In recent research we published, we found that 80 percent of SMB owners are looking forward to strong performance in 2019. A variety of factors was attributed to this optimism, including the quality of their employees as well as the strength of their marketing and sales efforts. One notable finding though was the 51 percent pointing to one core factor: the strength of their existing customer base.
Letâ€™s take a look at why existing customers are so important for a business, and then weâ€™ll explore the tools and practices that just about any businessâ€”B2B or B2Câ€”can enjoy to keep their fingers on the pulse of customer satisfaction and retention.
Why Customer Retention Is Important
Data has shown that most organizations focus far more on new customer acquisition that putting their efforts on customer retention. This is a hugely concerning trend when you consider the value of customer retention. Thereâ€™s evidence that boosting customer retention rates by 5 percent can actually increase profits by 25 to 95 percent. This comes from the fact that returning customers tend to buy more from a company over time, theyâ€™ll likely refer friends or colleagues to your business and theyâ€™ll sometimes be willing to pay a premium to continue doing business with someone they know rather than an unknown competitor.
As if these werenâ€™t strong enough reasons alone, consider that customer acquisition costs have gone up by 50 percent of the last five years! Itâ€™s getting more and more expensive to get those new customers.
For businesses that want to build their bottom line, retention tools and tactics can play a huge role. Implementing one, two or even all of the ideas below are cost-effective, informative and go a long way to helping businesses retain their best customers.
Top Customer Retention Tools & Practices
While by no means an exhaustive list, the tools and practices below are some of the most universally used approaches to measuring satisfaction and ensuring that customers continue seeing value in the products and services that a business offers.
1. Net Promoter Score (NPS)
One of the most universally-used ways to measure customer satisfaction is with something called a Net Promoter Score (NPS). NPS is a single-question survey that asks customers, â€œHow likely would you be to recommend our product or service to a friend or colleague?â€
Responders are given a zero-to-ten response scale. Anyone selecting a rating of zero to six is designated as a detractor. A rating of seven or eight is considered passive or neutral. Meanwhile, giving a business a nine or ten means a customer is a promoter. A businessâ€™s NPS score is calculated by subtracting the percentage of detractors from the percentage of promoters, yielding a score between -100 and 100.
This is such a widely used metric that it lets you benchmark your scores against published industry averages, letting you see how you stack up and if youâ€™re over- or under-performing on customer satisfaction. When asked of customers over time, youâ€™ll be able to see if any changes in your business operations, products or services has impeded or improved satisfaction.
However, as powerful as NPS is, it has one key downside: itâ€™s a really limited question. It lets you gauge an overall measure of satisfaction (or dissatisfaction) but not necessarily the reasons behind those scores.
2. Customer Pulse Surveys
A related, but slightly different approach, is using customer pulse surveys. These are surveys that let you â€œtake the pulseâ€ of customer sentiment over recurring periods of time, like very quarter, every half, or every year. They are intended to be very shortâ€”no more than three questionsâ€” so that customers will actually complete them each time they are sent.
Typical questions in pulse surveys include things like:
Why were you originally looking for something like our product or service?
What would you describe as the best features or benefits of our product or service?
What can we do to offer you a better product or service experience?
The upside of pulse surveys is that you get more information from you customers to inform retention efforts. However, because youâ€™ve just increased the number of question from one to three, you may get lower response rates.
3. Product or Services Usage Tracking
A good proxy for understanding customer satisfaction without overtly asking about it is by tracking your customersâ€™ usage of your product or service over time. This can be anything from the last time they walk through your door or logged into your software portal to the breadth or depth of the features that they using.
Seeing that customers are infrequently using your product, or not using it to its fullest, can be a major signal that a customer is about to churn. Keeping your eye on these measures, and comparing them to your customer averages, can help you pinpoint lapsed customers who you are likely to lose.
This is one area where customer relationship management (CRM) tools can take away the burden of manually reviewing this information. These systems can automate the tracking and collection of usage information by customer for you. Some can send you email alerts about lapsed users so you can reach out to them and see how to be of assistance. Several also automate sending emails to users directly with special products or offers to entice them back.
4. Product Marketing of â€œstickyâ€ features
A major misstep companies often take is to highlight just the latest and greatest products or services they launched. While new things are cool, these new features may not be the ones that are most engaging or valuable to a user, and therefore the ones most likely to keep them coming back. Known as â€œsticky features,â€ these features are worth mentioning on a recurring basis to ensure that as many customers as possible are using them, and that they are being used to the fullest.
A great way to promote usage is by creating videos or blog posts about these features and sharing them via email and your social media sites. By showing them all the great things they can do with these features, customers will be more likely to try them out, adopt them and not be able to live without them.
Customer Retention Never Ends
Itâ€™s never enough to do just one of the activities mentioned above. One-and-done is not the name of the game is the world of customer retention. Even if you pick just one of the tools or practices mentioned above, stick with it. Leveraging it over the course of months and years is an invaluable way to continue engaging customers. It also ensures that you can get ahead of issues before a customer attrits and you never hear from them again.