American companies lose nearly $140 billion annually to avoidable customer churn — that’s a number that would be frightening if it didn’t make so much sense. Businesses lose customers all the time, and it’s not always for good reasons.
Regular customer renewal is critical to business. It’s no secret that taking on a new customer costs five times as much as keeping an old one. If you’re hoping to keep revenue up and costs down as time goes on, you need a viable customer retention strategy in place.
Keeping customers means meeting their needs and treating them with respect. But what does that look like in a practical context? If you’re hoping to increase customer renewals both now and in the long term, there are some absolute musts to consider.
1. Keep it personal.
Consumers respond to personal attention — the average person is willing to spend 17% more when doing business with companies that provide good service. While highly personal service should always be the goal, businesses rarely have the manpower to make it a reality across the board.
Automation tools can give your communications a personal edge. Workflow automation can give you the tools to create custom email templates, connect with clients, and automate internal manual processes. Automation helps ease the burden of connecting with all of your customers.
2. Make them automatic.
At the end of the day, most of us are just lazy. If there are two options available and one requires no effort at all, most will choose that option.
That’s the logic behind automatic renewals. By letting your customers’ accounts and payments renew automatically, you’ll follow the footsteps of brands like Costco. This process maximizes retention by making the process incredibly easy for customers.
That being said, you should never make it difficult to cancel a service. If a customer wants out, it’s in your best interests to part ways quickly and cleanly. Automatic renewals are a good way to make customer retention the norm, but don’t keep any of your customers trapped in the long run.
3. Streamline the process.
Automatic renewals might not be right for you or your business. That doesn’t mean you can ignore the whole process of renewal itself. Companies need to stay as focused as possible on making their onboarding and retention process functional: 48% of consumers have left a product’s website for another simply because the experience was confusing or poorly curated.
The fix here is simple: Make renewal a breeze. If you’re not doing automatic, make the steps obvious, clear, and easy. All types of people and businesses are liable to use your company; make sure you have a customer retention format that fits as many different experiences as possible.
4. Don’t cut them off.
Let’s say one of your customers is out. He doesn’t want your product or service anymore, and that’s that. What do you do? Most businesses would immediately suspend service and call it a day. While this might make sense in terms of immediate cost, this can incur other problems down the line.
Consider providing your service for some additional amount of time while reminding customers that they can pay to renew at any time. Possibly even offer a “parting gift” of sorts, like a renewal discount for the future. Leaving your customers on good terms is not only a great way to boost your business’s reputation, but it’s also a good way to get departing clients to return. Research from McKinsey & Company shows that satisfied customers are almost universally more likely to upgrade or retain a service than dissatisfied customers.
No business can really work without return customers. Loyal patrons are what keep every kind of business afloat, from big-box stores to web design firms and everything in between. As critical as customer acquisition is, customer retention makes every new acquisition that much more valuable.