Successful Customer Retention Strategies That Build ROI

As you walk through annual goal setting or strategic planning, how much focus do you place on customer retention? Businesses that have enjoyed sales success typically resort to strategies that are heavily or solely reliant on customer acquisition, when the long term economic rewards come from the ability to maximize the lifetime value of customers. A commonly referenced statistic in business states that acquiring new customers can be 5 to 25 times more expensive than retaining existing customers. To emphasize the impact of that investment, according to Harvard Business Review, research done by Frederic Reichheld of Bain & Company (the inventor of Net Promoter Score) shows that increasing customer retention rates by 5% increases profits by 25% – 95% (based on your industry). This is why retention is one of – if not, the single most important – “skill” for any business to master.

Retention, like any skill, requires practice. It requires effort. And most of all, it requires being highly intentional. A robust strategy with multiple penetration points can help to maintain an open dialogue with your customers, instills trust in your brand, and enables you to deliver a unique and valuable service. All organizations, no matter the industry, must take a discerning look at their current processes in order to ensure they are delivering a highly personalized and exceptional customer experience. All of these tactics can be covered with a solid customer retention strategy.

Let’s take a look at six customer retention tactics proven to be successful in building ROI for our customers: Gather Customer Feedback, Commit to Customer Intimacy, Prioritize Customer Service, Offer Customer Education, Create Customer Reporting and Grow a Customer Retention Program.

Gather Customer Feedback

Having a comprehensive understanding of your customer experience is essential for maintaining strong customer retention. This is why we often recommend implementing Net Promoter Score (NPS) to gather customer feedback. NPS is a single question survey which measures customer loyalty by asking how likely the customer is to refer your business/service on a scale of 0-10 to a friend or a colleague. A score of 0-6 ranks the customer as “Detractors”, these customers are considered to be actively seeking another solution and could potentially speak ill of your brand. A score of 7-8 is considered to be “Passive” a neutral score but it is assumed they would leave your brand if “conditions” (price, circumstance etc.) were enticing, and a 9-10 is a “Promoter” or loyal enthusiast who will continue to buy and refer others. The NPS formula is calculated by subtracting the percentage of detractors from the percentage of promoters. The results are projected on a scale ranging from -100 to +100 and businesses from all industries land all over the scale. The results of this survey give insight into how you are performing and provide telling insight into your relationship with your customers. 

A survey like NPS or another form of user testing can open up opportunities to reach out to those who gave you a low score or negative feedback and ask what you could do better. Not only is this an opportunity to learn but serves as an early warning sign for accounts that may be less secure than you may assume.  It also gives you the opportunity to show your customers you listen to their feedback, care about their experience, and strive to give them the best service possible by taking action. For instance, a promoter might receive a personalized message from your head of marketing letting them know that you appreciate the feedback and would love it if they could participate in a testimonial. On the other hand, a detractor may get a phone call from the CEO asking what exactly it is they could do better and showing how you are improving. Passives could be flagged internally, and a customer service leader could proactively reach out to build a closer relationship with said customer; the “passives” are on the fence, your actions (or lack thereof) determine if they grow into promoters or fall back to detractors.

Another way to receive high quality feedback is to hire an unbiased third party, such as Cosgrove Partners, to call on customers and conduct Voice of the Customer interviews. This gives you the opportunity to tailor specific questions that get below the surface as to what your customers care about and why – what type of service brings value to their business, and what can you do to meet those needs? Research like this is often valuable when augmented with NPS data-one providing quantitative feedback, the other more qualitative. Providing an unbiased third party puts your customers at ease and allows for them to share feedback that either they are uncomfortable sharing or withhold in an effort to protect the feelings of someone from your business they interact with on a regular basis.

Both of these tactics are strong examples of ways to build your customer retention strategy. Customer feedback is the only way to find trends that can enhance your customer experience. Use the data you find to celebrate the good feedback with your team and address the negative in order to constantly improve.

Commit to Customer Intimacy

Customer intimacy is your ability to understand your customers and their business priorities so well that you can proactively anticipate their needs. Not to be confused with customer service, customer intimacy is the core foundational element that allows for customer service to thrive. It is how we educate ourselves with the details, motivators, pain points, etc. of each customer and use those to shape our offering, our processes, our strategies and more. 

One way to get ahead of this strategy is to leverage account management frameworks and strategies to gain additional contacts within customer accounts. When you understand a customer’s unique priorities, pain points and their decision making process you improve your credibility and ability to create value.

In addition, the more you know about your customers and continue to prioritize open lines of communication, you are able to build trust. It is important to keep in mind that with many customers, trust has to be earned over time through consistency and reliability. Their willingness to sign a contract or engage with your services is just the first step. Building true trust and accountability takes time and it starts with having a deep knowledge and understanding of your organization’s core values. It is one thing to get someone to agree to a first date, it takes a different set of skills, effort, transparency and mutual trust to end up in a long-term relationship or a marriage. 

Once you share your core values with your customer, it is absolutely vital that they are acted upon and you follow through. Holding true to your values and your commitments keeps you accountable and automatically builds that trust bond between you and your customer. If a customer trusts you, they are that much more likely to renew and be a customer for life.

Another important component to building trust is owning up to your mistakes. Humility and integrity go a long way when it comes to the longevity of a business, and it is evident to those who are closest to you – your customers. 

