Customer retention is the backbone of every successful business. Not only is it much cheaper to keep a customer than it is to acquire a new one, but returning customers, on average, spend more and shop more often than new customers. Here’s Fyresite’s top tricks to boost your retention rate.

Why Bother?

According to Profit Well, the average Customer Acquisition Cost (CAC) for both B2B and B2C have risen by nearly 50% over the past 5 years. With a frequently shifting economic landscape, companies need to be smart with their money in every aspect of their business.

How Boosting Customer Retention Boosts Profits

Saying that returning customers are more valuable than other customers isn’t without reason – it’s what the numbers say. Here are the numbers to help you convince your boss to dedicate time to customer retention.

Your Loyal Customers are Your Biggest Spenders

Did you know that, on average, your top 10% of customers spend more than the bottom 90%?According to a study conducted by smile.io, the loyal top 10% of customers spend twice as much as the bottom 90% per order, and your top 1% spends 2.5% as much.

That same study found that small businesses generated 35% of their revenue from their loyal and returning top 5% of customers. That’s over a ⅓ of all revenue!

Another study has found that the odds of selling to a new client are 5 – 20%, whereas the odds of selling to an existing customer are much higher at 60 – 70%.

Investing in Customer Retention is Cheaper than Customer Acquisition

Not only do businesses tend to make more on orders from returning customers, but it costs less to invest in customer retention than it does to invest in customer acquisition. In fact, one study found that it can be anywhere from 5 to 25 times more expensive to acquire a customer than it is to retain one. More than that, it’s actually cheaper to obtain a 5% increase in retention than an acquisition.

Surprisingly, despite this, nearly 2.5x more companies focus on customer acquisition than those that focus on customer retention. They’re choosing to spend more to get less!

Ways to Boost Customer Retention

Wondering what actions you can take to retain as many clients as they can? Try these tips.

Track Customer Behavior

If you want to keep your customers, you have to understand how they behave. What do they like, what do they dislike, what can you offer them that would make them come back?

One of the best ways to accomplish this is by employing the use of a CRM. A CRM (customer relationship management) tool can be used as a behind the scenes look into customer behavior. You can see what they buy, how much they spend, and how often they purchase. You can also see what they engage with, and what level of engagement each customer is at, getting a visual representation of pain points and customer journeys.

Popular CRM tools include Zoho CRM, HubSpot CRM, and SalesForce.

An Image of graphs representing CRM

Reward Loyalty

By adding a loyalty program to your store, you’re giving customers a reason to come back and spend with you over another store. 52.3% of loyal shoppers will join a loyalty program.

Loyalty programs reward your customers for shopping with you. There are many types of loyalty programs, so you can find the one that fits your store.

  • Point Based
    • This loyalty program rewards points for every dollar spent. The more $ spent, the more points earned. Points can be saved and redeemed, typically for a percentage or dollar amount off.
  • Tier Based
    • Tier based loyalty programs have different benefits for different tiers. The higher the tier, the better the benefits. Most commonly, the tier a customer is on depends on how much they spend in the previous year or how much they spend.
  • Value/Mission Based
    • When you have this type of loyalty program, customers can contribute to your mission with every dollar they spend. Traditionally, companies will partner with a non-profit of their choice or let customers choose from a list of charities.
  • Subscription Based
    • If you’re selling products that are frequently repurchased, this is the loyalty program for you. Subscription based loyalty programs give customers a discount when they sign up for a subscription, automatically purchasing their chosen product at a discounted price at specific intervals, such as monthly, quarterly, etc.
  • Punch Card Based
    • This loyalty program works for brick and mortar as well as eCommerce. Customers get a ‘punch card’ to complete for a free product or discount. Businesses can set what each punch is, but they are typically a purchase or a dollar amount spent.
Shopify Subscriptions
Example of a subscription available on Shopify

Listen to Your Customers

Customer feedback is incredibly important if you want to keep your customers. According to a Microsoft report, 61% of customers switch brands due to poor customer service.

It’s important to have many avenues for your customers to contact you. On top of traditional avenues like chat bots, email, and phone calls, being accessible for feedback on social media is becoming increasingly important. A study has found that customers will spend between 20% and 40% more with businesses that respond to customer service requests on social media.

Not only do they spend more when you respond on socials, but they also stay with your brand. Brands that don’t respond have a 15% higher churn rate than those who do.

Check Out Our Services

Want to better optimize your store? Check out Fyresite’s services to see how we can help boost your profits and brand image.