Why focusing on customer retention is the #1 key to grow your business

Posted by Page Grossman on Nov 29, 2017

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So often, growth is measured as an increase in specific metrics: more users, more clicks, more customers, more sales. But is simply getting more prospects and customers into your funnel the most effective way to measure business growth?

According to Frank Reichheld in his book, The Loyalty Effect, increasing customer retention by 5 percent can potentially increase the value of your business’s customers by 25 to 100 percent. In other words, don’t just focus on quantity of new customers but spend more time nurturing your current customers.

The quality of your customers can make a big difference to the success and growth of your brand. Here are a few tips to build up and nurture those customer relationships: 

1. Personalize communications to customers

You're probably already personalizing your communication to customers, like addressing them on a first-name basis in your messages. But if you want to take personalization to the next level (and we think you should), then you'll need to collect information about each customer, like activity, past purchases, and preferences. This type of information can make it easier to target certain customers with specific information that they’ll find interesting. Personalization and targeting allow your company to send relevant messages to customers that are less likely to be considered annoying and useless.

For example, one of Outbound customer’s Zova, a smart fitness app, tracks their customers' health data—aggregating data from Apple's Health app and workouts completed in their own app. Zova puts this information together to create a health score for each customer. So instead of sending nagging reminders to their customers to stick to their workout goals, Zova sends them interesting and useful updates about their personalized health score.

2. Interact with customers at the right moment

Customers don’t want to be bombarded endlessly with your messages and campaigns, but if you can find a way to be present at critical moments, exactly when they need you, your messages and campaigns are more than welcomed and appreciated. 

For example, you might send an email to a customer about a new product you’re releasing that’s similar to something they bought in the past. But those promotional emails probably go straight to spam unless your customer has expressed intent to purchase. To target customers who may have purchase intent, Scoot, a scooter rental service, sends a message as soon as a customer completes their first ride—letting them know about the benefits of purchasing a ride package. In order to do this type of data-driven targeting, Scoot brings in rider activity data into Outbound using our pre-built Segment integration. 

3. Follow up on customer feedback

By now, almost every company is capturing customer feedback in some way. But perhaps not every company is following up on that feedback as readily. One easy best practice is systematically categorizing the reasons for a negative experience. There are many survey tools out there that enable you to automatically integrate a short survey into an existing workflow—capturing feedback and the reason behind that feedback. 

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Taking the time to analyze your customer's feedback and crafting a personalized response shows your customers that you’re listening and that you care about their experience. They'll probably be more likely to continue to provide feedback and continue to have an open dialogue with your company—and that's a great thing. 

If you're looking for ways to better target and personalize your communications, Outbound can help. You can request a demo here