It’s one thing to get customers, but it’s another thing altogether to keep them. Your sales team may be able to pull in hundreds of new clients each year, but it won’t mean a thing if they don’t stick around. Some customer churn is inevitable; it’s impossible to keep every single customer until the end of time. But there are things you can do to minimize that loss and build customer retention rates.
Improving your customer retention numbers can improve net revenue retention and help you build a strong brand identity and reputation. Several factors impact how long a client stays invested in your product or service, and they’re not all connected to the product itself. A strong onboarding process, a climate of trust, and a personal relationship with the customer success team are all factors that can affect customer retention.
In this blog, we’ll discuss how to measure your customer retention rate and cover five proven strategies to build your customer retention rate.
What Is Customer Retention and Why Does It Matter?
Customer retention is the opposite of customer churn. The churn rate measures customers lost over a certain period of time, and customer retention describes how many customers keep using your product or service.
Loyal customers are the foundation of a successful business in any industry, so it’s crucial to understand your retention rate and continually work to improve it. Investing in customer retention strategies can give your company a competitive edge and create a reputation as a trusted authority in your industry.
Measuring Customer Retention
Before you can make a plan to improve customer retention, you must understand what your current numbers look like. You can calculate the customer retention rate over any specified time period, but most companies look at monthly, quarterly, or yearly churn. The rate is usually expressed as a percentage. To get the percentage, use the formula below, then multiply the result by 100.
Customer Retention Rate Formula:
What Is A Good Customer Retention Rate?
What’s considered a “good” customer retention rate?
The answer depends largely on your industry. Here are some industry averages (based on data from 2022):
Retention rates in those industries are fairly low, but that’s not true in all sectors. For example, the average retention rate for banking companies is 75%, and it’s 84% in the insurance industry.
5 Ways to Build Customer Retention
Want to improve customer retention? Then you need to provide a superb experience across every customer journey stage. Start by focusing on the customer onboarding process, and then continue to find new ways to support ongoing customer success.
Keeping a customer is about maintaining a strong relationship and giving them a product that betters their lives, and that requires constant attention. The effort is worth it, though. Satisfied customers are a key source of reliable revenue, and they may even support acquisition efforts by providing word-of-mouth referrals.
Tip #1: Streamline Customer Onboarding to Boost Customer Retention
Also called implementation, customer onboarding simply refers to the process of introducing your customers to your product and guiding them through the first steps. Think of onboarding as a guided tour that gives your client inside knowledge of all the places and activities on their journey as your customer.
Every product has a learning curve. A customer might be extremely clear on your product’s features and potential benefits, but they probably don’t know all the ins and outs of the operation right away. A clear and comprehensive onboarding process helps customers access every useful feature without overwhelming them. That means your customer onboarding is important for customer success.
Onboarding is your company’s chance to make a strong first impression and show your clients what they can expect going forward. And customers understand exactly how important this part of their journey is — 63% of clients consider the onboarding process a key factor in their buying decision.
A successful onboarding starts with a well-designed and documented process. Your customer success team should understand exactly how to guide new clients from the sales handoff to full implementation (“go live”).
Ultimately, your onboarding strategy should reduce a customer’s initial time to value — that is, the time it takes for your client to see a return on their investment in your product or service. The sooner your customer knows how helpful you can be, the more likely they’ll stick around.
On the other hand, a complicated and slow process can contribute to early customer churn. Some clients might leave before they even get to fully experience your product, costing your company time and revenue and potentially damaging your reputation.
Onboarding strategies that can significantly improve your customer retention rate:
- Send a welcome email telling customers what to expect next
- Automate notifications and task management actions to reduce errors and save time
- Offer tutorials, videos, and “self-serve” learning resources to customers
Giving your customers the support they need throughout customer onboarding can help drive retention and ensure things stay on track. Moreover, you’ll also be giving them an excellent experience from the beginning.
Tip #2: Communicate Frequently With Transparency
Transparent communication is a fundamental part of supporting the success of your customers. Prioritizing communication helps build trust and credibility with your customers, fostering long-lasting loyalty.
Honesty is equally important. You should also set realistic expectations about your products and services, including capabilities and even limitations. Doing so helps manage customer expectations and improve satisfaction with your solutions. Being open, even when things go wrong, builds trust with your customers and allows you to step in and proactively fix issues.
