6 customer retention strategies used by businesses that built loyalty
Fostering customer relationships that last through times of prosperity as well as uncertainty starts with incorporating a set of skills and strategies to reduce customer churn and build loyalty
Published May 12, 2020
Last modified June 11, 2020
Businesses tend to think of customer retention as a metric, losing sight of what matters the most: their customers. It’s true that improving customer retention positively impacts revenue—research by Bain & Company found that increasing customer retention rates by just 5% can boost profits by up to 95%. But at its core, customer retention is about building lasting relationships with your customers that make them feel valued. This requires you to think of your customers as people, as opposed to a percentage, conversion, ticket, or sale.
Fostering the kinds of customer relationships that last through times of prosperity as well as uncertainty starts with incorporating a set of skills and strategies to reduce customer churn and build loyalty.
Customer retention skills
Retaining customers isn’t a responsibility that falls on any single part of your organization. It involves all teams bringing their unique expertise together to create a great experience—from your customer service team’s ability to “read” a customer’s emotional state to your sales team’s ability to build rapport and your marketing team’s ability to be agile during a crisis. While each team brings a different flavor to your customer experience recipe, improving customer retention starts with incorporating a few essential skills—or ingredients—across the business.
Customer-focus describes a company’s ability to adjust its focus from the needs of the business to the needs of the customer. It requires teams to evaluate the customer journey from the outside-in. Zendesk’s Chief Information Officer, Colleen Berube, puts it best: reframe the conversation to start with “what is the experience our customers should have?”
From the customer’s perspective, transparency builds trust. For customer service, this might mean owning up to mistakes when customers complain or responding to negative reviews with a solution rather than removing them from your website. In retention marketing, it involves committing to honesty in campaigns, and in sales, it includes refraining from over-selling a product or service you’re unsure the business can deliver on.
Companies with high customer retention rates are constantly strengthening their empathy for their customers. If you can feel the pain points of your customer, you’ll understand them better—whether that’s being patient with a difficult customer or being extra cautious of the tone of your marketing campaigns during a pandemic.
6 examples of customer retention strategies used by businesses that built loyalty
Businesses often narrowly focus their strategies on growth and what it takes to get a potential customer in the door. But only investing in customer acquisition and not prioritizing your existing customers doesn’t build loyalty and isn’t cost-effective. In fact, acquiring a new customer is five to 25 times more expensive than retaining an existing one.
Retaining customers shouldn’t be random—it requires teams to use their customer-focus, transparency, and empathy skills while being strategic in how they do so. “Customer retention strategies are programs or activities put in place to reduce customer churn and retain as many customers as possible,” explained Stephanie Lee, Sr. Lifecycle Marketing Manager at Zendesk. Here are 6 examples of strategies to elevate your customer retention game.
Implement a Voice of Customer (VoC) program
Customers aren’t likely to stick around if they don’t feel heard. A VoC program enables you to foster a feedback loop with your customers by making them active participants in your brand. This involves using insights from your customer service analytics and satisfaction surveys to capture customer feedback, and then incorporate it across the business. “VoC programs are an important customer retention strategy because they give customers a seat at the table,” explained Lee.
For example, at Vimeo, support team members are looped in before every product launch to look at designs, anticipate pain points, and voice common feature requests from customers. After launch, the support team shares how customers are receiving the new feature or product, tracking any pain points or issues.
Build trust through knowledge and community
According to Zendesk’s Customer Experience Trends Report, 2020, customers prefer to help themselves—yet only a third of companies are delivering on customer expectations when it comes to self-service.
Harnessing the power of self-service with a knowledge base builds trust by empowering your customers with a one-stop-shop for information they know they can turn to whenever they get stuck. And forums build in peer-to-peer support, fostering brand loyalty through community.
Canva regularly updates its knowledge base with content tailored to where a user is in the customer journey. This includes specific articles where a new customer can find tips for getting started during the onboarding process.
Focus on the human touch
A study by Deloitte revealed that emotional connections are a powerful driver of customer loyalty—and even outperform discount incentives like loyalty rewards. This requires brands to think beyond the kind of “buy five coffees, get one free” loyalty program and build real, human relationships.
“Making personal connections with customers that go beyond your actual product is essential to retaining customers,” said Lee. “The most successful retention efforts build interpersonal rather than transactional relationships with your customers.”
Since your agents are on the frontlines interacting with your community of customers directly, they play an important role in fostering human connections with your customers. Thrive Market trains its agents to become knowledgeable about natural foods because its members value understanding where their food comes from. This enables its customer service team to relate to customers on a more human level by engaging them in things they are passionate about.
As part of Birchbox’s Service Recovery Program, its agents personally follow up with customers who rated their initial interaction with a Discovery Specialist poorly. Zappos sends customers flowers when they express to an agent that they need help returning shoes for a loved one they lost.
“The most successful retention efforts build interpersonal rather than transactional relationships with your customers.”
Stephanie Lee, Sr. Lifecycle Marketing Manager, Zendesk
Leverage AI to create proactive experiences
Another important retention strategy is being proactive. With 89% of companies competing on the basis of customer experience, simply reacting to customers’ needs isn’t enough to differentiate. Customer expectations are higher than ever—so much so that customers today expect you to provide them with what they need before they even ask for it.
Technology can help—and 48% of customers are more likely to be loyal to the brands that use the latest technology to engage and connect with them. Ultra Mobile deployed a chatbot to gather information from customers on its website and connect them with the right person, right away, before they bounce. Pinterest’s agents use AI to predict customer satisfaction during support conversations, before a customer takes a survey.
Communicate quickly and according to your customers’ channels of choice
Zendesk research found that communicating quickly and according to your customers’ channels of choice is a powerful driver of loyalty. A great customer experience is an effortless one, and customers increasingly expect your business to meet them wherever they are, whether that’s on your mobile app, social media, or other popular messaging apps like Whatsapp. Delivering the effortless experience your customers expect across channels requires a connective layer of tissue that arms agents with context and conversation history—if someone has to repeat themselves three different times to three different departments they aren't likely to become a repeat customer.
To meet its customers wherever they are across the globe, Airbnb provides help through the phone, email, social media, SMS, and social messaging channels. It’s able to deliver an effortless experience on the front through its sophisticated customer support software on the back that connects channels with the full view of the customer. This means that agents have the context they need to effectively help a customer no matter what channel that customer reaches out on, such as the urgency of the problem, if a customer is on a trip or if they’re preparing for one, and their history with Airbnb.
Use data to personalize the customer experience
80% of customers are more likely to give their business to a brand that delivers a personalized experience. But to reap the power of personalization, you’ll need to eliminate silos and connect data from across the customer journey. This involves combining customer data from different sources, such as your customer support software, marketing automation system, or order management tool. Building a connected ecosystem of customer data opens up possibilities like sending personalized promotions to customers with recently closed tickets and ensuring that your customer service team doesn’t offer a customer a promotion if your email marketing team already did.
“Personalization is an important retention strategy. This means delivering the right message, at the right time. For example, tailoring an email to where a customer is in the customer journey, as opposed to sending the same email blast across your entire customer base,” said Lee. As part of Freshly’s win-back strategy, its customer service team sends recently canceled customers messages tailored to the specific reason they canceled, incentivizing them to reactivate.
Improving customer retention starts with building better relationships. When you treat your customers like humans as opposed to a number, they’ll feel a deeper connection to your business.