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Reduce Churn: How to Increase Customer Retention Rate

Peter Sobotta
Updated 05/18/18 9:33 PM

While many online retailers focus on enticing potential customers through sales and discounts, many of these practices fail to convert one-time buyers into lifelong customers.

Customer retention and brand loyalty are powerful tools used by tech giants like Apple to maximize the lifetime value a customer provides to an organization. In fact, the lifetime value of a customer is so great that according to a 2014 report by the Harvard Business Review, a marginal 5% increase in customer retention rate can lead to a profit increase of 25% to 95%.

Simply put, online retail is like a game of dodge ball. You want as many people on your side as you can get.

So, how do you keep your players from getting knocked out of the game?

1. Build Trust

Today, shopping is a detail driven venture. People want to know everything about the product they're buying, and who they're buying it from.

Start with listing some basic information such as your company's address, contact information, and where the product is being shipped from in an easily viewable location. This display of credential adds validation to your business, which translates into a better awareness of your brand.

Maintain contact with your customer, and inform them of everything affecting their product. Your customers will appreciate your transparency and therefore view your brand as honest and trustworthy. 

2. Educate and Engage Consumers

By providing a platform where customers can learn more about the products and services offered by your organization, you're creating a much more complete user experience.

Incorporating a system in which your customers can ask questions, or learn more about a product's more technical features can foster a community like feel, which according to Sales Force, helps a company outperform it's competitors.

3. Build a Better Feedback System

While advances in technology have allowed for a faster shopping system, the human feedback of the experience is left on the lagging edge. 

An effective user feedback system employs the use of detailed customer satisfaction surveys, that provide the consumer with more personalized and specific questions.

To build a better feedback system, try to incorporate the information you gather from your product returns. By using data from the products your customers send back, you can gain insight as to what your customers want.

4. Address Your Audiences on Social Media

People often take to social media to share both positive and negative experiences. For a brand, a negative review is never ideal, but if handled correctly, it can serve as a public stage to demonstrate a company's commitment to their customer.

ZenDesk reports that 45% of people share negative reviews on social media. By combating these negative reviews with traditional commitment and creative solutions your brand can prevent the loss of a valued customer and perhaps even attract more people to your products.

5. Go the Extra Mile, Or Else Your Competitors Will

Consumers today are looking for the extreme positives in their shopping experience: they want the highest grade of product, and they want it fast and cheap. What sets you apart from your competitors is your ability to consistently meet and exceed the customer's expectation. According to Right Now Technologies, a vast majority (86%) of consumers are willing to pay upto 25% more for a better consumer experience.

Start with personalizing your involvement with customer. For example, quickly replying to a consumer's inquiry or complain will make them feel prioritized and valued. 

Once you've mastered more traditional customer care practices, try offering some more creative solutions. For instance, if you notice that consumer has regularly purchased a number of accessories for  their smart phone, try offering them a discount on their next accessory purchase.

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