You Aren’t Necessarily Retaining Customers For Life
Some companies have lofty customer retention goals like winning customers for life. But, most companies aim to keep as many of their customers happy for as long as possible while minimizing churn or customer turnover.
But what levers can you pull to help increase your customer retention rate? In short, there are three key elements to focus on:
- Setting expectations and beating them.
- Ensuring your product/service is competitive.
- Building an emotional relationship with your customer.
Let’s discuss what I mean by each of these.
Nothing can derail customer retention more than missing their expectations somehow. If customers expect one thing and you deliver something else, things can get ugly in a hurry. Research shows that customer retention is highly dependent on their experience in their first 90 days with your business.
The same principle applies to new employees. I remember working for a company earlier in my career and within just a few weeks, I knew I wasn’t a good fit for the company’s culture. Worse, many of the expectations they set for me around the kind of work I would be doing were inflated. It just wasn’t what I expected. I eventually left for another job because I could never shake that early experience and feeling that I was a mismatch between the company and the expectations they set for me.
On the other hand, intelligent companies learn how to increase customer retention by controlling their expectations–and even beating them. Think about Disney. There’s almost always a crowd when you go to their theme parks. So when you want to go on one of their rides, you immediately see the signs telling you the wait is “45 minutes from here” or something. They’re setting the expectation for you on how long you will have to wait. But the truth is that Disney expects that you might only stand in line for 25 minutes at that point. In other words, you’ll get through the line far faster than you were expecting–so you feel good about the experience. So even though you still had to stand in line for almost half an hour, Disney has found a way to delight you as a customer rather than disappoint you.
While it might seem obvious, you can’t overlook that if you want to keep your customers happy, you need to ensure that your products and services are competitive with the market. Are you offering similar or better options at an equal or lower price than your competition?
But there’s more to keeping customers around than new bells and whistles. There’s also the strategy of making your products and services more “sticky” by building barriers to exit them. That might mean that they are required to make significant investments in time or money upfront, which will make it more painful for them to switch to a competitor. You don’t want to make any of these too onerous. Customers hate it when companies make it too hard to cancel something. But you can find ways to make it easier for them to stay than leave.
As an engineer, I sometimes find it hard to understand the emotional attachments some people have with certain companies and brands. But it happens all the time, and it’s a powerful force for those companies who can create these kinds of relationships with their customers. When you can do this, you build loyalty with people beyond features–which goes a long way toward retaining customers.
That means you should be intentional in building these kinds of relationships with your customers. Suppose your frontline salespeople are answering calls. In that case, you might invest in training to help them understand that their goal should be to build relationships with the people on the other end of the line, more than merely trying to solve a problem or close a transaction. It’s all about making those sticky human-to-human connections.
Retaining Customers for Life
If the long-term value of your business hinges on attracting and retaining customers for the long haul, whether you are B2C or B2B, there are three areas you can invest in to help you reach your goals: think about setting, and beating, customer expectations; build competitive ad sticky products and services, and think about how you can make those emotional ties and relationships that will boost your customer retention.