September 29, 2016
Increasing your customer retention by just 5 % can result in a 25% to 90% increase in profit. After all, 20% of your most loyal customers bring your business 80% of profits. The question is – how do you foster customer retention after all?
It all starts with improving your customer experience, and using these four strategies can help you retain and grow customers faster than ever before.
Incorporate Social Proof
According to a recent study by Nielsen, 83 % of respondents from 60 countries indicated that recommendations from friends and family remain the strongest purchase decision driving factor. In the same report, 66% of respondents indicated that consumer opinions posted online by their peers encourage them to seal the deal with a certain company.
For your business, utilizing social proof could help drive customers to click the buy button. A few examples include:
- Incorporating testimonials on your product pages, which back up certain product features.
- Publishing case studies from your users highlighting their experience.
- Tapping into influencer marketing or create an ambassador program to spread the word.
- Opening a call for user submissions and curate UGC (user generated content) on your social media.
Work On Your Messaging
There are three main words that get a customer's attention – free, new and instant.
According to a research done by Dan Ariely in the Journal of Economic Behavior and Organization, our brains are wired to reach for the low hanging fruit. Humans tend to seek out objects, which can be gained with the minimal effort or expenditure. In fact, we seek to avoid losses more than attaining gains, even when a loss is actually a great deal (for instance a huge discount).
For businesses, this might mean to hold off on issuing coupon codes or discount details and think about how you can bundle your product with a simple freebie.
Also, our brain hates waiting for something. In fact, waiting makes our frontal cortex feel really uncomfortable. However, a suggestion that we’ll get an immediate reward or value boost our mid-brain activity and makes us feel excited. Pair it with the fact that the modern pace of life has become real’ quick, and you’ll notice how easy it is to retain and convert customers with a promise of instant value.
Novelty is another characteristic that excites our brain. However, some studies prove that novelty tends to die off quickly in material purchases and last longer in “experiential purchases”. To develop repeat customers, begin to think about how you go beyond offering just a service or product, instead sell “the experience”.
Don’t Sell. Educate
Having established relationships with the customer facilitates making a sale. According to the same survey by Nielson, 56% of consumers trust emails they opted-in to receive.
Email marketing generates $38 in ROI for each $1 spent and building your email list should be a priority. Research conducted by TARP Worldwide also highlights that customers enjoy receiving helpful information on how to achieve better results, and recommendations and new product information.
Build Meaningful Connections
Whether it's through content marketing and distributing value or reaching out to your customer's one-on-one, relationships are the bread and butter of one's business. It's important to remember that connections with customers come in many forms. Whether it's providing education to help one's business grow, rewarding a loyal customer with discounts or thanking them publicly, every customer matters.
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