What is Customer Retention Management and Why Does it Matter?
As the economy grows increasingly customer-centric, customer retention becomes more vital to the success of enterprises. Repeat customers provide greater value at a lower cost than those who buy something once and leave. This means that good customer retention management is necessary for maximizing financial growth, minimizing wasted resources, and optimizing the customer experience. Optimizing customer retention depends on your company’s ability to consistently provide both a quality experience and offerings that keep customers coming back.
What is Customer Retention Management?
Customer retention management is about keeping customers interested and invested in what your enterprise has to offer. An environment where your customers feel satisfied, supported, and inspired will keep them coming back to you for more great solutions instead of turning to one of your competitors in hopes of finding something better.
Customers look for quality above all else. Your customer success team’s priority should be to ensure that your customers consistently experience the best of what you have to offer. This includes the client’s experiences with your team as well as with the products or services they purchase. The better your customers feel about their relationship with your enterprise, the more likely they are to renew time and time again.
Why Your Enterprise Needs Customer Retention
While it still takes work to keep customers coming back, it is nothing compared to the cost of bringing first-time customers into the fold. In fact, new leads can be up to 25 times more expensive to acquire than existing customers are to retain. Losing customers is just as bad—in the U.S. alone, it is estimated that companies have lost up to $1.6 trillion due to customers leaving them for competitors offering better service.
That is not to say that there is no value in drawing in new customers. Every first-time customer is also a potential long-term customer. Even if a customer does not return you should strive to ensure they leave with a good impression. You may not be a perfect fit, but if you provide excellent service, they may still recommend your enterprise to others, potentially bolstering your reputation and increasing sales. As such, both the sales team and the CS team are critical components of your enterprise.
Remember that fostering long-term customer relationships tends to prove extremely valuable on both sides. Your customers benefit from the convenience and peace of mind of no longer having to shop around, and you will be able to grow your enterprise along with your customers. Repeat customers are also more likely to refer your service to others, as they know better than anyone how your company delivers on its promises—which saves your team precious time, energy, and money while boosting your enterprise’s reputation. Bonus: repeat customers usually spend more, further demonstrating the value of retention.
Customer Retention Management Best Practices
Building lasting connections with your customers requires dedication and attentiveness. In order to maximize your customer retention rate, certain best practices can help set you and your team up for success:
- Focus on relationships, not transactions. While tracking purchases and revenue is an important element of customer retention management, it is even more valuable to cultivate a company culture that revolves around what your team can do for your customers. It is never just about what your customers can do for you. Ensure that your team’s number one priority is maintaining and improving the customer experience.
- Value versatility and scalability. Your strategy will naturally need to evolve as you gain greater insight into your customers’ needs, which also tend to change over time. Your team needs to be ready to adapt to these changes, whether they are gradual shifts or sudden pivots. Find ways for your team to not only make changes—such as creating new campaigns or altering onboarding steps—but also to measure the results of these changes and continue to adapt as needed. Your strategy and the technology that supports it should be scalable and able to support your team’s changing internal goals.
- Streamline processes. Your team should have standard processes in place everything from adopting and nurturing new customers to identifying risk factors and preventing churn. Equipping your team with a CS solution that can further streamline these processes and facilitate clear communication ensures efficient operations.
- Remember that retention is a journey, not a destination. A key component of retaining customers is being able to see exactly where they are in their customer journey at any given time. Utilizing technology that provides easy access to this information is important—but even more important is ensuring that your team understands this information in context. Customers do not remain at a fixed point once you have established a relationship, and the customer journey is not linear. Your team should always be aware of not just where your customers stand but also where they are headed—and how to ensure their journey does not lead them out the door.
The best way to motivate customers to stay is to demonstrate that you are their best option. Integrating these tried-and-true best practices into your standard operations and equipping your team with technology that supports these practices is the best way to achieve this goal. Your team’s customer success software should be capable of painting detailed portraits of individual customers as well as providing a clear overview of your overall retention rates. For the best results, look for software that facilitates communication across channels and offers an early warning system that can alert team members to red flags in customer behavior and suggest effective next steps.
In today’s economy, customer retention walks hand-in-hand with business success. The happier your customers are, the more willing they will be to continue to support your enterprise—and to spread the good word that will inspire yet more customers to come knocking at your door. Inspiring the customers you already have to continue being your customers plants the seed for exponential growth—all your team needs to do is make sure those seeds have what they need to thrive.
Totango is proud to provide leading B2B enterprises with top-quality customer success solutions. Request a demo to experience our innovative software firsthand. You can also explore Spark to learn more about how our solutions can help boost retention rates.