{"id":18120,"date":"2022-08-02T09:00:34","date_gmt":"2022-08-02T08:00:34","guid":{"rendered":"https:\/\/www.intercom.com\/blog\/?p=18120"},"modified":"2024-10-22T17:52:06","modified_gmt":"2024-10-22T16:52:06","slug":"customer-retention-5-best-practices-6-strategies-for-low-churn","status":"publish","type":"post","link":"https:\/\/www.intercom.com\/blog\/customer-retention-5-best-practices-6-strategies-for-low-churn\/","title":{"rendered":"Customer retention strategies: 5 best practices & 6 strategies for low churn"},"content":{"rendered":"

Customer retention is the biggest opportunity \u2013 and the biggest challenge \u2013 facing businesses today.<\/p>\n

While many companies focus on acquiring shiny new logos, acquisition is only one small piece of the puzzle. If you consistently acquire new customers but they only stick around for a month or two, you won\u2019t build a sustainable long-term business (or good word of mouth for your brand) \u2013 no matter how low the customer acquisition cost is, you\u2019re in leaky bucket territory<\/a>.<\/p>\n

To lower the burden of acquisition, you need to increase customer loyalty; and the first step to happy, brand-loyal customers is retention. Improving customer retention is especially crucial in times of economic uncertainty, when it’s increasingly important to build a resilient business with a reliable revenue stream.<\/p>\n

But how do you retain customers? The key is engaging them at the right time, in the right place, and with the right message. Using clever targeting to ensure you reach the right people, and multichannel, integrated campaigns to help drive the right action when and where it\u2019s most effective, you can create retention campaigns that keep your customers engaged and happy.<\/p>\n

Read on to learn more about customer retention: what it is, why it matters, and our key strategies and best practices for customer retention.<\/p>\n

What is customer retention?<\/h2>\n

Customer retention is the rate at which your business can keep its paying customers over a given period of time. Customer retention is important to any company because it measures not only how successful they are at acquiring new customers, but how successful they are at satisfying existing customers. This makes it a crucial metric to measure no matter what stage of growth your business is in.<\/p>\n

Why a customer retention strategy is important<\/h2>\n

Most people think retention is so crucial simply because it means you lose fewer users than you otherwise would. But a sound retention strategy is actually one of your most powerful levers to grow your business by creating loyal customers and building valuable customer relationships.<\/p>\n

\u201cRetention can be more than twice as powerful as customer acquisition\u201d<\/p><\/blockquote>\n

A study by Price Intelligently<\/a> showed that a 1% increase in customer acquisition<\/a> affects your bottom line by just over 3%. But improving your retention by lowering your gross churn by 1% extends customer lifetime value and increases your bottom line by around 7%. That\u2019s right: retention can be more than twice as powerful as customer acquisition.<\/p>\n

Not only that, but those current customers spend 67% more<\/a> on average than new ones. They\u2019re also more likely to refer you to other customers, which is one of the most effective ways of generating leads. Research shows<\/a> that referral leads convert 3-5x more than leads from other marketing channels, have a 16% higher lifetime value, and go on to have a 37% higher retention rate, making them even more valuable.<\/p>\n

\u201cBy reaching customers with the right message, at the right time, and in the right place, you can improve customer satisfaction and increase the likelihood of that user sticking around\u201d<\/p><\/blockquote>\n

One retention tactic that works particularly well is lifecycle messaging<\/a>. Lifecycle messaging involves contacting users with contextual, personalized messages that provide value based on their actual experience of using (or not using) your software. These messages are targeted and delivered across multiple channels, often as part of an orchestrated multichannel campaign<\/a>.<\/p>\n

This means you can reach them where they\u2019re most likely to take action, whether that\u2019s inside your app or product or out. By engaging customers with the right message, at the right time, and in the right place, you can improve customer satisfaction and increase the likelihood of that user sticking around.<\/p>\n

Best of all, to create these message schedules you don\u2019t need a \u201cretention hacker\u201d. All you need for a lightweight but effective customer retention program is a few hours to create a simple campaign of messages<\/a> that will pay back many times over \u2013 and instill a culture of retention marketing into all aspects of your business. Building these customer relationships from day one, and optimizing the ideal experience, is the key to improving retention rates.<\/p>\n

How to understand customer retention<\/h2>\n

The key to a good retention strategy is spotting the symptoms of churn early with your existing customers. You’ll know you’re losing a customer when you see a gradual decline in customer engagement. It’s important you act during this window, because once a user is gone, it’s very difficult to get them (and the corresponding lifetime value) back.<\/p>\n

\"How<\/p>\n

6 best customer retention strategies<\/h2>\n

Instead of thinking about loyalty efforts as a siloed retention program, we recommend embedding a culture of retention into your company. By prioritizing customer engagement at every stage of the customer journey<\/a>, every interaction becomes an opportunity to build long-lasting customer relationships \u2013 which lead to long-lasting customers. In this way, your customer-facing teams are empowered to make a real impact on your customer retention, and can also help to spot and reduce churn before it happens.<\/p>\n

With that underlying principle in mind, you can try one (or more) of the following strategies to improve customer retention rate \u2013 starting today.<\/p>\n

1. Defend against churn by reducing time to value<\/h3>\n

The seeds of churn are planted the moment you acquire a customer. Even after initial onboarding, everything about your product is still unfamiliar, and you shouldn\u2019t expect a new customer to figure it out on their own. This is why creating a great customer experience is important from day one. By reducing time to value and helping customers find their \u201caha!\u201d moments ASAP, you can help them to instantly see the return on investment of your product or service \u2013 meaning they\u2019re more likely to feel the impact and stick around.<\/p>\n

\u201cMany people will gravitate toward the one or two features of your product that resonate with them the most, but don\u2019t explore other features. That means they\u2019re missing out on some of the best parts of your product\u201d<\/p><\/blockquote>\n

For example, many people will gravitate toward the one or two features of your product that resonate with them the most, but don\u2019t explore other features. That means they\u2019re missing out on some of the best parts of your product. Those first-time buyers need to see value from the first steps of the customer journey. In the first few days after signup, getting them to use those other features and discover new value works wonders for retention.<\/p>\n

You can do this in a few ways:<\/p>\n