, your primary focus should be on each customer’s lifetime value.

Some of your consumers have contributed more than others. Those who consistently purchase your stuff should be considered VIP customers.

This is because they not only provide you with continuous income, but they are also the same clients who will promote your business to others. They tell their peers about their experience, which helps your brand’s credibility.


10. Consistently deliver valuable information

Just because a customer has made a transaction with you does not suggest you should abandon your efforts to seal the deal. Because people have more alternatives than ever before, go the additional mile and provide them with something meaningful.

Education is one of the most significant services you can provide to your customers. The goal here is to advise and engage people until they are ready to buy your product.

It provides clients with knowledge and insights into the product to help them comprehend it. Once they become loyal, they can also turn into your brand advocates.


11. Re-engage customers by leveraging automation technologies

It takes time to manually check and keep your consumers informed. There are numerous actions that must be performed daily to keep your brand relevant in the minds of your customers. This is where automation technology can come in handy.

They enable software to handle parts of your processes automatically. You may manage your customer contacts, continue giving education letters, schedule marketing offers, and send other notifications using automation.

Not only will you notice an improvement in conversion rate as you engage clients automatically, but you will also be able to form stronger ties. Moreover, making these processes more efficient will allow you to deliver on the promises you make to your clients.


12. Monitor and evaluate churn metrics

Businesses that want to optimize retention efforts must understand how to analyze and measure churn data. You should be measuring and evaluating the number of consumers who churn as well as the reasons why they churn.

You can improve the customer experience by learning why consumers leave and how they leave. More importantly, it teaches you how to keep your current consumers from leaving.

Customer churn will come regardless of your best attempts. When this occurs, you should take advantage of the chance to investigate what you can do to prevent a comparable customer from leaving for the same reason in the future.


13. Provide customized, one-of-a-kind services to loyal customers

Scientists believe that surprise is beneficial to the brain. It provides enjoyment and spice to one’s life. So, instead of waiting for your clients to make a request, go ahead and delight them with personalized service.

Unexpected offers can give your clients the impression that they are a part of something special. Therefore, if you want your clients to stick around and love your brand, you should go above and beyond the standard service that you provide.

A well-designed client retention campaign can be a fantastic idea. By rewarding your consumers with one-of-a-kind discounts and prizes, you make them feel good about their purchases and encourage them to return.


14. Use newsletters to keep in touch with customers

Generating email newsletters is still the most effective client retention method. It is one of the most effective strategies to stay in touch with consumers and develop long-term connections with them.

It is essential to follow up with new clients and email subscribers after the initial interaction. If you want to cultivate client loyalty, you must keep your subscribers up to date on the latest and hottest information from your brand.

Email newsletters enable you to convey relevant information to your intended audience. You can categorize the list based on characteristics such as buying habits and age demographics, and then tailor the newsletter to each category.


15. Create a community to improve customer interactions

Creating a forum on your webpage is an easy approach to fostering engagement and community. Having a forum allows your customers to discuss your products, services, and everything else about your brand.

One example of a very active platform used by store owners to communicate with customers is a discussion board. The platform allows users to post challenges, questions, and fresh ideas. This media can also be used to share information about new product features, promotions, and expansions.

You may even spice up the conversation by rewarding your most active users. This would encourage more active engagement, which would increase your customers’ loyalty to your brand.

Look around and you’ll find that prosperous digital companies got there not only because of their excellent services, but also because their customers collaborated. They employ community platforms to connect with customers, eventually transforming them into brand advocates.

However, you will almost certainly come across bad remarks or complaints. When you find one, don’t dismiss it; instead, confront it. Users will learn, respect, and trust your brand this way.



Now that you’re armed with a list full of useful retention management strategies, which would you go for first? There is no one-size-fits-all solution that will work for every business, but as long as you keep the customer’s interests in mind, they will return.

To proactively treat customers, you must provide excellent customer service and build interpersonal kindness. With well-designed client retention strategies, you will better understand your consumers’ needs and enhance loyalty.


One of the most impactful strategies to keep clients is to make them feel as though your company knows them personally. Thus, you should present your company as a welcoming and accommodating ally according to your clients.

If you haven’t heard from a specific consumer in a long time, don’t be hesitant to contact them. Even if your initiatives don’t yield instant sales, they will help maintain your brand at the forefront of your client’s minds.


First and foremost, you should position yourself as the go-to brand for your client. Be a problem solver, and make sure that when consumers have concerns, they can talk to a genuine, empathetic staff, preferably in person or over the phone.

Then, always provide excellent customer service. How you address customer behavior will impact whether your clients will give you another chance or abandon you with a negative review.

Finally, accept blame when anything goes wrong. When problems develop, recognize your missteps and, if needed, apologize. This sort of behavior shows clients that you are prepared to correct flawed processes and avoid future errors.

Customer feedback might provide valuable insight into what is and isn’t working in your organization. Surveys can also be useful in recognizing unsatisfied consumers and providing companies with an opportunity to resolve the situation before people churn.

You might set up a forum for customers to engage and discuss ideas. Outlets like these promote user advocacy and interaction by addressing key subjects and asking more questions about a company’s goods and services.

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