How CRM Helps with Customer Retention | YouDigital Blog
Potential customers are not as valuable as the existing ones
Why? Because keeping existing customers is much more profitable!
Did you know that studies show that increasing customer retention rates by only 5% may result in profits increase from 25% to 95%? And it costs from 5 to 25 times more to acquire a new customer than it is to keep an existing one, another study proves. Not to mention that it will cost you a staggering 16 times more to bring a new customer to the same level as a current one, proves Marketing Tech Blog.
The bottom line here is your potential customers are not as valuable as the existing ones!
And since it’s profitable to keep customers, you need to keep your eye on and measure your customer retention efforts.
Churn rate and why it matters?
To estimate how well your company is doing at retaining customers, you need to calculate your churn rate.
Churn rate, aka the attrition rate, is an important business metric that calculates the number of customers who leave a company during a given time period. You can analyze the churn rate by types of customers and thus see who is more at risk of leaving.
It’s quite simple to calculate churn. You take the total number of customers who left your company during a period of time and divide it by total customers at the beginning of the period.
Usually measured by month, quarter, or year, customer churn is, in fact, an indicator of your company’s health. Because the higher the churn rate is the less viable you’re as a business. It also a simple, yet powerful way to see whether or not you’re good at communicating with your customers and understanding what they need.
Customer churn is an indicator of your company’s health!
On the other hand, churn is the enemy of growth and a recipe for business decline. Not to forget that it’s simply too expensive!
For these reasons alone, churn should matter to you.
To make this idea really sink in, just keep in mind that:
- Improving customer retention has a 2-4x greater impact on growth than acquisition,
- 82% of companies claim that retention is cheaper than acquisition,
- 2% increase in customer retention can lower costs by as much as 10%,
- The probability of selling to an existing customer is 60-70%, and only 5-20% to sell to a new prospect.
The art of keeping customers
There are many ways of preventing churn and keeping your customers by your side.
But, if you really think of it, if you want to make your customers stay you need to focus on 3 main things: give them your full attention + offer a consistently great customer experience + personalize your interactions with them. And that’s exactly what CRM can help you do.
Here 7 ways a CRM system can help you prevent customer churn:
Notice they are about to churn
The best way to retain customers is to prevent them from leaving. You can make them stay by simply noticing on time that they’re considering leaving you. Once you spot the “churn” signs, you can take timely actions.
A CRM system is very helpful in detecting the signs of impending churn, as it notifies salespeople which customers have not been contacted or didn’t show any activity for a while. You can generate lists of customers that display these churn signs, and follow up them up with an email, a survey, a phone call, or maybe an entire marketing campaign.
So, if you noticed any signs of your customers heading for the door, take action now!
Stay connected through regular follow-ups and feedback
No matter what you do and how you do it – showing attention and interest in their opinion is the best strategy for keeping customers by your side.
To do that, you need to create a routine of regularly following up with customers and asking them for feedback.
A CRM is a rich repository of customer-related knowledge. It also streamlines your sales and marketing activities into consistent, automated processes. The CRM system can alert you when a follow-up is due, what your next action is, and what activity you should schedule to move onto the next stage.
And if you’re swamped with work and start losing track, you can assign activities to members of your team, and in this way ensure no customer is left on their own.
Finally, do not allow your customer relationships to be based on assumptions! A CRM system allows you to send feedback questionnaires, surveys, or polls to your customers via webforms they can fill out online or at the end of each resolved customer service session. Make sure you pay attention to all grievances and act on suggestions, as well as thank for any praise.
Increase your up-sale and cross-sale opportunities
We’ve already established that selling to an existing customer is easier. You know what they want and how they like to be approached in a sales situation.
That’s why maintaining strong relationships with customers gives you ample opportunities to upsell or cross-sell.
Since all the information on a customer’s buying behavior and sales-related communication is stored in the CRM system, it’s easy to notice tendencies, anticipate your customers’ needs, and timely action when a customer expresses interest in your other products or services.
Moreover, CRM can help you track your customers’ visits to your website and tell you what information they looked at. It can also alert you when a contract renewal is due or the free trial period is about to finish. Use these opportunities to send renewal and pitch new product releases or upgrades.
Reward your loyal customers
Not all customers are the same. Some of them may be a drain on your resources: demanding a lot, but bringing very little revenue. While others – stay loyal, buy a lot and regularly, and recommend you to others.
