What is customer retention and why should I care? Most people are familiar with the leaky bucket metaphor.
You have your trusty bucket that you’re rapidly filling with a hose. Things are going well, the bucket is filling up with water, until you start to notice the water is staying at the same level.
Then, all of a sudden, you’re losing water. Upon inspection, there are holes in the bottom and sides of the bucket. You might try to plug one of the holes with your finger, or, wrap a rag around the bucket but no matter what you do, the water escapes.
This is customer retention.
Or, rather, the relationship between marketing and customer retention gone wrong. Too often, companies are more concerned with acquiring customers and rapidly filling the bucket that they overlook what happens when a prospect becomes a customer. It’s the responsibility of everyone at the company to complement acquisition with retention.
To go further than metaphors, Bain & Company has found that “a 5% increase in customer retention can increase a company’s profitability by 75%”.
In the following section, we’ll share proven strategies we’ve utilized at Tuff and in past positions to increase customer retention and earn the right to growth.
How to improve customer retention
1. Know your target customer like the back of your hand
When you’re working day and night on a product or have your website imprinted on your brain, it can be easy to slip into subjective decisions and designs. You might prefer a certain font or color scheme and think it’s the right choice because it looks better to you. Sometimes, if your customer base is similar to yourself, this can work out okay. However, it’s a big risk.
It’s incredibly important to understand your customer(s) and the job they’re looking to have done. There is an unconscious bias called implicit egotism that explains a tendency of people to prefer things where they have a self-association. For example, if you have testimonials on your website, it’s important the people you have selected to highlight resemble your ideal customers. In order to do this, you need to take the time to identify your target customer and craft an experience tailored to them.
2. Explicitly communicate how you solve their problem
Buffer: “Fully manage all of your social media accounts in one place. No more wasting time, no more logging into multiple social accounts.”
Evernote: “Organize your work and declutter your life. Collect everything that matters in one place and find it when you need it, fast.”
Mailchimp: “Give your customers a clear call to action. With MailChimp, you can create beautiful landing pages that make it easy for people to buy your products or join your list.”
These three companies are leaders in their respective industries. Visiting their home pages, you can quickly scan and find these statements. In all three instances, they’re explicitly speaking to the problem a potential customer might have. With Buffer ‘no more wasting time’, with Evernote ‘declutter your life’, and with Mailchimp ‘make it easy for people to buy your products’.
Our friends over at Buffer have written more on this in a post called ‘People Don’t Buy Products, They Buy Better Versions of Themselves’.
3. Education > Sales
Your success is tied to your customer’s success. A relevant business metric here is Lifetime Value (LTV). The deeper a customer’s work depends on your service or product, the less likely they are to leave you. There’s a saying that ‘you shouldn’t celebrate a product update, celebrate adoption’. And this, really, comes down to communication and education. Do you have targeted in-app messages? What is your onboarding email series like? When is the last time you ran a survey to learn more about your customer’s needs?
4. Prioritize reducing friction over quick customer support
Education and LTV are much easier when you are building and improving a product to increase the core value to your customers. There are a number of companies that have had success through ‘surprise and delight’ gestures. These tend to get more coverage on blogs and in the news and can have a more viral tendency. According to research from Dixon, Toman, and DeLisi published in The Effortless Experience, the true driver of customer retention and loyalty is the ease of getting a problem solved. Is it extremely clear how a customer can get in touch with your support team? Are you letting them pick the support channel that works best for them or forcing them into a channel you’ve decided is best?
5. Throw out the traditional support metrics
As a support lead, it can be really tempting to dedicate more time and energy to tracking and optimizing support metrics like response time, happiness score, etc. These are, of course, helpful to know but long term your customers want a product that works well and solves their problem. The traditional support metrics are more straightforward and depending on the culture of your team you may be receiving pressure to focus on them. But, you’ll have a larger impact, ideally reduce the volume of incoming support queries, and help create a product people need and want by focusing your energy on a solid customer <> product team relationship. This is key to great customer retention.
