Two words dominate the discourse today: Profitable. Growth.
And customer retention is critical for sustainable business growth and profitability. Did you know that repeat customers generate over 40% of revenue and have significantly higher lifetime value compared to newly acquired customers?
Even a small 5% increase in customer retention rates can lift profits by an impressive 25-95%. Despite this, many companies still focus the majority of their efforts and budget on customer acquisition. In fact, 60-70% of new customers never return to make a second purchase.
In contrast, loyal customers are the lifeblood of a thriving business:
- They spend 10x more than new customers
- 50% are more likely to try new products and services
- 65% are motivated by exclusive deals and promotions
So what can you do in 2024 to retain more of your hard-earned customers and reap the benefits of improved loyalty? Here are some proven customer retention strategies to focus on.
Digitally Reward Your Best Customers
One of the more effective ways to make customers feel valued is to surprise and delight them with digital rewards. Research shows that 6 out of 10 consumers cite surprise rewards as a top reason they stay loyal to brands.
Some ideas for digital rewards:
- A bonus for new members on their first purchase
- Loyalty points for every purchase that can be redeemed for discounts
- An exclusive birthday offer or gift
- Referral incentives for recommending your brand to others
Launch a Subscription Program
Shifting customers from one-time to recurring purchases is a powerful way to boost retention. 70% of business leaders say subscriptions will be key to their future growth.
Subscription programs drive ongoing brand engagement and make it easy for customers to keep buying from you over time. This predictable revenue stream and “sticky” customer relationship is invaluable. Consider what kind of subscription could work for your products or services.
Measure and Track Retention Metrics
What gets measured gets managed. To improve customer retention, closely track key metrics like:
- Repeat purchase rate
- Average order value
- Purchase frequency
- Customer lifetime value
- Churn or attrition rate
Benchmark your performance and monitor how these trend over time, especially as you implement new retention strategies. This will help you understand what’s working and where you have room for improvement.
Re-Engage Lapsed Customers
Don’t give up on customers who haven’t purchased recently. It costs far less to reactivate a lapsed customer than to acquire a new one. Reach out with personalized “we miss you” messages and an enticing offer to bring them back.
Analyze your customer data to identify common points where customers tend to drop off so you can proactively intervene. The goal is to extend the lifetime value of every hard-won customer.
Deliver Excellent Customer Service
Retaining customers often comes down to the quality of your customer service and support. Make it easy for customers to get help when they need it via their preferred communication channels – phone, email, chat, social media, etc.
Respond promptly to inquiries and go above and beyond to resolve issues. Gather feedback regularly and act on it to continuously improve the customer experience. Customers who feel heard and cared for are far more likely to stick with you.
The Bottom Line
Focusing on customer retention is one of the smartest investments you can make in your business. You’ve already done the hard work of acquiring customers – now make sure you keep them.
Even a modest increase in retention will pay off in higher customer lifetime value and revenue. Treat your existing customers like VIPs and give them plenty of reasons to keep choosing your brand again and again.
Implement these customer retention strategies consistently and watch your loyalty metrics climb. The results will be well worth it – for your customers and your bottom line.
At Ethos Support, we train our agents on the importance of customer retention for long-term success. Want to level up your CX? Let’s talk!
