We know that your business works hard to attract customers. Product improvements, social media, customer support, branding, etc. You have probably been investing a lot of time (and money) on these factors, so it just makes sense that once you have found your clients, you want to keep them. This is when a good customer retention strategy might come in handy. So keep reading to know how to improve your CR strategy.
Customer retention defines your company's ability to turn one-time customers into recurrent buyers and increase subscriptions. It is a strong indicator of whether your product or service meets the quality expectations of your target group. Furthermore, it has come to be the central pillar for subscription-based companies and many other service providers.
This term is not just about transactions and numbers. It is about creating positive relationships with your clients. This might be difficult to achieve, especially if you are an online business, and time might be a factor that keeps you from pursuing this goal. However, as they say, Rome wasn't built in a day, and the same goes for any business.
Why should you focus on customer retention?
Sometimes it's easy to think that the more customers you attract, the bigger and better your business would be, but that isn't always true. According to Harvard Business Review, keeping your current customers happy is 5- 25 % less expensive than acquiring new ones. Here's where customer retention can act as a crucial factor for improving your business model.
Saves marketing costs
In recent years, there has been an increase in competition for all industries due to the rise of E-commerce. Hence, low conversion rates and customer acquisition costs are ever rising. This is translated to an increase in time and money for your marketing team to find new clients.
Even if your marketing campaigns are on point, you'll still have to deal with some loss in the process, which means that not everyone who's attracted to your product would turn into actual paying customers. By having a loyal set of clients, you're improving your chances of having a stable revenue.
In addition, existing customers don't require extensive selling efforts. Once your lead has purchased your product, the probability of converting them into a recurrent customer is 60-70%, while the possibility of a new lead buying your product is just between 5-20%, according to a study conducted by Bain & Company.
Gain valuable feedback
Feedback is the Holy grail of companies' growth, and sometimes gathering it can be tricky. If you want to know what's working and what's pushing your users from coming back to you, it's better if you hear it straight from your customer's mouth.
The trust-building process promoted in customer retention creates a feedback channel that has two directions, allowing you to improve and find out the strengths and weaknesses of your brand.
Convert customers into your promoters
Customer retention and customer satisfaction are strongly related. The better the experience is for your clients, the more possibilities there are for repurchasing.
Loyal customers are more likely to recommend your company to friends, family, and colleagues. It's more likely that they would endorse your product creating a positive image for your brand with no added cost.
As you can see, customer retention can become the lifeblood of your company. But what can you do?
When building a customer retention strategy, understanding the customers' journey before and after the purchase is key. Research shows that customers see their interactions with companies as similar to their relations with people.
Hence, they look for brands that are reliable, authentic, and especially aware of what matters to them. For these reasons, it's essential to understand who they are, what they need, and what they want beyond your product.
Once you know your clients, it's about improving your existing interactions with them and how they interact with your product and content. And one of the ways of doing it is by improving your payment processes.
1. Automatized payments
Involuntary churn can happen. This means that although your customer was satisfied with the product or service, there is an external reason why they didn't repurchase. This is particularly true for subscription businesses.
With a classic form of payment, the responsibility of making the transaction falls on the customer. In other words, there is an active payment method. This might lead to consequences, e.g., the customer forgetting to renew the payment, some problems in the transaction, delays, or general irritation about having to repeat the same process over and over.
By automating payments with a recurrent payment method, you invert this responsibility. If that is the case, the customer can still cancel the payment, but you ensure that no involuntary churn messes with your customer retention.
2. Let them choose their payment options
The easier the process is for your customers, the better. When your customer is familiarized with the payment options, it might be easier to allow the purchase without extra effort. In a study by Cardtronics, 7 out of 10 consumers make payment decisions depending on which available payment complied better with their security and commodity standards.
For example, as a payment service provider, Waytobill offers both invoices and cards and other payment methods depending on the country or region, for instance, Autogiro in Sweden.
Furthermore, if your business is subscription-based, you can improve your conversion by allowing your customers to easily upgrade to a recurring payment method.
3. Solve failing payments and be flexible
When analyzing the customer's journey, there are many variables to consider, one of which is the possibility of a failure in payment. Sometimes, even if the client wants to stay, repeated declines in payment approvals, lack of funds, changes in the billing address, etc., might turn this customer down.
For example, 20% of subscriptions worldwide end each year because of credit card expirations. This is why a proper payment service provider that allows you to adapt payments is crucial to avoid involuntary churn.
Allow your customers to modify payments or change their billing details. With the proper tool, you can even help them change to a more suitable payment method.
4. Integrate your billing system with your customer support
There is a fundamental feature that most payment service providers overlook, and that is the importance of data management.
One of the issues with handling customers' data on different platforms is that valuable information can get lost in the process, and you as a merchant might lose control of your clients.
Most customers are channel-agnostic. This means that they look for a consistent experience across the several touchpoints that a sale might entangle. Hence, they will come to you whenever there is a payment error or a query.
If you lack the necessary information to help them because your payment service provider hasn't shared that data, the overall customer satisfaction will decrease and, in turn, affect customer retention.
Having a plug-in system that allows you to control your customers and their information develops your customer service and boosts your brand's image.
Payments are crucial when it comes to improving your customer retention strategy. From automatization to data control, the right payment service provider can help you unleash the full potential of your business so you can focus on your customers and product.