If you don’t have a process for tracking customer feedback and sharing it with your product team, stop reading this article right now and start building it. Open up Trello and create three columns for: ‘bug report’, ‘product feedback’ and ‘product confusion’. Add a new card to the ‘bug report’ column when there is a repeatable issue with your website, a new card under ‘product feedback’ when a customer writes in with explicit feedback or a feature request, and a new card under ‘product confusion’ when you get the ‘how do I…?’ questions.
Empower your support agents to prioritize asking an extra question to learn more about your customer’s needs rather than focusing on response time.
6. But, still focus on great customer support
It might be a little extreme of us to suggest throwing out traditional support metrics. They have a place and are helpful information but they can’t be your north star. One actionable strategy we’ve seen have a huge impact on retention is related to tracking customer feedback. When you are tracking customer feedback in one location, you have an automatic checklist of customers to follow up with when your team has acted on their feedback. The customer took their time to explicitly let you know how your team could improve, send them a personalized email to let them know you heard them. When a customer feels heard, they’ll stick by you through anything.
Bonus tip: Help Scout makes tracking feedback and following up super easy with their workflows.
7. Test a chatbot
There’s never going to be a future where Artificial Intelligence totally takes over because humans and chatbots are good at different things. Leaning on our strengths and the strengths of chatbots can make for a powerful team. When a chatbot pilot program was initiated in a telco company, it could handle 82% of common queries in customer service. After 5 weeks of tweaking, analyzing, and optimizing by human agents, its success increased to 88%, according to Accenture. Chatbots can help you offer 24/7 support while also freeing up your support agents to handle the more emotionally-driven and empathy-requiring conversations.
8. Use social as a two-way street
Your social media channels need to be more than a megaphone, amplifying your own message. Think about that person you know who is constantly talking about themselves, forgetting to ask about you or how your day was. Your customers want to be heard. Topo Designs, an outdoor apparel company, has someone on their team whose responsibility is to respond to comments and mentions on Instagram. All day long. The ROI might be a little harder to prove but this is how you build loyal customers and advocates.
9. Set customer-centric goals
It’s important to set goals and it’s even more important to keep them aligned with serving your customers.
For example, your digital marketing team might be running a few Pay-Per-Click campaigns. It can be easy to fall into the trap of measuring success based on the number of clicks. And while clicks are really important, converted clicks are even more important. It means you’re helping the customer find the thing that solves their problem.
Set all goals to rely on the customer’s success.
10. Be intentional about how you speak about customers
This strategy takes more than one day, it’s a cultural adjustment. But, one you can immediately address and speak up agains. The way you speak about your customers is going to have an effect on how you treat them and how your company as a whole supports them. Do you hear people around your office talking about ‘that dumb customer’ or how they had to ‘deal’ with someone? You wouldn’t be in business without your customers. Even if it’s subconscious, speaking about your customers with anything but gratitude and respect will carry over to your teams interactions with them and how your team prioritizes customer needs.
11. Marketing + Customer Support = BFF4L
This strategy here is really the big kahuna. All of the previous 10 strategies will be easier to implement when you de-silo your teams and make it easy for them to collaborate on behalf of the customer.
Your marketing team is at the top of the bucket, filling it with water (customers). Your customer support team is inspecting the holes (reasons a customer is leaving).
While holes may be inevitable, they will get filled much quicker and better when these two teams work together. Empower the teams to work together through embedding a customer team member in marketing meetings, have your marketing team deliver support for an hour each week, no matter how you do it provide positive affirmation about the collaboration.
At Tuff, we partner on both acquisition and retention strategy and implementation because we want to offer a damn good, leak-free bucket.
We’d love to work with you.
Schedule a call with our team and we’ll analyze your marketing, product, metrics, and business. Then, present a Growth Plan with actionable strategies to find and keep more engaged customers.
Mary is a growth marketer at Tuff. She specializes in Customer Experience, Email Strategy, Copywriting and Chat. She also runs on coffee and peanut butter pretzels.