A five percent increase in customer retention can increase business profits by 25 percent. That’s substantial, but according to the Harvard Business Review, it may be on the low side. That same five percent retention increase may be able to increase revenue by up to 95 percent.
So where should you invest your time and resources to effectively increase customer retention?
An online customer community is a good place to start. Customer communities bring customers, companies, and subject-matter experts together for the betterment of the group. With the right strategy and activities, a customer community can greatly improve your retention rates.
Here are five ways to increase customer retention using an online community.
Research from Gallup shows that customers in a variety of industries, from retail banking and electronics to B2B, are worth more when they’re engaged. For example, B2B companies that fully engage their customers have a 63 percent lower customer attrition rate and a 55 percent higher share of wallet.
Use your online community to provide a range of activities designed for engagement. From connecting with peers to asking questions in discussion forums or sharing opinions in original blogs, anything that attracts and keeps customers active helps deliver value and, ultimately, increase customer retention.
Many engagement methods, like sharing best practices in discussions, also help customers use your use your products more effectively. Customers often share creative ways to resolve issues as well as innovative ways to use products that your company may not have thought of. When people use such advice to get more value from your products, they’ll also get more value from your company and be more likely to stay with you.
Expert Tip: Encourage customer engagement by rewarding those who participate, refer friends, or make additional purchases. You can do this with formal customer advocacy programs or gamification tools that award ribbons and badges to your most engaged customers.
The first thing that 73 percent of customers do when they need help with a product or service is search the internet, according to a study by portal software consultancy Software Advice. That’s encouraging, since it shows that the vast majority of customers try to solve problems on their own before taking up your company’s time.
If they don’t find the answers they need, however, customers won’t have much choice but to contact you. That could lead to more dire problems, as research from Google shows that 78 percent of customers will end a relationship with a business due to bad service and 61 percent will switch to a competitor.
Use your online community to provide a single location where customers can go to solve their own problems. Having one place to look will cut down on how much Googling your customers need to do, saving them time and frustration.
Fill your community with self-service tools including detailed product documentation in file libraries, FAQ pages, and help forums where customers can post questions for their peers to answer. Make sure that someone from your customer service team is monitoring conversations as well. They can jump in on particularly tough questions to ensure customers get the support they need.
People don’t connect with corporations, they connect with other people. Help your customers build connections that keep them engaged by providing networking tools in your online customer community. Some tools include:
Connecting people with others who share the same background and interests allow them to build relationships and grow together. Customers can use their networks to quickly ask questions and receive support as well as feel like they belong to something bigger than themselves.
This creates a culture of support and inclusion that helps your customers succeed. They’ll be reluctant to leave such a positive atmosphere behind, which will help raise your retention rates.
Sixty-three percent of customers expect a personalized experience based on their purchase history. Sixty-two percent also expect a consistent experience regardless of where they interact with you, but only 42 percent of brands are meeting those expectations.
With an online customer community, you can not only provide the experience that customer expect, you can go above and beyond. That’s because online communities add behavioral data from your customers to the traditional transactional and demographic data in your CRM. Online behavioral data will show you what discussions, files, topics, and products your customers are interested in so you can provide a tailored, relevant experience for every customer.
To make this work, integrate your online community with your CRM. Combine data from both systems, as well as marketing automation and other platforms, in a single place (such as your CRM or a third-party business intelligence tool) so you have a complete picture of customer interests.
Once you have a 360-degree view, use it to ensure that your customer experience and engagement tactics are aligned across every channel. Provide consistent information in your online community, on your website, and through public social networking accounts. The best online community software will even let your customers import profile information from sites such as LinkedIn to more closely align the experience.
When you use your community to go above and beyond the basic experience customers want, you’ll exceed your customers’ expectations. That wow factor may be the difference between a loyal customer and a higher attrition rate.
People love to give their opinions, so ask for them. Ask your customers what they think about your products and services, as well as how you can improve them. You can create a dedicated discussion forum just for feedback and product ideas, or you can encourage customers to send ideas to one of your staff members via email. Just giving feedback will help customers become more invested in your business and its products.
Then, act on the feedback you receive. Incorporate new ideas and customer improvements into your product development processes, publicly thanking customers who contributed and announcing when enhancements roll out. Customers will love that you not only listened to their thoughts, but found them valuable enough to incorporate into your business. Just think how impressed you would be if a company acted on your feedback. Even if you didn’t become a customer for life, you’d probably say nothing but good things about them to friends and colleagues.
This practice benefits your company in terms of market relevance and new customer acquisition as well. Customers know your products and what they need from them best, so their ideas will likely help your business keep up with changes in the market and win new prospects with better solutions.
Expert Tip: While feedback and product development can be powerful retention tools, remember that not all feedback is worth passing along to your product team. Making every change that customers ask for can result in a complicated product that’s difficult to use. So choose the feedback that you implement based on what will benefit the majority of your customers.
The tactics you use to increase customer retention will impact far more than just customer loyalty. They’ll also trickle down to increase satisfaction, revenue, and help grow your business as a whole.
Online customer communities provide one location where you can implement multiple retention techniques, or even launch a full-scale customer loyalty program. Take advantage of the tools at your disposal to create a stronger customer base that helps not only your business, but current and future clients as well.