Prioritize Customer Service

Consider this: just like every other relationship in your life, the ones that last and thrive are the ones you pour attention into. Being intentional goes a long way. There are many ways to do this; both grand gestures and small efforts make a difference. If you are a commercial laundry, customer retention through relationships leverages one of the strengths you carry innately, that being customer intimacy. While large national companies have scale and pricing advantages, family-owned businesses and regional operators have innately more intimate relationships with customers. You know them differently. They recognize names and faces of your key employees; they can set their watch by your routemen’s arrival each week.

You are memorable. Using this to your advantage is a fantastic (and profitable) strategy when it comes to retaining these customers for years to come.

For example, one of Cosgrove Partners’ clients has an outstanding customer retention rate of 98%. How do they accomplish this? Effort and intentionality. They host picnics and barbecues for key customers, which also provides an opportunity for facility tours of the plant. They have even been known to tow a large grill over state lines to host a cook-out with customers at their locations. This provides great face-time for employees with valued customer contacts and is a true act of service and appreciation for their loyalty.

While those gestures are invaluable, the scalability of an effort like that does not reach every single customer. Fortunately, other outreach efforts do not always require a large budget or time investment. Basic acts of customer service go a long way as well. Making sure your team keeps good notes, and checking in with customers every few months is a simple and free way to keep a relationship active. This helps with your record-keeping but, even more than that, remembering when a customer’s daughter graduates from high school or celebrating a business’ 10th anniversary humanizes you and your brand. Putting it more directly, it is much harder to end a relationship with a vendor that has celebrated your personal accomplishments with you.

Basic acts of customer service that display a genuine and selfless interest in your customer’s business or personal life solidifies your relationship. Thank-you cards, creating customer spotlights, or being transparent about upcoming changes with their account are all simple efforts that continue to establish trust and build the foundation for great customer relationships.

Offer Customer Education

Customer education builds customer retention by showing your customer base you are invested in the success of their business. Especially if you can find a way to offer your customers free training or similar needs on specialty services in your industry. Research regulatory and compliance topics that impact the industries that you serve, in an increasingly regulated world, being the expert that a customer turns to in a time of confusion can make you an invaluable partner. A Cosgrove Partners client in the remediation and restoration space serves customers in the commercial and property management sectors. As a way to build relationships with these customers and potential customers the company hosts or sponsors classes where they bring in speakers or specialists that allow for their customers to receive Continuing Education (CE) credits needed for their jobs. While this is not directly related to the work or service our client provides to their customers, it creates value for them, builds trust and demonstrates that they understand the industries they serve.

Find expert leaders in your organization who are great teachers. You may find that your customers depend on your continuing education program to stand alone in the marketplace, and therefore continue to work with you, and refer you to others year after year. Showing that you are the industry expert through education programs and training builds trust between your customer and your brand. Developing a program to showcase that expertise will not only help retain customers but create raving fans. 

Create Customer Reporting

In addition to identifying opportunities to educate your customer base it is important to share with your customers all that you do “behind the scenes” to enable their success. Report cards are a fantastic tool to leverage to accomplish this. Rather than a report card where you assign a grade or feedback for your customers, consider grading yourself. This is a unique opportunity to highlight all of the things you do for a customer that they may not remember over time and provides a way for you to remind them of the investment you continually make on their behalf without feeling like you are boasting. As we mentioned earlier, oftentimes the value you create for customers is achieved “behind the scenes”. If you are doing your job well, they likely do not know everything you do to serve them. Unfortunately, out of sight can mean out of mind.

Proactively reminding customers of the steps you take and investments you make to serve them well allows you to ward off retention issues. If you made an extra delivery trip over a holiday weekend because they mis-judged inventory or if you frequently took calls after hours to assist them with their needs it is important to document these times you go above and beyond. You can do this through improved tracking and data record keeping internally and transforming these into reports you share with customers on a monthly, quarterly or annual basis. 

Grow a Customer Retention Program

Technically, any of the already stated tactics above could be different facets of your greater customer retention strategy. In addition,  there are countless established methods that you can take on as a customer retention program if they fit the needs of your business model.

A customer retention loyalty program incentivizes the buyer to continually purchase or renew. Take an airline, for example, loyalty programs that give flier miles, perks and flying advantages if you spend with them over other airlines are highly motivating.

Other programs could include a customer round table or advisory board. Show the buyer you value their expertise and feedback and in turn you receive their loyalty. Another program we have helped clients implement is a quarterly scorecard, a report presented to customers on a regular basis that scores your performance where it matters to them, so that they can see where you are succeeding, if and where you are underperforming, and what you are doing to improve. This effort helps to keep you and the value you create top of mind when a competitor comes in and offers a discount. There are referral bonus programs that reward customers who will promote your service and assist you in growing your customer base.

Adopting every single strategy to improve your customer retention would be incredibly difficult to scale and in turn be less effective than starting small. Consider the saying, “It is hard to chase two rabbits and catch one”. However, think about each of these customer retention strategies carefully in relation to your buyer personas and business goals to determine which one or few will be most successful for your business and customer base.

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If you have questions about customer retention or other sales and account management training tools, feel free to reach out directly – we’d love to chat with you! info@cosgrovepartners.com