Top 10 Best Practices to Increase Customer Retention

Conduct Customer Migration Analysis

Customer migration analysis essentially provides you with a snapshot of how well your customer retention tactics are working and helps you identify areas for improvement. Specifically, this analysis shows you how customers are moving in and out of specific spending tiers that you define. By tracking this migration, you can understand which customers are shifting downward in spending, which are trending upward or holding steady — and what you should do about it.

Where a customer falls in the customer migration path helps determine your retention strategy for that individual.

One important point that customer migration analysis helps drive home is this: Not every customer is worth saving. For example, low-value or cherry-picker customers who become inactive may not be worth the effort of trying to retain. Instead, you can redirect resources you would have used on them toward strengthening relationships with best customers and encouraging look-alikes to shift up to the top tier.

On the other hand, if you find good to great customers who are becoming inactive, you’ll want to dig deeper to discover why they’re lapsing. Then create an intervention strategy to re-engage them before it’s too late.

Gather and Analyze Customer Data

Your customer data is, of course, critical to helping you build the customer journey maps discussed earlier and developing your customer migration analysis and strategies. But analyzing data can also reveal problems you didn’t know existed, as well as reasons for underlying issues you do know about. It can help you find patterns of behavior so you can pinpoint weak spots in your customer retention efforts and act on them.

For instance, you may find a group of customers who seem to have attrited. You may want to review the products they purchased in their last transaction to see if there are any commonalities that may uncover a problem with the quality of a particular product.

Or you may identify a segment that appears inactive, but actually represents orphaned accounts. You might then discover that those same customers are active under different accounts.

Customer data can also allow you to segment your customer base so that you can better target offers, communications and other interactions with more relevancy and personalization. This brings you closer to the one-on-one experiences that are the bedrock of customer retention — particularly today.

Focus on the Customer Experience

Customer experience is critical to your efforts to increase customer retention. And customer service is, of course, central to the customer experience. In fact, excellent service can drive a 9 percent lift in spend, according to an American Express study.² On the flip side, for every customer who complains, another 26 will simply leave you without a word³ — emphasizing the importance of truly understanding customer satisfaction.

The front-line of your customer experience/customer service focus should be your front-line employees. It’s no secret that happy employees can make happy customers. So give them the training, information and resources needed to do their job and provide customers with personal service. Ensure they understand the important role they play in retaining customers.

Then go a step further and work to instill in your employees a passion for your company, your products or your services. In doing so, you can turn employees into brand ambassadors who will naturally share their enthusiasm with customers and through every customer interaction.

Developing this personal approach and keeping the human touch part of your customer experience is essential to driving loyalty. In fact, a Verint Systems study showed that 79 percent of customers feel a human touch should remain part of customer service.⁴ And in an Econsultancy survey, live chat ranked highest of all customer service channels in terms of customer satisfaction, with email support coming in second.⁵ (That said, it’s a good idea to also provide customers with self-service support through FAQs and the like.)

Calyx Flowers does a great job of incorporating a personal touch into customer service. They’ve actually created a “Super Q” team of service reps to handle more complicated customer requests.

In today’s world, it’s also imperative to offer integrated omni-channel support — including mobile and social access. In fact, a Microsoft publication stated that 90 percent of consumers simply expect the entire customer experience, not only your customer service, to be consistent and continuous across all the channels where your brand lives.

Reward Customers

Customer retention best practices are all about building loyalty — and rewards can go a long way toward giving customers a reason to keep coming back for more. In fact, it’s been shown that getting a reward delivers a hit of dopamine to the customer’s brain. And in that moment, the customer wants more, creating a biochemical and emotional reason to return to your store.

You can build these special treats into a formal loyalty program or simply find ways to periodically surprise and delight your best customers. Either way, create a mix of hard benefits — like free products and special discounts — and soft benefits, which can run the gamut from recognizing someone as a best customer, to sending personal thank you notes, to private shopping services.

Women’s fashion retailer Talbots uses a mix of hard benefits (offers, etc.) and soft benefits (sneak peeks, etc.) to engage customers.

Don’t be afraid to innovate here. For example, high-end men’s apparel retailer Mizzen+Main has a unique 24/7 concierge service for its top customers. So if, for instance, you’re traveling to the West Coast and spill dinner on your shirt en route, a replacement can be waiting for you on arrival.

Involve Customers

Just as important as outward-bound communication is encouraging inward-bound communication from your customers. Proactively reach out in multiple forms to solicit feedback and constructive criticism.

You can invite customers to provide input on product development, service enhancements and more through vehicles such as traditional surveys and focus groups, as well as online forums, live chats and social messaging.

Mizzen & Main again presents a notable example. They ask some top customers — their “VIP team” — to coordinate with their innovation team and act as unofficial beta testers for new products.

You can also ask a select group of customers to participate in an advisory board or voice-of-customer initiative. But also look for ways to interact with customers on a less formal level. For instance, hold an annual customer appreciation picnic or invite a small group of top customers to have lunch with regional managers.

Evolve Your Products and Services

To increase customer retention, you must ensure that customers have a reason to return and make additional purchases with you. Besides using your content marketing plan to convey your offerings, make sure you have enough products or services to maintain the relationship after that first transaction.

This could be as simple as offering a free annual cleaning on a diamond engagement ring or as involved as developing new products or services. Ask yourself, what’s the next step for this customer after their first purchase? And then after their next purchase? Do you want them to upgrade, to add on, to buy for others? Again, tie these questions (and answers) back to your customer journey maps, as well as your communications plan.

Use Referral and Word-of-Mouth Marketing

Yes, this sounds suspiciously like an acquisition tactic. And it is. But once acquired, a referred customer is 18 percent less likely to churn and can have a 25 percent higher lifetime value than other customers — all of which equals retention.⁶

Furthermore, you can leverage your super-fan current customers to provide the referrals and WOM to bring these newbies in, thus cutting your acquisition costs. Bonus: Referred customers are more likely to turn around and refer their other friends. And the friends who shop together — well, they shop together. Which means if one sticks with you, both (or the whole group) may be more likely to stick with you, as well.

Make sure your customers can easily find simple ways to refer friends anytime they interact with your brand. That means online carts, account pages, PLCC statements, mobile app, emails and so on. And don’t forget the incentive, whether that’s real dollars, loyalty points, small gifts or social recognition.

Create a Community

If customers feel that you are more than a place to shop, that you are in fact part of their community, they are more likely stay for the long-term. This concept can take concrete form through some of the tactics mentioned above, such as referrals and input opportunities.

However, creating a sense of community around your brand is also about less tangible ideas. Sharing your company culture and values can create an affinity between your brand and customers who ascribe to a similar ethos. It’s about going beyond price and product, even past customer service, and connecting with your customers on an emotional plane.

This isn’t a piece of the puzzle that you can force into place. You need to nurture it organically by truly making what your brand stands for an essential part of every customer touchpoint.

Outdoor retailer REI is well known for deftly integrating its mission and culture into its promotions, products and services — including this hiker’s resource callout on the store’s website.