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Neil Patel

How to Solve the Customer Retention Problem (And Make Your Customers Happy!)

Neil Patel

Customer retention.

It’s one of the most worthy investments a business can make.

Its goal is to retain as many customers as possible. After all, a loyal customer is worth much more than a new customer.

Here’s the problem: companies drive customers away with poor customer retention initiatives (or a complete lack of a customer retention strategy!).

But before you can understand how to effectively retain customers, you first must understand why they leave.

Here are some of the biggest reasons why customers defect:

So, how do you stop your customers from cancelling? You need to combat these reasons for cancelling and employ the right customer retention strategies. And often times, it doesn’t have to be complicated. The tactics below are simple but effective.

Here’s where to start:

1. Show More Customer Appreciation

Customer appreciation is the measure of your effort towards your customers.

It’s a way to show your customers that you care about them and that you’re grateful for their business. And when you enact initiatives to show customer appreciation, your customers are more likely to be loyal.

Here are some customer appreciation initiatives you can start:

Create customer loyalty programs

Customers want to be rewarded for their loyalty, and that’s exactly what a loyalty program aims to do.

Here are some common customer loyalty programs for SaaS companies:

And here are some common customer loyalty programs for ecommerce companies:

For example, Neiman Marcus, a retail clothing company for women, created an “InCircle” loyalty program. It rewards customers for every dollar they spend. When customers accumulate enough points, they can enjoy rewards like wardrobe consultation, gift cards, and more.

Send a thank you email

Here, you thank the customer for making their purchase. But you also do the following:

Derek Sivers, founder of CD Baby, wrote perhaps one of the best post-purchase “Thank You” emails of all time. It helped generate thousands of sales and even went viral.

Derek Sivers put some extra creative effort into this “Thank You” email for CD Baby, and his customers loved it.

Here is how powerful thank you emails can be: Remarkety found that thank you emails receive 42.51% open rates, 18.27% click rates, and a 10.34% conversion rate. For inspiration on crafting a great thank you email, check out Really Good Email’s collection.

Reward customers for special events

Consider sending emails with discounts and special offers during their birthdays, holidays, and customer anniversaries. This makes the customer feel like you remember them and truly appreciate doing business with them.

Birchbox sends a great birthday email. They offer $10 off a purchase of $50 or more, which incentivizes people to make a larger purchase during their birthday month to take advantage of the deal.

Sending something physical via snail mail is also a good option. MailLift offers marketers the option to send handwritten letters.

2. Implement Customer Feedback

Don’t just take customer feedback and forget about it. Consider how you can apply that customer feedback to improve your products and services.

Of course you can’t act on every piece of feedback – no company has the resources to do that, and even if you did, you wouldn’t want to.

What’s more important is to look at the trends within the customer feedback. That will give you a sense of what your customers want the most.

Here are some of the best ways to gather customer feedback:

3. Proactive Customer Service

Good customer service is key to every customer retention initiative. But you should also be proactive with it.

Research your customers, anticipate their wants, needs, and next moves, and try to handle potential customer problems before they pop up.

To do this, you can create customer personas and map out their wants and needs.

You can also look at trends and common questions that customers ask you in email and social media. If a question keeps popping up, it’s a sign that you need to do something to address it before it becomes a deal-breaking problem for your customer base.

Quickly handle any customer issues that arise. Some are more urgent than others – a customer asking Charter why their internet isn’t working requires a different response time than an enterprise customer asking why their bill arrived 2 days earlier than usual.

A good rule of thumb is to reply to any issue within 24 hours. Equally important is to ensure that issues get resolved quickly. Lingering issues are a sure-fire way to cancellation.

Notice below how JetBlue quickly responds to its customers’ questions on Twitter:

JetBlue is quick to respond to customers on Twitter, both in terms of questions and handling customer issues.

4. Better Content Marketing

In-depth blog posts, how-to guides, actionable content, Instagram pictures…

This kind of content marketing will help you build a better relationship with customers and keep them coming back to you as a resource, and perhaps even for entertainment as well.

Whole Foods

Whole Foods knows that healthy eating is important to customers. So they launched a blog, Whole Story, to educate customers on healthy eating, new products, and even sharing some recipes.

They also post consistently, so customers know they can expect helpful content every week. For these customers, it’s a constant reminder why they love shopping at Whole Foods.

Movement Watches

MVMT (Movement Watches) opts to focus more on a different channel for their content marketing – Instagram.

The brand’s customers value adventure, class, travel, and style. So, MVMT fills their Instagram with pictures and captions that match those values. In doing so, their followers are constantly (but subtly) exposed to new MVMT products while also being reminded how well the MVMT brand matches their values.

MVMT Watches posts customer content on Instagram that matches the brand’s values and draws engagement.

5. Answer the Phone!

There are few things more frustrating to a customer than when nobody is on the other end of the line to hear out their problems.

And as you can see below, the majority of consumers still prefer the phone as their main channel of communication with companies.

61% of consumers still prefer to interact with companies by phone, which means you need somebody on your end of the line!

As customer experience continues to become an even bigger part of the buying cycle, it’s important for businesses to think of all of the critical elements that go into it. How will you treat them after the purchase, how fast are you at resolving issues and answering questions will be a huge differentiator from your competition.

Here are a few things you should consider when creating the ultimate phone customer experience:

Conclusion

You won’t be able to keep 100% of your customers. Some will fall off due to reasons outside of your control, or simply because they no longer need your product or service. However, you can dramatically increase customer retention by following the strategies outlined here.

Remember, the 3 keys are: great customer service, customer appreciation, and a close eye on customer needs.

About the Author: Parker Davis is the CEO of Answer 1, a leader in the virtual receptionist and technology enabled answering services industry. He believes that the application of data analytics, investment in technology, and fostering a positive company culture together create highly efficient and scalable growth companies. Parker is also the Managing Partner of Annison Capital Partners, LLC.

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