What is customer retention and why is it important?
Customer retention rate outlines the ability of a business to successfully increase the number of repeating customers. A good rate is achieved through activities aimed at encouraging customers to repeat or continue purchases, preventing them from switching to a competitor. All in all, customer retention is a continuous effort to minimise customer churn.
Customer churn refers to the rate at which your business loses customers that were once subscribed to your services. We calculate churn like this…
Customers that churned during the period
➗
Total number of customers at the beginning of the period.
✖️100
Download The Ultimate Business Metrics Cheat Sheet to find out which other metrics you need to track to analyse your business performance.
There’s a straightforward correlation between ability to retain customers and financial performance. The more customers you retain, the better your company does. Why?
- Customer retention is cheaper than customer acquisition.
- Engaged consumers buy 90% more frequently; they’re more profitable.
- Retention-centric businesses stand out from the competition.
- Engaged customers provide more feedback so you can improve.
- Well-retained customers are more forgiving.
- Customer retention prompts money-efficient customer acquisition.
How CRM software helps reduce customer churn
CRM software helps businesses bring order to their customer databases, aggregate data from multiple sources, and standardise communication with target audiences. All of this helps track customer experience throughout their whole journey – before and after a purchase, ensuring better levels of satisfaction and reducing customer churn. Here come the 9 key CRM functions that your business needs to implement to beat the churn.
CRM standardises the customer journey for each lead
CRM software ensures each lead entering your sales pipeline is treated equally, experiencing the same customer journey. By standardising the customer journey, you make sure no important information gets missed and no details or opportunities fall through the cracks.
CRM decreases product friction with automated sequences
Product users need a robust understanding of how your product works, its extended functionality, and its potential value to their business. Your product is designed to make their life easier, so trying to wrap their head around it shouldn’t be difficult. Your job is to explain how your product helps complete particular tasks and streamline specific processes. Once users understand the ways a product betters them, they’ll start using it more.
CRM enhances email marketing personalisation
If you want to reduce churn, you need to achieve maximum levels of personalisation – especially when it comes to email marketing. No one wants their inbox clogged with yet another email that’s irrelevant to their needs. Personalisation is the kingpin of successful marketing.
CRM filters help identify disengaged customers
You mustn’t passively observe your customer churn and take it as a given. Take a proactive approach; identify and deal with disengaged customers before they leave you for good. In CRM, create filters or views that warn you about possible customer churn. But before you do that, identify the signs of churn applicable to your business
CRM puts customer requests and suggestions in one place
One of the most common reasons why customers churn is because your product doesn’t have the functionality they need. A simple way out of this situation is to give your customers an opportunity to leave requests for your dedicated development team. Create a space where your customers can communicate with you and ask for the features they want your product to offer.
Whether you receive requests from website chat, email, or phone calls – add their requests to CRM. Create certain fields in their CRM record, such as ‘Product Requests’ and add tags with feature names. Let your product team see the most frequently required features, prioritise them, and add to the roadmap.
CRM data also helps with personalised mailouts to clients once their requested functionality is applied to the product. You can get back to the clients with an explanation if the features they request are not going to be developed soon and offer workarounds.
CRM automates assessment call scheduling to meet expectations
It’s important to make sure your product is delivering exactly what was promised. It’s better to spot inconsistencies and fallbacks earlier, rather than later when your customers are about to churn. You should take advantage of CRM automation to set up automated assessment calls to make sure your product meets your customer’s initial expectations.
CRM automates subscription renewal reminders
When you have a considerable number of customers, it’s difficult to keep track of subscriptions manually. Even if you do manage to memorise all the subscription expiration dates, renewal outreach will take the last of you. Don’t waste your time; deal with the problem in a much more efficient way.
CRM improves the quality of your customer service
CRM gives you full context at hand. All of your customer service team have access to a complete and up-to-date customer record with the history of previous interactions, requests, segmentation tags, and other important information to personalise and resonate with customers. It brings third-party integrations such as Intercom or Facebook Messenger to allow for better conversational experience – bringing all their communication in the same place, within the same record.
CRM helps identify reasons for churn before bringing them back
Once a customer has churned, you need to find a reason why they’ve churned and use an appropriate tag in your CRM system, such as no budget, missing feature (identify the feature), chose competitor X because of X, or whatever else. Then, use these CRM tags to bring customers back.
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