If You are the founder, senior management leader or head of sales for a traditional business that is being conducted online, then you are more likely to be wondering about strategies to acquire new customers constantly. According to Peter Krasilovsky, chief analyst at Local Onliner, SMBs are more aware of ways to spend on customer acquisition than retention.
You know how painful it is to let customers churn away when they have decided to do so especially after you have invested a lot of time, effort and money in acquiring them. Running an online business is much like running a marathon. To see the finish-line you have to maintain your speed good enough so that you have strength to cross the last mile. Cost of acquiring customers is like the initial sprint in running the online business and could be fatal if it is done excessively. A hope to recover the CAC over customer’s lifetime gets evaporated as customers choose to churn away much before you anticipated. This is making customer retention all the more critical for your business to grow quickly.
Following is a list of segments of SMBs operating in the online space, attempting to make it big. Most of these face the problem of customer churn month after month without a clue as to why customers move on. If you find your business in this list then you are sure to use customer retention strategies right away:
- Online grocery shop
- Online restaurant table booking
- Online laundry service
- Online coaching services
- Online marketing services
- Online shopping/E-commerce
- Social media marketing service
- Online Legal support
- Online Accounting support
- Facility management service
- Entertainment service app
- News aggregator
- Content sharing service
- Book rental app
- Self-drive app
- Broadband Internet service provider
- Cab rentals
- Health activity tracking app
- Online investment/ trading
- Image sharing service
- Beauty and cosmetics
There is at least one example of an established company who is doing wonderfully in each of these segments. It’s all about modeling the leader’s strategies and empowering yourself with required tools to handle customer churn consistently.
Here are 5 specific strategies that can be implemented quickly and will show results right away for your business in terms of better customer retention rate.
- Sell Subscriptions
If you have already heard about selling subscriptions and aren’t doing so already then you are possibly thinking that it’s a cliché. There are more than 20 reasons why you should add subscription model to your business. One of the best reasons subscription models are good for your business is that it provides much needed predictability and visibility in your month on month business. Both these metrics are so loved by your investors, aren’t they? Subscriptions offer just enough value to your customers and help them keep coming back to you, if you are doing well in terms of service/ product quality. Subscriptions are also a great way to bundle multiple offers so that you can do better on up-sell and cross-sell.
- Reward and Celebrate Every Purchase
Customers love to be proven right about their choice of buying during the purchase, after the purchase and when they are up for buying again. Expressing gratitude on every purchase is a great way to start with. Rewarding them on every purchase and extending out any form of celebration is helpful too. The celebration could be a card, banner or asking them why do they love your service/ product so much and share it with their community. There are many ways to celebrate customer decision to do business with you. When customers feel good, they are ready to be your advocates. Advocate customers stick around for longer to fill in the life-time value plus they give referrals.
- Offer Convenience
Just ask your loyal customers why do they continue doing business with you. One of the things that you will hear them saying is “well, it’s quite easy for us to order”.
If you come from the background of engineering, technology then let me say this discretely that convenience isn’t an engineering problem. It’s a consumer behavior aspect and if dealt with in time, you have a higher likelihood of retaining your customers better than any of your competition. To understand what constitutes convenience you must be in the shoes of your customers. While rigidity in offering convenience is the experience-killer, outdoing convenience is also a killer which makes knowing every customer touchpoint a critical factor in effective customer retention.
- Be Responsive
As an SMB one of the reasons why customers do business with you is because you are fast and right. With cloak of app, portal, email many SMBs start building a culture that lowers their responsiveness to their customers. Existing customers love being responded to quickly. Customers do not have patience today and they have multiple options, if you aren’t responsive enough for your customers they are more likely to investigate your competition.
Responsiveness is directly connected to quick turnaround time on customer issue resolution.
For example if you cancelled a ride on Uber and are charged for it, you simply choose the option “I would like a refund” in their help menu, and Uber refunds the money straight back to you, no further questions asked. Though Uber runs highly sophisticated fraud detection and machine learning platform on the backend to ensure that this is not a loophole in their process, the point is that they demonstrate a superb responsiveness which keeps passengers keep using Uber. You may follow what works the best for you while maintaining being responsive as the top priority.
- Keep track of data and identify customer churn
Smart SMB leaders know the importance of data in their journey to be the market leaders. The online businesses particularly generate amazing amount of data for each customer interaction. Take an example of a customer’s interaction with customer support on their purchase queries, purchase process, delivery issues or more details on the products, all these are seeds to what’s coming next in the customer journey i.e. whether they buy from you or not, what would they buy, when would they make next purchase and how much?
Customer interactions have hidden patterns and your online properties should be well equipped to capture these data points. Whether your business is small or large it is in the best interest for you to know in advance which of your customers are likely to buy/ renew in the next cycle with you and who may not – this is called customer churn analysis.
Customer churn analysis will guide the sales and marketing leaders to deploy strategies to better engage with customers who are likely to discontinue, thereby influencing their decisions in favour of giving you another chance.
Customer retention is about adopting one strategy at a time and look at the visible impact. If your business is equipped to hold most of its customers for the longest part of the duration, every dollar in your budget to acquire new customers starts becoming more productive. Data doesn’t lie and therefore having data available to understand which initiative to kick-off first is the key to success in retaining more customers every month. Instead of being overwhelmed about customer retention you could look at retaining just 1% more customers QoQ will give a much higher compounded rate of growth in profitability and market share over 1 year.