No matter where your business is in the world, customers play a big role in the success (or failure) of your business endeavor. Thus, it only makes sense that much attention and importance should be given to them. And the work involved in accomplishing that doesn’t stop once you’ve converted social media followers or site visitors into actual paying customers, you also have to continue to work for their loyalty. In the long run, you not only have to know about the customer retention rate formula, you also have to find ways to improve your business’s customer rate so that you can ensure a better outcome for all your business endeavors.
Customer Retention Rate
Customer retention is something that you have to do as a business owner. No industry or business can survive without earning the trust, confidence and respect of their customers. And while you can earn back what you invested by a couple of surges in sales and profit, you won’t be able to sustain your business if you don’t find a way to encourage retention. Your marketing strategies should not just be focused on inviting customers, it also needs to be tailored to encourage your previous or current customers to stay that way and continue to support your business.
When you calculate your customer retention rate, you gather information about how your business is doing in this aspect. This customer rate will tell you information about how your customers are reacting to your actions and decisions, about any problems in your business, and ultimately, give you an idea of how to improve your customer service. Also, understanding what your customer rate means will help you gain an understanding of which strategies are working most effectively for your customers and which are not working at all. It can also serve as a basis for forecasts and for benchmarking. It can give you the foundation for new strategies that you need to implement or consider doing. Knowing all about your customer rate will help you improve it. And if improving it would give your business more loyal customers that may sustain your business in the long-haul.
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How To Calculate Customer Retention Rate?
The customer retention rate formula involves three factors:
- Your number of customers at the end of the period (E)
- Your number of new customers acquired during period (N)
- Your number of customers at the start of the period (S)
This would give you an idea of how many customers you lost and gained in the industry. After identifying these three factors, you need to deduct your new customers from the number of your customers by the end of the period. You then need to divide this number by the number of customers you had going in. You then divide this by 100 in order to get the percentage rate. The retention rate formula can simply be written as: [ (E-N) / S ) x 100 ].
It is important to note that you have to manage your expectations after you calculate customer retention rate of your business at any point in time. You have to remember that a 100% customer rate is almost not realistic. To get a better understanding of the number that your retention rate formula gave you, try to find out what the industry’s average and work your expectations out from there.
Improve Your Customer Rate with These Strategies
Your customer retention rate is easy to calculate, but it’s not a smooth process to improve it. You are facing a long road ahead and it won’t always be easy. But here are some tips and strategies that may help you as you travel down this road.
1. Good Customer Service
Similar to how you earn customers, good customer service is also key to earning their loyalty. Putting your customers’ needs first will help you make them feel valued. And if they feel valued, they become more attached and attracted to your business. By giving them the attention and time they deserve, you create a brand image for your business. One that caters to customer satisfaction and that values their customers enough to put them first, which ultimately allows you to improve your customer retention rate. You can accomplish this by always tailoring your advertisements accordingly. Make sure that they won’t have any trouble navigating through your website and your online store. And if ever they have any trouble there or with the products/services that you have delivered, make sure that they have an avenue to do that. You also want to respond as quickly as you can to any of their concerns or inquiries. Besides adding a contact form for them to contact you, you can even add a live chat feature on your website so that your customers can easily contact you.
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2. Start a Loyalty Program
While incentives for all your customers are good for your business, your customer rate can significantly improve if you start a loyalty program. While you indeed have earned their loyalty, it is still something that you should be thankful for. And what better way to give your customers your gratitude than to give them benefits or incentives. If they have been a returning customer, then they have been improving your customer retention rate. And you can encourage more of this by giving them discounts or coupons for certain promos that are exclusive to them only. You can attach this to their next purchases or you can even send the coupons to their emails - basically giving them a surprise gift. In the long run, this loyalty program would help you encourage more customers to be loyal to you too.
3. Collect Customer Feedback
Customer feedback is important in any aspect of your business. It is not only useful for gaining insights about the quality of your products and services, it can also be helpful in improving your customer retention rate. You can integrate a product reviews feature on your website. This will allow your customers to rate your products or services after they have received them. But aside from asking them about the products itself, you can also encourage them to make comments about their whole experience. You can add a sign-up form at the end of your site and allow them to leave any message or feedback for you. In addition, your customer rate might also be improved if you can display some of the good feedback you have received throughout the years. This can encourage more of your site visitors to try and become your customers.
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4. Benchmarking
Knowing your playing field is one of the most important aspects of business. And in order to not just play in the game but to also win in the game, you need to be aware of all the other players in the field with you. Taking a look at the industry will help you gain an insight about how to further improve your customer retention rate. Benchmarking will let you know what your competitors are doing and what they are not doing well or at all. By doing this, you give your business an opportunity to grow and be better. It will help you see what else you can do to set yourself apart from the competition or what you can do to fill the gaps that they are leaving. This can increase your customer rate because the fewer customers that go to them, the more goes to you. It is not an easy job to do, but it most definitely will be worth it in the long run.
5. Be More Active On Social Media
Your online presence should not be limited to just your website. While a business website with an integration of an online store is vital to your business’ success, you have to stretch out and reach more. Social media is a growing community and its popularity and usefulness for ecommerce continues to rise. If you don’t keep up with such demands, you might lose customers instead of increasing your customer retention rate. Try to be as active as you can in the different social media platforms. This will help you reach more customers and connect with them even more. You can even add social media icons to your website, or even a social media feed, that will help your customers see how present you are in the online community. And thus, they might be more encouraged to be a loyal customer and follower of your brand and significantly increase your customer rate.
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6. Reach Out to Your Customers
Besides chatting with them or interacting with them on social media, you can also proactively reach out to them. You can use email marketing and/or business SMS messaging to reach and talk to more of your customers. By doing so, you make them feel more valued and connected. It would give them the impression that you care about them and that it is important to you that their experience is always good. This can improve your customer retention rate because a good customer experience is always encouraging. You can earn their customer loyalty and significantly increase your customer rate.
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7. Produce Good Content
You already have a business website and different social media accounts. But it is not enough for you to just have them on hand for your business to grow and your customer retention rate to go higher. You can’t really have an online presence without actually being present. Thus, you have to keep producing good content that your customers will enjoy and look forward to. Images and videos are always good ideas to put out into the world. You can also benefit from writing blogs for your business. It can all be about your business, your products, and how customers can take advantage of all that you offer. If you can accommodate and answer to their needs, then you are setting yourself up to improve your customer rate and ultimately, your business.
Strikingly is a website builder that you can use to create and edit a website where you can execute these strategies for the improvement of your customer retention rate. It won’t be a simple path, but nothing worthy ever just falls from out of the sky. We assure you that with the right tools, like Strikingly, you can do the most amazing things for your business. Sign up now, improve your customer retention rate, and grow your business.
