Back in the day, railroad brakemen had to walk between cars of a train and manually insert pins to couple them together. A missing finger or two was taken as evidence of his experience. Thankfully, pin-type connectors were eventually replaced by couplers that worked more quickly and safely, but in the early days, if you hooked a car up to a train, you wanted to pull it for as long as you could!
By the same token, for the locomotive that is your business, it takes substantial effort to hook up a new customer. You probably won’t have to lose a finger or two in the process, but it may cost you considerable time, effort, and hence, money, to gain that customer. You want to pull him or her along happily for as long as you can.
There’s an old business adage that it costs five times as much to acquire a new customer as it does to retain one you already have. This may or may not be true, as I couldn’t find any research studies to verify it. There is compelling evidence, though, that increases in retention lead to increases in profit.
The Harvard Business Review points to a study indicating a 5% increase in retention rates leads to profit increases of between 25% and 95%, depending on the industry. It’s hard to say whether this is because retention leads to a longer relationship with the client, and that their purchases during this extended time drives the profit, or whether it’s because retention efforts lead to a higher volume of purchases immediately. It doesn’t really matter which is the case, or if they’re both working together, though, because the evidence is clear that it pays to focus your efforts on retention.
As far as retention goes, six pillars make up two main factors that contribute to it. We’ll talk in a future post about the six pillars and how they work with each other, but the two main factors to consider are ease and delight.
Ease
People will stick with your brand if that’s the path of least resistance. With some of today’s cautious consumers, they likely spent quite a bit of time deciding that your brand was the one for them. While inertia alone would encourage them to stay with your brand, this only actually happens if it’s easy to do so.
When the effort to accomplish their goals with your brand becomes greater than the effort to find a new brand, you run the risk of losing them. That boxcar will roll down the track behind you as long as its axles are oiled, its wheels are in good repair, and the track is clear. If these things aren’t the case, though, it’s not that difficult to derail it.
There are several services you can set up to make sure staying loyal to your brand is the easiest course of action for your customers. It may take some extra effort on your part to set these services up initially and to keep them running smoothly. Your efforts, though, will be rewarded with happier customers and an increased retention rate. Here are a few services you can set up to achieve this:
Customer Retention through Subscriptions
We have a couple posts on why and how to set your shop up with subscriptions, and if you want to go into the details, you can read our miniseries on subscriptions. The gist of the series is that enabling subscriptions to your products, either for replacement or novelty purposes, is a very effective way to compound your sales.
Beyond that, subscriptions are becoming more and more of an expectation by some customers. Offering them doesn’t give you as many bonus points as it used to, but not offering them may lose you points with some customers.
It’s kind of the retention question for you flipped on its head: yes, you spent lots of money acquiring a customer, but that customer also spent lots of time acquiring you as their provider of products and services. If they like your products or services, they want to retain you as their provider, and want an easy way of doing that. Enter a company like our favorite one for subscriptions: Recharge.
Yes, it takes you just a little bit of time and effort to set Recharge subscriptions up (or you can hire a competent web development agency to do it for you), but then Recharge makes it simple for both you and your customer to continue your relationship on an automated basis that neither of you has to think much about.
You can choose any subscription provider you want, but when considering who to choose, just make sure that the process your customers will go through to subscribe to your products is as simple and manageable for them as possible.
Customer Retention through Simple Shipping
Another aspect of your shop that customers expect to be seamless is shipping. Indeed, according to Parcel, a media company that researches useful information about the shipping logistics process, 80% of consumers say the shipping experience is what they think of most in their online shopping experience. This makes sense since it is often the last interaction they have with the brand in any given transaction.
Unless your store uses a dropshipper, or some sort of fulfillment service, you are probably responsible for sending out all your customers’ orders. Until your shop hit a large volume of sales, this was probably a fairly easy process.You printed labels one at a time, put together boxes of your products to affix your labels to, and then sent them off.
With a few orders a day this process may not have been a big deal, but as your orders have swelled to the dozens or even hundreds a day, you can easily get derailed by the sheer volume. This is when a service like ShipStation can really help.
ShipStation lets you print your labels in bulk, make sure you’re offering the best shipping options to your customers, and keep track of it all simply. This can go a long way towards making sure that you don’t fall behind in sending out your orders. Your customers might not feel that much better about you if their orders ship on time, but they will surely feel worse about you if they ship late, and anything you can do to simplify the process for yourself will be worth it to avert the negative response.
Customer Retention through Easy Returns
An aspect of your store that you likely don’t want to think about very much, but really should, is the returns process. Returns are a normal part of every business. Often returns happen not because customers don’t like your brand, but rather because the particular product they ordered doesn’t work for them for some reason. If the product doesn’t work, the only solution for the customer is to return it.
The good news is that easy returns can lead to an increase in brand loyalty. According to a retail industry news and analysis firm called TotalRetail, 84% of customers say that a positive returns experience actually makes it more likely for them to shop with that retailer again. So just by handling it well, the inevitability of returns can be a boon to your brand as well!
But a return needn’t be a loss of revenue in any event. At SeaMonster Studios we like Loop Returns because it focuses both on making the return as easy as possible, and also turning returns into exchanges, where you retain the revenue, or even upsells where you end up better than before. It does all of this seamlessly by integrating with Shopify to suggest alternatives during the return process, manage inventory, automate the return or exchange, and leave everyone happy with the experience.
