Everyone knows a version of this stat: it’s 5X more cost-effective to retain a customer than acquire a new one.Yet too few of us are actually investing nearly as much in customer retention as we do in acquisition.
Creating a high-converting customer retention program is no accident, but it’s also no mystery: the steps to building an effective retention program have been tested and proven many times over.
In this post, we start you down the step-by-step path to a high-converting customer retention program, beginning with revising your conversion funnel itself.
Most people think of the standard conversion funnel as ending with conversion itself, but that’s not showing the whole picture. Extend your funnel to include engagement and retention, and you’ll start to see just how much opportunity you’re leaving behind by focusing only on an initial conversion.
Additionally, while there’s only a 27% chance any one customer will become a repeat buyer, there’s a 45% chance that a repeat customer will go on to make a third purchase and a 54% chance that person will buy a fourth time, showing that the more you engage, the more they buy.
In short, people keep buying due to habit and trust. As the caffeine addicts and social media junkies among us know, people are creatures of habit. We’re also susceptible to status quo bias, where we’re most comfortable with what’s already happening. To help people break out of their habits and make a purchase, we need to create new habits.
Fortunately, research shows us that habits are formed with a clear trigger, action and reward cycle. If you’re rewarded for taking an action, you’ll form the habit of repeating it. Rewarding your customers requires understanding what they want. Once you know that, you can provide effective rewards when customers interact with you. Rewards could include customized information, personal guidance or even special offers. Trust is also important to repeat purchases. Loyalty is driven by trust, which you can build in a few ways.
First, make sure to recognize your customers when they visit your site, product or app. Show an understanding of their preferences, thank them for coming back, and personalize their experience with you as much as possible, based on the information you have.
Second, provide social proof of how many others are using your products or services, or even browsing your website right now.
Other effective ways to build trust through engagement include reviews, gamification, surveys or chat, webinars, email and expert content.
One of the most unexplored avenues for customer engagement and retention is incredibly simple: the thank-you page after a customer requests to download an asset or subscribe to an email list.
Too many companies take this page literally and simply leave saying “thank you,” missing out on a huge opportunity to display related products, services and resources to customers. Or, treat the page as a chance to engage customers by asking them to write a review, displaying a quick feedback survey or even letting them ask you any questions they may still have.
These tactics will engage your customers and help you learn more about them at the same time.
After customers make a purchase, it’s time to engage them even more! Make sure they get the best value out of your product or service; help them with implementation and onboarding; understand their needs and show them how you can meet them.
Let them know about other products and services you offer, affirm that they made the right choice with social proof (“You’ve just joined 30,000 smart customers!”) and encourage them to share their stories or even become ambassadors for your brand.
Remember, too, that humans are loss averse: we prefer avoiding losses to acquiring gains. So provide specialized offers and deals that your customers won’t be able to resist. You may be surprised by what an effect even a few simple interactions can have.
Keep in mind that working on retention helps you with acquisition as well, multiplying the impact of your efforts. For more details on the steps to building a high-converting retention program and even more tactics to try, watch our webinar on the topic with Talia Wolf.
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