Customer Retention

Listen to Customer Feedback
The bottom line of increasing customer retention is customer satisfaction. One of the best ways you can do this is by listening to what your customers have to say. When you get to the bottom of why a customer is unhappy, and then you solve that problem, you are more likely to keep that customer around. Customer feedback should be considered no matter if the customer is a first-time buyer or a customer that’s been with your business for ten years.

ARC can monitor your support team to see how they handle customer feedback and where your team can improve their customer engagement strategies. Customer feedback can also be extremely easy to automate depending on which CRM your company uses.

Automations that send customer feedback surveys after a customer buys a product or uses a service are a great way to follow-up with your customers and get testimonials to encourage new customers to shop with you.

Improve Your Customer’s Journey
When you look at your customer’s journey as a whole, you can focus on where your KPIs are and where they can be improved. You can also find out which of these KPIs are most important to your customers and find improvement opportunities in those areas. When your customers have an excellent experience with your brand, they are more likely to keep coming back.

Customer Loyalty Programs
When you offer your customers incentives to stay with you, you are more likely to keep them as a customer. The best way to do this is to offer additional products or services that make the products and services they already love even better. You can also do this by rewarding frequent purchases with a discount or other special offers.

Brand Ambassador and Referral Programs
A great way to keep customers coming back is by offering a brand ambassador or referral program. Often seen on social media platforms, ambassadors are the biggest promoters of your products and services. This not only keeps your current customers coming back to you, but it also drives new customers to your business through word-of-mouth.

These types of programs can be extremely cost-effective because while they offer a slight discount to your representatives, they also help with customer acquisition with lower acquisition costs.

Upgrades and Upselling Products and Services
A great way to keep customers returning to your brand is to offer upgrades to products and services that make their experience with your brand even better. Not only does this give these products and services a longer lifetime, but it also improves the experience that your customers have with your brand.

A great example of this is Amazon. Amazon has tons of additional services that you can add to your subscription to make your customer experience even better, and it keeps you placing orders on the site. Another simple example is offering a new product that works with products that your repeat customers already love.

In order to improve your customer’s journey, you first have to know what your average customer’s journey looks like. When you track your customer’s journey you know exactly where conversions happen, and you can see where your customers may be getting stuck. After finding out where your customers are having trouble, it’ll be easier for you to make improvements to that area.

A brand ambassador is a person that promotes your brand, products, and services on social media and brings referrals to your business. Social media brand ambassadors often have a special code that their followers can use to get products or services at a discount. Brand ambassadors sometimes get a percentage of the profit from the sales they bring to your business. Using brand ambassadors is not only a great way to get new customers to your business, but it’s also a great customer retention tactic used to create returning customers.

Customer loyalty programs reward customers for continuous purchases, and they encourage customers to keep doing business with you. Customer loyalty programs are great for customer retention because they give incentives for continuous business, and they can help your customers feel appreciated.

The great thing about customer loyalty programs is that they are highly customizable, and they can work for any business. There are many different ways to create a customer loyalty program. Common programs are usually based off of points systems or the number of purchases made.

• Example of a Points-Based System:
  A great example of a points-based system is Starbucks’ Stars system. When Starbucks customers acquire a certain number of stars, they can redeem them for reduced costs on drinks and food, and even get a free drink or food item when they reach a certain number of stars.
• Example of a Purchase-Based System:
  These are the “free item after every 10 purchases” cards you often see in restaurants or fast-food establishments. The way these programs work is that the customer gets a perk after a predetermined number of purchases is made.

These systems don’t always require you to give away discounted or free services. They only require that you give your customer some type of perk for repeating business with you. Both of these systems can be adapted into any type of business, and they can also be customized to fit your business. There are many different types of loyalty programs out there, you just have to find the one that works best for your business.

These are customer retention KPIs (key performance indicators) you can use to monitor your customer’s brand loyalty and track repeat customers and the number of customers you are obtaining. Most of these metrics can be tracked in real-time, so you always know which areas you are performing well in, and which areas may need improvement.

Repeat Customer Rate
Knowing how many repeat customers you have is one of the most important customer retention metrics to keep track of. When you know who in your customer base is returning to you, you can measure your retention much easier. Always make sure to track which of your existing customers are making repeat purchases.
Use this formula to find how many repeat customers you have:
Number of Customers That Purchased More Than Once / Total Number of Customers

Customer Lifetime Value
Customer lifetime value helps you to see how valuable a customer will be over their lifecycle with your business. Your customer retention rate will rely heavily on the customer’s lifetime value because it will help you determine which of your loyal customers will be the customer relationships you want to spend the most time focusing on.
You can determine your customer lifetime value by using this formula:
Customer Value = Purchase Frequency x Average Order Value

Customer Acquisition Cost
Customer acquisition cost calculates how much it costs your business to get new customers. It is the opposite of your customer retention rate or churn rate. This includes how much you are paying for advertising, your marketing strategies, and any other strategies you are using to acquire customers.
Calculate your customer acquisition cost with this formula:
Customer Acquisition Cost = Total Number of Expenses to Acquire Customers / Total Number of Customers Acquired

Monthly Recurring Revenue
Monthly recurring revenue, or MRI, is exactly what it sounds like. It is measuring how much revenue your product or service generates in a one-month time period. MRI is used to track your finances, measure your product or service’s growth, and help you forecast the revenue your company can expect to gain in the upcoming months.
Calculate this with this formula:
Monthly Recurring Revenue = Average Revenue Per Account/Sale x Number of Accounts/Sales in a Month

Purchase Frequency
Tracking how frequently your current customers are making purchases is an important metric to keep an eye on. Knowing in any given period of time how many frequent shoppers you have is key considering that most of a business’s revenue comes from repeat customers rather than new customers.
Calculate customer frequency with this formula:
Number of Orders / Total Number of Customers

Average Order Value
Tracking how much your returning customers are spending on each transaction will help you determine the lifetime value of your customers. Monitoring your customer behavior is a good strategy in general, but when you see how much they spend on average, it helps with many things beyond your customer’s value like which products to focus on and where to upsell.
Find your customer’s average order value with this formula:
Total Revenue Earned / Number of Orders Placed