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When you run an online e-commerce site or digital business, your retention rate is a powerful force in keeping your business up and running. No matter how many potential leads and clients you acquire, it means nothing without the ability to retain them and continue to profit and provide top-notch service.
In order for you to maximize your digital marketing and sales efforts, it’s vital that you understand the basics of retention rates, how to analyze customer retention data, and use that information to increase retention rates over time.
Learn how to keep your existing customers engaged and satisfied by following along with the helpful tips, tricks, and tools included in the following article.
What Are Retention Rates?
The retention rates of your website is a key performance indicator (KPI) that measures how many clients or customers are sticking around or making repeat purchases. For online startups and related businesses, this metric can be tracked by comparing the sign-up and drop-off rate of your app or software. In turn, entrepreneurs can measure this metric by comparing how many return clients they have as compared to one-off work for the same type of projects that has the potential to be recurring work.
According to Invesp, it can cost five times as much to get a new customer for your business as compared to keeping an existing person engaged. To minimize your business sales and marketing costs to be invested in other areas of your business, it’s vital that you understand your retention rate and how to increase it over time.
Analyzing Your Retention Rate
Thankfully, digital platforms and services have access to an abundance of data that can share important information on overall business performance and customer activity. However, locating, interpreting, and using this data can be confusing for some, especially if you’re new to digital marketing and measuring analytics as a whole.
The most important information that analytics and data can provide is an understanding of how your potential and existing customers think and act online. When you can access these insights, you can work to optimize your marketing and sales processes to keep customers engaged and increase your retention rate. Insights like the number of return customers and drop-off points help business owners perform A/B testing based on accurate data and develop a research-based strategy for future growth.
To analyze your retention rates, try the following tactics:
Ask the right questions: Any information or data on your customer retention rates is only as useful as the questions you’re asking. At the end of the day, you should know what purpose you want these analytics to service. For example, some business owners may be interested in learning where customers are becoming disinterested in their product or service, while others may want to know what products or services people are buying that they seem to be satisfied with.
Before beginning to analyze your retention rates, sit down by yourself or with your team to brainstorm the kind of answers you’d like your data to represent. Generate a list of questions, think about your current problem areas, and discuss how those two areas tie your business together.
Start gathering retention rate data: Once you’ve generated your questions, it’s time to start accessing and collecting your data. Platforms like Google Analytics can help you gather the needed information to track your retention. You can also compare past sales information to see which customers have made repeat sales if you’re an online e-commerce business.
After finding a way to accurately and easily gather your data, you can begin to analyze the findings. You can test the accuracy of your questions, answers, and data by comparing how you thought your business and site were operating and performing to how the analytics are proving. If you notice a larger newsletter drop-off rate than anticipated or a lack of return customers after a first purchase, your overall retention rate may not have been as high as you initially thought.
By analyzing your customer retention rates, you can gain valuable insights into how you can encourage customers to keep coming back for your product. Whether you find that it’s an area of your website that should be perfected or an overhaul of your product offering itself, use your retention analysis results to streamline your service and encourage relationship nurturing.
How to Increase Your Retention Rates
Now that you have a clear idea of what your current retention rates are, how can you accurately and effectively increase your retention rates over time?
According to a study completed by the Harvard Business Review, an increase in your customer retention rates by only 5% can increase your revenue anywhere between 25% and 95%. If you’re interested in having results like that, focusing on keeping your current customers satisfied and coming back for more should take priority in terms of your marketing and sales strategies.
Customer loyalty means a lot when it comes to increasing your customer retention rates and being a successful brand and business in general. When customers trust that your product or service will continue to benefit them, they’re not as likely to seek out alternatives or unsubscribe from your services.
To increase retention rates, implement these tips and tricks into your current digital marketing and selling practices:
1. Create a Personalized Essence with All Customer Relationship Management Tactics
In the modern buying world, maintaining a customer-centric point of view will help you stick out in a saturated market and stay memorable in your customer’s mind. Your retention rates rely heavily on the relationship that you have with your customers and utilizing customer relationship management (CRM) tools, and software can help you maintain these relationships with ease.
Designed to be easy to use and customizable to each customer profile, CRM software can allow you to reach out with personalized messages, check-ins, and follow-ups after purchase to make sure that the customer is still enjoying their experience with your product or service.
2. Continue Being Beneficial to Customers After Purchase
The last thing that you want to do is forget about a customer who has purchased a product or service from you. Return and retained customers are highly profitable, and already have a general understanding of your brand and exactly what you do.
These people have benefitted you financially, so the ball is in your cart to continue being of benefit to them. Share sale information with them first, provide exclusive discounts, and keep an open line of communication available to them at any point if they have questions or concerns about your product or service. Let your existing customer base know that they are appreciated to maximize your chances of being their go-to provider of your niche service or product.
3. Demonstrate Other Customer's Success and Satisfaction
There are not many other tactics that allow you to create an interactive service while gaining valuable insight into your product offering. Customer reviews not only demonstrate how your product can enhance their daily life.
Encourage existing customers to leave reviews about their experience with your business. Not only will this draw them back to your website and product offerings, but it provides useful information to potential customers about the quality of your product or service.
Additionally, use social media channels to build a positive rapport, and brand identifies with your existing customer base. Try developing a hashtag unique to your business and work it into your customer follow-up content and information. This practice can be beneficial for both customer and business, as it allows a customer to create content and share what they love about your service while also providing you with a different type of customer review that you can access anytime.
You can also consider developing case studies on how your service or product has benefitted a well-known business or individual if you have a wide enough client base. When people recognize an individual or brand, they’re more likely to interact with the content and familiarize themselves with your brand, generating repeat purchases and a higher customer retention rate.
Customer retention can not only help you stretch your current marketing and sales budget, but it can help you develop brand loyalty, gain referrals, and enhance your service overall. Simply attracting new customers to your brand isn’t enough to stay relevant in a saturated digital realm.
When you know how to accurately access analytics and analyze your current retention rate information, you can dedicate time to streamlining your sales funnel and optimizing your marketing processes for existing customers. Take time to reach out personally to your retained customers and maintain a healthy business to customer rapport.
At the end of the day, analytics and insights are only valuable if you choose to take appropriate action to improve your business. Before beginning to analyze your data, take time to critically think about your business, website, and current customer retention strategy. Identify what you think the problem areas are, and upon receiving your actual current retention analytics, compare your initial thoughts to the data. This practice will help you understand your business operations differently to perfect your customer retention strategy moving forward.