The latter are the ones you want to keep! That’s why you need to allocate more time, effort, and resources to such customers and ensure they get serviced quicker than the rest. Here are a few things a CRM system can help you do:
- Pull an up-to-date list of your more profitable customers, whom you can reward with a loyalty discount or any other incentive, based on their personal preferences. This is a simple, yet effective step towards making them stay happy and content.
- Generate a selection of your loyal customers and send them a regular customer (membership) updates, newsletters, or promotional campaigns.
- Prioritize customer support queue and speed up the response time for your loyal, VIP customers.
Engage in more targeted marketing
Everybody wants to be treated as individuals.
A CRM system can help you sharpen your marketing activities and make them more targeted. You can send more specific messages that fit the needs and preferences of different customer groups.
You can use and analyze the data you’ve collected on your customers in your CRM system, group and segment them by various criteria and strategize your actions in line with your customers’ buying patterns and consumption behaviors.
By being more relevant you can hit the target much more effectively, as well as create a more valuable experience for your customers.
Provide outstanding customer service
Nothing beats customer experience. It’s one of the most important factors for business success.
Did you know that after just one negative experience, 51% of customers will never do business with a company again?
And, of course, customer service is at the heart of customer experience. If you get it right, your customers not only will stay but also will pay you more! Research shows that 8 out of 10 consumers are willing to pay more if they get a better customer experience.
A CRM system is a massive aid here! It can help you:
- Monitor customer engagement on multiple social media channels and, this way, guarantee timely responses to their service requests, inquiries, or complaints.
- Help your customers in real-time via the live chat integrated into your CRM system.
- Increase your response times and be better prepared to offer comprehensive service by managing all customer inquiries in one central database, which gives you access to the entire communication history of each customer.
- Assign each service request a unique reference number and automatically route tickets into corresponding queues, categories, or types.
- Never leave a customer waiting for too long by automatically escalating unattended requests.
- Offer 24/7 support through self-service options, such as FAQs and the Knowledge Base portal.
After all, outstanding customer service is, by far, one of the most convincing factors for staying loyal to the brand.
Offer a more personalized communication
Personalization is a powerful means of keeping your customers satisfied.
When you personalize your communication with customers and offer them only relevant messages, they feel special and taken care of.
It can be as simple as using such data as their first name, their company name, position, and even birthday. You can also leverage their behaviors and preferences to personalize interactions.
All of this is right up the CRM alley!
Forget about sending mass emails with “Dear Sir or Madam” or not knowing the name of the person that calls you! This is no longer acceptable.
If you have a CRM system, you can easily send highly personalized emails, offers, special promotions, post-purchase surveys, or invitations and answer service requests fully informed of the customer’s situation and their previous enquires – all to show your attention and appreciation for their business.
A word of caution …
Keeping customers by your side is good. But do you really need them all?
To answer this question, think about the type of customers you want to attract.
Let me guess: you want them to regularly buy from you, appreciate your efforts, value the quality of your offering, be loyal, and spread the good word. Did I guess it right?
The trick here is that not all customers are like that. In fact, only a handful is.
“Many firms are attracting the wrong kinds of customers. We see this in industries that promote price heavily upfront. They attract deal seekers who then leave quickly when they find a better deal with another company.”
So, if you’re facing a high churn rate – maybe it’s because you’ve been attracting the wrong type of customers for too long by heavily relying on the discount policy. Cheap deal-seekers will never be loyal.
This means it’s time to reconsider your acquisition strategies, and rather focus on acquiring the right customers and making them happy, with the help of CRM.
CRM as the guardian of customer relationships
Just as its name implies, the Customer Relationship Management (CRM) system is preoccupied with establishing and maintaining strong relationships with customers.
In other words, its central function is to keep customers from churning.
And so far the results have been quite optimistic!
According to Capterra, 47% of CRM users said that their CRM had a significant impact on customer retention, and the same percentage of CRM users said that their CRM had a significant impact on customer satisfaction.
CRM can help your business centralize, optimize and streamline your communication with customers, treat every customer individually, not forget about them, and be there when they need you.
Finally, CRM can help you protect your customers’ personal data and ensure its safe storage and use. Today, CRM systems need to contain a special data-protection functionality set that helps businesses stay compliant with the EU General Data Protection Regulation (GDPR).
If you’d like to find out more about how CRM can help you retain customers, please contact us today.