6 Customer Retention Strategies for Small Businesses

6 Customer Retention Strategies for Small Businesses

If you find that most of your first-time customers only make a purchase once and never come back, it’s an indicator that your business isn’t scaling as quickly as it could be. While new customers are great for boosting sales, every company needs a base of loyal customers in order to achieve sustainable growth. In fact, it costs six to seven times less to keep an existing customer than it does to win a new one – which is why focusing on customer retention is key if you want to increase profits in the long run. Keep reading to discover customer retention strategies you can use in any industry.

What is Customer Retention?

Customer retention refers to your company’s ability to inspire repeat purchases. When your retention is strong, returning customers continue to choose your products or services over time instead of switching to your competitors’ offerings.

Your customer retention rate is a key metric you can use to gauge your customer loyalty. To measure customer retention over a given period of time, you can use this formula:

(Total number of customers at end of period – Total number of new customers during period) ÷ Total number of customers at start of period

A high customer retention rate naturally reduces your churn rate—the number of customers who stop using your products or services—and boosts your customer lifetime value, which is the average amount of money that customers spend during your relationship.

6 Customer Retention Strategies

The best way to increase customer retention is to provide the customer experience your clients are looking for. However, if you think churn may occur, it’s equally important to have a plan to re-engage customers before you lose them. 

Here are six customer retention strategies that can help you achieve greater brand loyalty, along with examples of what they can look like in action.

1. Improve your onboarding process

Your first few touchpoints with an existing customer set the stage for the rest of their interactions with your business—this is considered the onboarding process. Nurturing the relationship after the initial transaction gives you the opportunity to follow up on their experience, show them more products or services, and/or share educational material. For example, if you own a hair salon, you can send follow-up emails to new color clients to explain how to maintain their new hair color themselves and when they should return for a touch-up.

Interactive walkthroughs, video demos, and one-on-one video calls can also make your onboarding process more engaging and personal.

To figure out where you’re meeting customer expectations—and where you’re not—it’s vital to review, respond to, and act on feedback quickly. Whether you’re getting it from customers in-store, via email, on social media, or on a review platform, customer feedback helps you home in on what you do well and what customer problems you can tackle. 

Not only can feedback help you shape your future operations, but customers appreciate being heard. At least one survey shows that 83% of consumers feel greater loyalty to brands that respond to and resolve customer complaints.

Plus, when you receive positive feedback, you can reach out to those happy customers for testimonials that you can share on your website and social media channels.

2. Build a customer loyalty program

Giving repeat customers exclusive rewards is a highly effective customer retention strategy that can keep them coming back. When you build a customer loyalty program, you provide incentives that can influence customer behavior and give your current clients something to strive for.

3. Personalize your sales promotions

Using the same marketing strategy for all your current customers doesn’t cut it if you want to stand out from your competitors. Think about when you have a good relationship with someone—you expect them to know a lot more about you than someone they just met. Same goes with your customers. Personalize your sales promotions to meet the needs of your unique market segments. If a client exclusively buys shoes from your ecommerce shop.

Offering sales promotions for birthdays and first-purchase anniversaries can also be great ways to keep customer engagement high throughout the year. To make this customer retention strategy efficient, use a customer relationship management (CRM) tool to keep track of client information.

4. Improve your customer support

The quality of your customer support can make or break your client relationships. Data shows that after a poor customer service experience, 40% of clients will stop buying from a brand. As such, improving your customer support experience is one of the most critical customer retention strategies you can put into action.

Keep in mind that 31% of consumers expect a response time of 24 hours or less for questions or complaints made on social media. Whether you offer live chat, phone support, or email support, make sure you set customer expectations about your response times so they’re not waiting for an instant replay if that’s unlikely. 

To speed up customer support times, add an FAQ page to your website so clients can get the help they need before you (or your support team) can personally respond. You can also consider setting up a knowledge base using tools.

5. Win back disengaging clients

Customer retention strategies aren’t 100% foolproof. When you notice a client disengaging or see your overall customer retention metrics dropping, you should have a workflow in place to win them back. 

For example, if you have customers who haven’t repurchased in two months, you can send a “we haven’t seen you in a while” email with a welcome-back offer. Or you can make phone calls to ask why customers haven’t returned, which helps you figure out what you could do better next time. It also opens up the opportunity for you to upsell customers with new products or services that better fit their needs.

If customer churn does occur, don’t forget to follow up later on. A client’s decision to drop out of the customer journey may not be permanent— if they’re facing temporary financial hardships and have to cancel their personal training contract, for instance—but they might forget about your brand if you don’t reach out.

6. Show your appreciation

Creating small moments of customer delight throughout the customer journey is a simple retention tactic that can make clients feel like a VIP when shopping with your business. A bakery can provide a free treat “just because,” while a car mechanic can leave an air freshener in customers’ cupholders when a service is complete. 

These special moments can be the reason clients go from loyal customers to brand ambassadors who become your de facto word-of-mouth marketers who actively provide referrals and recommend your business.

We hope you enjoyed our article on 7 customer retention strategies for small businesses. We’ve worked to compile a list of tactics that you can use to keep your customers happy and coming back to your business in the future. If you have any questions about customer retention, please feel free to leave a comment below or contact us at Thank you for reading, we are always excited when one of our posts can provide useful information on a topic like this!

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