It’s not enough to talk to your customers only when things go wrong. Instead, touch base regularly to see how things are going, and make sure to celebrate their successes. But you don’t necessarily have to commit to personalized interactions. Even automated communications, like welcome emails and task reminders, help keep your customers engaged and in the loop.
One way to keep customers engaged throughout the process and to give them a chance to ask questions is by holding recurring webinars that provide an in-depth look at the onboarding process and give customers a chance to ask questions. For example, GUIDEcx offers monthly Office Hours available to all customers. These sessions are led by our product team and spotlight the latest enhancements while also allocating time for customers to interact with our team in real time.
Another way to communicate with your customers and keep them engaged is by building an online community.
GUIDEcx has created its own online community called, The Onboarding Network. This community, made up of implementation professionals, is a great chance to share tips and tricks related to onboarding and network.
And best of all? It’s free to join.
The important thing is that your customer feels like they have a personal relationship with your team. When a client feels valued and heard, they’re more likely to come to you for help when problems arise, rather than giving up on the product and looking for other solutions.
Tip #3: Develop a Customer-Centric Approach
Modern consumer expectations have transformed in recent years. Clients expect regular communication and a clear view of what comes next. Every time your team connects with a client, focus on clarifying expectations and providing a personalized approach.
A customer-centric approach starts with actively listening to your clients and understanding their pain points so you can proactively anticipate and address their needs. You can also empower customer service representatives to respond quickly to customer inquiries or issues.
Providing seamless and personalized interactions, whether it be through responsive customer support, user-friendly interfaces, or customized solutions, helps create positive and memorable customer experiences. And those positive experiences are crucial — 96% of customers say customer service is an important factor in loyalty to a brand.
You may cater to clients of different sizes, styles, and even industries, and these factors can radically change what a customer needs from your product. Are you creating solutions that work for all of your customers?
Understanding what a customer might face helps your team prepare for questions and concerns. And that knowledge also allows you to prove that you understand your client’s needs and have products that address them.
Tip #4: Gather and Utilize Customer Feedback
How do you know what your customers need? You ask them. Gathering feedback from your clients is the most reliable way to learn what works and what doesn’t. Make sure you inform your clients about your data-gathering measures so they don’t feel like you’re spying on them.
You can gather data from customers in several ways. First, you can build data-gathering tools into your product to measure how often certain features are used or how much time is spent on a page (i.e., quantitative data). Another option is to ask your clients directly via surveys and other feedback tools (i.e., qualitative data).
It’s important to gather both kinds of data; neither is fully reliable on its own. Quantitative data shows what’s happening but can’t identify the underlying cause. Likewise, a customer’s perception of the problem might not match the actual issue. If you have both numbers and subjective feedback, you can put the two together to identify problems and develop solutions.
Once you have data, use that research to generate insights. The information you gather is useful for addressing individual customer needs, but it also serves a larger purpose. You can use it to identify larger patterns in how your clients use (or don’t use) your product. Those insights can guide brainstorming efforts for future updates and features to improve your customer’s experience.
Tip #5: Don’t Take Your Customers For Granted
Remember, developing the right mindset can be just as important as implementing practical strategies. To build customer retention, it’s essential to practice gratitude.
If you take someone for granted, you assume they’ll always be there regardless of the effort you put into the relationship. For example, you won’t feel the need to respond to a friend’s text or return a phone call from your brother. But every relationship requires maintenance, including your team’s relationship with your customers.
Without an engaged, satisfied customer base, a business can’t function. Your clients are ultimately the engine that keeps your company running, so respect and value them.
The right mindset supports every other facet of customer retention. When you truly appreciate your customers, you can better listen, communicate, and provide the products and services your customers want.
Customer Retention Starts With Onboarding
If you want to support your customers well and encourage them to stay with your company for a long time, you need to give them an exceptional experience. And onboarding is your first chance to deliver that level of service.
GUIDEcx delivers a streamlined customer onboarding experience while also reducing the workload on your team members. Our automated communication tools, integrated customer feedback solutions, and industry-leading integrations facilitate fast, thorough integrations that shorten your customer’s time-to-value.
A well-designed implementation process sets the standard for future interactions and improves customer retention rates. To learn more about how GUIDEcx can enhance onboarding and drive retention, book a demo today or start your 30-day free trial.
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