Growth is the Holy Grail for any business, and it’s driving competition to be fiercer than ever. If a company doesn’t top its previous quarter or generate more money than last year, stock prices drop. That’s just the way of the world. This is why companies go after growth at all costs. It’s why Netflix and Spotify keep offering you free trials. It’s why Uber keeps sending you discount codes even after all this time. And it’s why Apple keeps pushing thousand dollar phones on you even after they’ve become the biggest company on earth.
However, what many companies get wrong is that only customer acquisition can drive growth. The opposite is true. The potential for customer retention to drive growth is much greater.
And here are a few ways to do that.
1. Work on Acquisition and Retention Simultaneously
While there seems to be a lot of hullabaloo around customer acquisition, everyone agrees that retention is cheaper. It’s nearly 5-25 times cheaper to retain a customer than it is to acquire one. Well, guess what? It’s also much better. All in all, customer retention will give your company a lasting impact and a better chance for growth
Research shows that there is a 25% increase in profit when 5% customer retention increases. More than that, nearly 75% of loyal customers will also tell their friends and family about your service/product. This means that you ensure good word of mouth through customer retention.
If you only focus on customer acquisition, you won’t be doing justice to the customers who’ve been with you for a long time. Hence, you should look at your existing customers and focus on them while also running a respectable acquisition program.
2. Mobilize and Engage Your Users
Most people choose one service over the other because of something personal. Most competition today centers on what you can provide to the customer that no one else can. And it’s not only the content. Most of the time, it may be the user experience , presentation, or simply a perceived value. It’s the reason people may prefer Instagram over Snapchat or WordPress over Blogspot. In each case, the services offer something similar, but whether because of the UX or the presentation, people choose one.
More than that, it’s very important to get your users to actually use your service. How many times do you remember downloading an app, only to never use it again? That’s the difference between a successful product and a clunker.
That’s why it’s important to measure active users rather than the total user count. To increase the former, there needs to be research on what they love.
If you find that most of your users engage with one specific feature, you should promote it more. If they cling to certain content more than others, focus on that more.
3. Step up the Monetization Game
Your monetization strategy shouldn’t stay the same for very long. Sure, if something’s working, you should stick with it. However, making it your bread and butter without a fallback is a classic mistake.
You don’t have to have the most competitive prices as well as the most perks. However, you do need to have something that the customer can value beyond others. Customer experience is key when it comes to customer retention. It’s no longer the content or product that you monetize, it’s the experience.
For instance, a service with the best catalog for TV and movies, but with terrible UX won’t fare well. However, if a fluid and smooth UX is bundled with a respectable catalog of films and TV shows, it will.
4. Play the Long Game
Long-term value is something that not many of us think about on a regular basis. However, it does pop up when we’re making big decisions. The reason that many people will sign up for Disney+ as soon as it launches is because of its catalog. The reason we think Netflix will fare just fine after losing Friends to WarnerMedia and The Office to NBCUniversal is because the content that it offers.
Another example is Netflix’s adaptable thumbnails. They change, even for the same content, according to your taste. If you’re into thrillers, then the thumbnail for Stranger Things may show you the Mind-flayer. However, if you’re into more wholesome content, then it may show you a character smiling. While it’s a small detail, it shows customers that you care about their taste. Spotify does the same with its Discover Playlists, by recommending songs similar to yours.
5. Value Your Long Time Customers
Plenty of businesses have rewards programs and discounts for their long-time customers. These are ways in which you can show your customers you care about them. And if your customers feel valued, they’ll be more likely to stay and to buy in to more deals. 77% of customers are more likely to stay with a company because of its loyalty programs. This strategy is basically rewarding loyalty, and it works the same way on loved ones and relatives.
You can offer 5-year customers first access to newly released titles or product features not available to other users. You can even allow them to rent a handful of movies for free. While this may cost you in the short term, it means hanging on to customers in the long run. And it means they won’t run to another service the second it launches.
Customer retention doesn’t get the attention it deserves. It’s a great tool to help companies grow and develop lasting, loyal relationships with their customers.