Retail marketing is not a walk in the park, and it’s high time businesses used data-driven solutions to address marketing problems and achieve desired results. For example, a retail lead costs about $34. Yet, despite the heavy spending required on retail leads, the average conversion rate is only 3 percent. That is a pretty hefty loss, especially for smaller retail businesses on a limited marketing budget.
Acquiring a customer is the primary profit driver for many businesses, but the ability to retain and grow repeat business is the foundation of long-term growth and profitability. Yet, 44 percent of companies focus more on acquisition, while only 18 percent emphasize retaining customers. This is despite the fact that acquiring a new customer costs five times as much as retaining an existing customer.
Customer acquisition and retention are both important business strategies, but one comes before the other. First, you have to acquire the customer. Acquiring the customer is a whole process on its own and follows the steps of target marketing, customer funneling, and finally, the customer makes a purchase. Once they purchase your product, customer acquisition can be deemed successful. That’s when you move on to retention.
Once you make customers buy from you, you want them to return. This is what customer retention is, and it can be influenced by your service and customer support as much as by your product offering and quality. There are dedicated strategies to ensure you retain the customer.
This article explores how you can improve your customer acquisition and retention.
10 Things to Help Improve Customer Acquisition & Retention
1. Provide Excellent Customer Service
Customer service can make or break your organization. According to a Zendesk survey, 87 percent of consumers feel that outstanding customer service alters consumer behavior, while 97 percent of customers claim that poor service adversely affects their purchase choices.
Current data also shows that 95 percent of customers are likely to share bad experiences with others, while only 87 percent are likely to share good experiences.
Customer service affects your ability to acquire and, most importantly, retain a customer. One of the most effective customer acquisition strategies is referrals and word of mouth. With the internet, word of mouth has been elevated to another level. Now a single post by a customer on social media can be broadcasted to thousands of people, potentially breaking or building the business.
A customer is likely to abandon a brand after only two bad experiences. Keeping in mind the expensive nature of acquiring new customers, you cannot afford lousy customer service. Instead, use a custom customer portal and other communication channels to provide timely and effective support.
2. Use a CRM System
Customer relationship management, or CRM, is a system that records, collects, and stores information about customer engagement and interaction. A CRM system allows a business to assess every contact point of interaction with a customer, thus driving sales growth. With knowledge of the CRM data, you can craft better strategies to get new customers on board and implement other strategies to retain them.
There are three types of CRM systems:
- Operational CRM: Enables businesses to create leads, transform leads into contacts, and provide the service infrastructure necessary to keep clients.
- Analytical CRM: Helps organizations to better comprehend customer data and their interactions with the company. It’s a crucial tool for transforming vast volumes of data into insightful actions.
- Collaborative CRM: bridges the information gap across teams and departments to deliver a seamless experience for clients.
3. Grow Customer Engagement
Remember that as much as you can get someone to purchase from you, you must be willing to engage them further to turn them into repeat customers. Lack of engagement with your customer or poor engagement is a sure way to lose them.
This fact is backed by research: 89 percent of consumers are more likely to switch brands after a negative engagement. Bettering your customer engagement improves customer retention, consequently improving sales by a factor of five.
4. Creative Offers
Offers are essential, especially in the retail space, because they directly impact customer acquisition and retention. Crafting an attractive offer can be a great way of getting customers through the door, even if they have no prior experience with your product or service. It’s an essential teaser to get one foot in the door. Once they have one foot in the door, the battle is half won.
Providing offers aids customer acquisition as it lowers the entry bar for most customers with the belief that once they try out a product, they will like it and, more importantly, repurchase it, even without the offer.
Upselling and cross-selling are two common ways of acquiring and retaining clients. For example, you can upsell by offering an existing customer a higher price for a much better or upgraded product, which, despite being costly, will offer greater satisfaction. On the other hand, cross-selling allows existing customers to complement their purchases with additional products. This boosts sales and profits and gives your customer a one-stop shop to return to every time.
5. Speak Your Customer’s Language
Customers mostly buy from brands they trust. So, as part of curating a trustworthy partnership with your clientele, you have to be able to speak in their language. Speaking in a customer’s language creates a camaraderie that you can easily leverage to grow your business.
When you speak in a customer’s language, you make customers relate to your brand better, and the result is brand loyalty–they will keep coming back.
6. Use Segmentation and Targeting
Not all customers are the same. Therefore, it’s important to understand the nuances in your customer profiles to segment and target them correctly. Segmenting enables you to target customers accurately by curating messages and offers that suit them. In addition, accurate segmentation makes it easier to acquire customers from a specific segmentation.
7. Make Use of Customer Analytics
Business is a game of numbers, with every unit representing something. Therefore, you should pay a lot of attention to your analytics. Analytics informs you whether the strategies in place in your retail business are working or not.
For example, you can tell whether your customer acquisition efforts bear fruit. By paying closer attention to these numbers, you can even get ideas on what to improve on.
On the other hand, these analytics inform you of things like your customer’s lifetime value. Such metrics tell you whether you’re retaining customers or not. With this consideration, it’s true to say analytics are the steering signals you need to sail your business successfully.
Here are a few dashboard software examples that can help you stay on top of your KPIs:
- Retail performance dashboard: This allows you to view departmental sales progress based on growth, sales targets, average revenue per use (ARPU), Customer lifetime value (CLV), and more.
- Sales conversion dashboard: This enables analysis of your sales process down to its actual stages to boost your overall conversion rate. It can do more than simply provide you access to data; it also organizes that data, making it easier to comprehend.
- Retail distribution management dashboard: Focuses on the best prospects in your selling process. It provides quick and easy access to important data on active sales opportunities within a specific location.
- Product availability dashboard: Helpful for maintaining optimal supply levels and avoiding shortages that can send your customers to competitors.
- Sales Leaderboard: Enables you to single out the top salespersons based on metrics such as completed tasks (calls, emails, chats), monthly recurring revenue (MRR), and client retention rates.
8. Build a Community Around Your Brand
As previously stated, acquiring a customer is not cheap–it’s expensive, with low conversion rates. However, creating a community around your brand can help circumvent that obstacle.
Every business seeks to address a given problem in society, and creating an intimate community should be based on this mission. With a robust community, you can access high-value prospects, which aids your customer acquisition efforts. Furthermore, actively engaging the community helps keep the already acquired customers.
9. Mitigate Your Churn Rate
It doesn’t help your business if you make the significant investment needed to get a customer to buy from you, only to lose them again. A high churn rate (the rate at which your business loses current customers) translates to lower profits and loss of competitive advantage as lost customers flock to the competitor’s doorstep. To be successful, make your churn rate as low as possible.
A high customer churn hinders acquisition, too, because you deplete your target market quickly, and the acquisition budget grows astronomically. Watching out for the areas that might be contributing to the churn can help you mitigate this challenge.
10. Have a Clear Customer Progression Journey
It’s important to consider how you’ll onboard a customer and how they will progress within your brand over time. For example, some of your products are better as entry point products, while others are better as follow-up products. You need to figure this out and lay out a clear purchase path for your customer. Onboarding is a continual procedure that assists users in moving through all phases of their experience.
Product analytics can assist you in improving user onboarding by providing you with the information you need to make informed decisions.
Customer Acquisition and Retention in a Nutshell
The big dilemma with any business is how to get many customers through the door and keep them returning. Remember that retaining a loyal customer is better than acquiring one, but that doesn’t mean strategies to acquire new customers are less important. In short, acquire and make efforts to retain your customers to realize more sales, higher profits, and a good reputation.