Customer Retention or Customer Acquisition? It’s Not Even Close.

Landing a customer is one thing, but retaining them is a whole different game. It’s a well-known fact that acquiring a customer is more expensive – and more difficult – than keeping one. Let’s face it – a customer knows your brand and is already familiar with your products and services, so – while not effortless – keeping them as a customer has to be easier right?

The proof is in the numbers.

According to studies done by Bain & Company, increasing customer retention by 5% can lead to an increase in profits of 25% to 95%. More to the point, the likelihood of converting an existing customer into a repeat customer ranges from 60% to 70% while the probability of converting a new lead is only 5% to 20% at best.

An article at the Harvard Business Review (The Value of Keeping the Right Customers) summed it up perfectly: “Depending on which study you believe, and what industry you’re in, acquiring a new customer is anywhere from five to 25 times more expensive than retaining an existing one.”

So how do you retain a customer?

The Rise…and Fall…of Loyalty Programs
The last twenty years has seen the rise – and also a bit of a decline – of loyalty programs. For a time, they were a fundamental tool for retaining customers and rewarding return business. But on the retail side, they are beginning to be relegated to “keychain clutter” – cards that are little more than incentive discounts, rather than loyalty-building programs (though some brands are better at it than others).

Airline loyalty programs – namely, frequent flier programs – have also become increasingly unfriendly to travelers, diluting their value. Once restrictions kick in, customer ire rises.

Two points from marketingcloud.com tell the customer loyalty program story:

  • 68% of millennials say they wouldn’t be loyal to a brand if it doesn’t have a good loyalty program.
  • The top two reasons why consumers stop participating in a loyalty program are: the program did not provide offers that were of interest (56%), and it was too hard to earn points for rewards (54%).

The takeaway: if done right, loyalty programs can increase retention. If poorly implemented, they can increase frustration and customer desertion.

Retention in the Call Center

In the call center environment, retention groups tend to have an additional barrier to overcome. Many customers come to the call having already made the decision to cancel or downgrade service – a decision which the call center agent needs to try and change.

So what methods today actually do work to improve retention?

Some of our retention techniques at CSR include:

  • It’s important to get to the ‘meat & potatoes’ of your customer’s discontent. Ask effective, relevant questions to gain a clear understanding of the customer’s situation, and better understand how you can help them.
  • Listen and respond by using the information you gathered to support your solution. Demonstrate the value and benefits of your products or services to the customer, and more importantly how that value helps resolve their problem or challenge.
  • Go beyond just satisfying the customer. Show that you care about resolving their issues. Make them feel valued and appreciated by expressing genuine interest and compassion.
  • You are the expert & brand ambassador. Display confidence in what you are presenting to the customer.
  • Provide seamless service. Your customer needs TLC – don’t make them jump through hoops. Do what you can to make sure that they won’t have to make a follow up call. You want the customer to ‘walk away’ saying “that was easy.”
  • Last but not least, solve the customer’s problem! Present a compelling solution for the customer to keep your product or service and ask them to stay with your company. The solution should be specific to their needs, and should address the reason for their discontent in the first place.

 

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