Delight
As long as you have the ease portion of the equation solidly in place, you can add the icing on the cake: surprise and delight. Many business gurus would argue that too many brands spend too much of their time trying to surprise customers with this new feature, or that new marketing campaign. It’s true that if focused on before getting the fundamentals on track, trying to surprise and delight can be problematic. On the other hand, if you can surprise and delight with the fundamentals, this can be a winning strategy. Let’s consider some of the fundamentals that you can easily add a little bit of delight to.
Customer Communication and Marketing Automation
Most consumers would tell you they don’t want to be marketed to. Announcement of sales, though, and special offers? These are fine, even though you know they’re marketing, and deep down your customers know it, too. Still, the more you can think of your marketing as customer communication, the better. One way to do that is by using Klaviyo as your marketing provider to switch from an email-based strategy to a SMS-based one, as we discussed in our post, “Fly SMS Marketing Into Your Business.”
In that post, we recommended that you not confine your messages to marketing, but find other ways to connect with your customers such as by giving information about a product, or asking for help, for example in the form of a review. We’ll talk more about product reviews in just a moment, but another request you could make to your customers is that they let you know how well your website itself is working for them.
This can be particularly powerful if you specifically ask about how well the site works for them if they’re using an assistive technology like a screen reader. Just asking will show that you’re serious about the accessibility of your site, especially if you make sure to quickly fix any problems they bring up, or make sure your web development agency fixes them. Compound the effect by letting your customer know when you have fixed the problem.
Example SMS Request for Accessibility Review
How’s our site working for you? Do you or any of your friends use a screen reader or similar device? We’d love to hear your experience. Thanks in advance!
This may seem like a rather specialized request to make, but consider that according to the CDC more than one in four Americans has a disability and you’ll realize that equates to likely a quarter of your customers. Even if any given customer you send your request to has no disability, you could write your request so that you’d be asking them to either review your site on their assistive technology themselves, or to ask a friend of theirs to review it. This increases the likelihood that you’ll get the site accessibility user testing, and also has the added benefit of getting more people to visit your site, and to know about your commitment to accessibility.
Customer Retention through Reviews
A great way to acquire customers is by allaying their fears about your product through the use of customer reviews. We covered that in “Big Picture 3: Using Reviews to Prevent Freefall Fright”. Once they’re customers, though, it turns out that a great way to retain them and strengthen your relationship with them is to ask for and get a review of your product from them. Michael Simmons at Forbes states that “asking for help deepens relationships”.
Simmons further points out that, according to research done by Curebit, people who recommend a brand are much more likely to purchase from that brand, whether or not they have yet already. I think being asked for a review makes us feel important, and that afterwards our dispositions are always more favorable towards the brand that thus stroked our egos.
In order to be sure that you are asking for reviews as consistently as you should, you should automate review requests as we recommended in Big Picture 3. You can easily do this with the reviews provider we recommend: Okendo.
If you follow our advice, your review requests will come in fairly close on the heels of your customer’s buying experience (usually about a week or so after the product arrives). Then another good idea is to consider revisiting the already-submitted reviews at some later date (a few months or even a year later) to request from former reviewers an update of the review. This could surprise and delight them, and might remind them of how great your product is and that they want more.
Customer Retention through Customer Service
The most high-stakes moments of customer retention will come in the moments of crisis. Your customers will have come to you for help with something, and the experience of your giving them exactly what they want, or not, may strengthen your connection, or it may roll them right off your track. This is why you need to get the customer service experience right.
Gorgias, our preferred provider of customer service, has said that the ease of customer support delights people, thus bringing us full circle: it’s got to be easy, and it’s got to be delightful. Gorgias is both, but whoever you use for customer service may be as well. Those are the standards you should apply when evaluating your customer service provider.
When thinking about customer service, you should reflect on the fact that a Consumer Reports survey on customer service found that the most common complaint—shared by three-quarters of respondents—was a general inability to get a human on the phone. This is not to say that you can’t use automation to screen callers and answer the easiest repetitive questions, but that your customers should have a way to escalate pretty quickly to a real person.
This effect can be easily achieved with Gorgias’s intents and sentiment detection. You can set rules for requests with certain sentiments to be prioritized for personal attention while less elevated and easier requests can be handled by automation, or in person once the elevated cases have been handled.
Despite the Consumer Reports’ survey response about the value of getting a human on the phone, the human aspect is likely more important than the medium. This is to say that phone support is great, but may not even be the best option today. Many people would rather engage with the actual human through the medium of a chat box than on the phone, for example.
Chat support is fairly ubiquitous today, so that may not be breaking any ground, but think what it would do for you to add an SMS channel, like Gorgias has, to your support options. Suddenly your customers can get support wherever they are, in the way many like communicating best (texting).
Suddenly you’re again set firmly in the realm of friend-communication, which is bound to deepen the relationship, just as we argued it would with SMS marketing, in “Fly SMS Marketing Into Your Business“.
Conclusion
Your efforts at customer retention will certainly pay off, especially if you focus them on the right things: primarily making it easier for your customers to accomplish their goals, and secondarily making all their experiences with you as delightful as possible. The pillars of retention you’ll want to make sure you set your track on are Marketing Automation (à la Klaviyo), Customer Feedback (à la Okendo), Subscriptions and Membership (à la Recharge), Shipping and Returns (à la Shipstation and Loop), Customer Service (à la Gorgias), and Data Visualization and Usage (à la Peel – watch for an upcoming post on this!). Do this, and the whole line of customers between your engine and caboose will happily follow you down the track.