Building brand awareness and acquiring new customers is one of the key objectives of any marketing strategy. However, what many businesses neglect to invest in is customer retention. In the long run, this can prove to be a mistake, both financially and from a branding standpoint.
What Is Customer Retention?
Customer retention is about a company’s ability, or inability, to keep customers that it already has. Whether those are one-time purchasers or long-time consumers, companies must take several actions in order to keep its customers happy and coming back for more as opposed to going to a competitor.
Simply put, customer retention strategies aim to build loyalty among existing buyers. They prevent them from defecting to competing businesses or ceasing to use your products altogether.
The main advantage of customer retention is that it boosts customer lifetime value by consistently providing a high standard of user experience and customer service. And having a strong customer retention strategy can be extra valuable in tough times like the 2020 pandemic when it might be even harder than usual to attract new customers.
Why Is Customer Retention Important?
60% of customers said that they purchase more frequently from companies that they prefer. Additionally, a survey from PwC reported that 32% of customers would stop doing business with a brand they loved after just one bad experience.
Then again, 72% of buyers will tend to share their positive experiences, while 67% of them are willing to pay extra for a great experience. These numbers are clear indicators that investing in customer retention is worth it on its own. But that's not all there is to consider.
As ecommerce becomes more widespread and competition increases, it can only be expected for marketing costs to grow as well. With this in mind, businesses should focus their efforts on developing marketing strategies that generate a high ROI. Customer retention through social media can be one practice to help in this regard.
How to Calculate Customer Retention Rate
The easiest way to measure customer loyalty and retention is to look at the numbers. You're going to need to know three factors:
How many customers you started with (X)
How many you have now (Y)
How many of those are new buyers (Z)
Then, you apply the following formula:
((Y-Z)/X) x 100 = CRR (customer retention rate)
For example, if you started with 20 customers, had 50 new buyers, and now have a total of 60 customers, your CRR would be 50%. This would mean that 50% of your buyers were lost, or churned, in the process.
Social media customer retention strategies
So, now you understand why customer retention is so important to your overall business goals. Are you ready to adopt a few easy-to-implement strategies to boost your CRR?
Here are six effective ways you can improve customer experience and build brand loyalty, which will lead to higher customer retention:
The most basic way you can use your social media presence to improve user experience is to listen to what your customers are saying. Social listening is easy to implement with the right social listening software.
Plus, it offers valuable information regarding your products and services. Whether you're getting positive or negative feedback, this type of strategy enables you to identify strengths and weaknesses, and you can build on those experiences in future marketing campaigns.
Moreover, you can use active listening strategies to recognize customer pain points (edit button on Twitter, anyone?). This is an excellent way to develop your offer in the future.
Another advantage of social listening is that it lets you reach out to users who may not have shared their negative experiences directly with you. This opens up space for "redemption" and prevents issues from going unanswered and harming your brand's health.
User behavior research
In addition to letting you know what your buyers want to see from you, social media also allows you to find out more about the customers themselves. Personalization plays a huge role in UX, and social media might just be the way for you to incorporate it into your marketing strategy.
Engaging with followers lets you learn more about them and their habits. Handy social media analytics tools let you see information such as audience demographics, active times, and statistics regarding the content you post.
But even more importantly, by taking a deeper dive, you can find out what other brands your followers have liked and how they're engaging with content. With this information, you can then work on your own marketing strategies and adjust them in a way that will serve your audience better.
Convenient customer service
Customer service is a huge selling point, and, obviously, it influences retention as well. An easy strategy you can adopt is to extend the platforms where your buyers can reach you.
Having an active presence over multiple social media platforms doesn't just maximize your reach. An all-in-one dashboard gives you the chance to respond to any possible problems in real-time, in a way that requires less effort on your customers' part. This decreases the chances of growing dissatisfaction, plus it allows you to better manage your brand's health.
If it makes sense for your brand, support accounts like this example from Xbox can also be an excellent way to share quick updates with users regarding technical difficulties or temporary issues.
Alternatively, you can take a look at this example by Ultimate Meal Plans. One benefit of membership is access to an online forum where coaches and fellow service users share questions and experiences together to help motivate each other.
Helpful and educational content
Orienting your efforts towards giving customers more bang for their buck is one of the best retention strategies out there.
It is for this reason that some brands choose to create educational content to share with their followers. It's an effective way of calling attention to the value you offer. Moreover, it can be made into a continuous way to support buyers by sharing tips and tricks or new ways to use your products.
And because it's so good at encouraging engagement, social media might just be the right place to launch this type of content.
You can look to Under Armour for inspiration. The brand's Instagram posts include a host of at-home workouts created by collaborators. The great thing is that their followers don't have to go searching for these posts. Instead, they organically appear on their social media feeds.
In addition to professionally produced content, you can also choose to share posts created by your users.
Because user-generated content is created by influencers and regular people, it's more likely to affect purchasing decisions. But, perhaps even more importantly, it gives you the chance to engage with your existing users and reward their loyalty.
GoPro offers an excellent example as its photo of the day competition keeps a steady stream of people submitting content that they created with the product itself.
Share special offers
Last but not least, don't underestimate the impact of pricing on sales. Especially when it's paired with a pleasant shopping experience.
While new customers may be reluctant to give your products and services a try, those who have already bought from you will be far less likely to switch if you offer the added incentive of a reduced price.
The simple reason behind this is that these users are already familiar with your products. And with social media, you can use this familiarity to gain an added edge over your competition.
So, if you already have a loyal base of customers who follow you on a host of platforms, don't forget to let them know of any discounts, special offers, or giveaways. In the end, it might just be the thing that increases their lifetime value.
The thing about customer retention is that it doesn't have to require a huge investment, yet provides excellent returns. When combined with your social media marketing strategy, it can yield even better results at a lower cost.
While you can use any of the six strategies we've discussed here, it's important to make sure that you do it in a way that reflects your brand's core values. So pay attention to your tone, try to create helpful content, and, of course, place emphasis on customer experience. This way, you'll have a formula for success that will work for years to come.
Editor's Note: This article was originally published on socialbakers.com. Any statistics or statements included in this article were current at the time of original publication.