Customer Retention Management & How to Do It

Magnet pulling in mini people objects

Why do you, as a business, even bother to improve your customer experience? Is it just to make them momentarily happy? Or for a single good review? I guess not. It’s because you want to retain your customers. You want them to have high product stickiness and want them around for the longer haul.

That can only be made possible by customer retention management. Your customer success team strives to drive continual value to your existing users every day, but it needs a dedicated approach to manage customer retention effectively.

Aksheeta Tyagi at Sprinklr has put together what you need to know about customer retention management to implement it with vision.

What Is Customer Retention Management?

Customer retention management embodies the strategies and activities a business undertakes to maintain and boost customer loyalty, ensuring long-term engagement and minimizing churn.

It focuses on making customers feel valued and important through direct actions like personalized rewards, swift problem-solving and genuine interactions.

It uses customer surveys and conversation analytics to get to the heart of what customers desire, enabling you to tailor your approach and connect more deeply.

It’s crucial for you to focus on keeping your existing customers happy — it’s not just economically savvy but also key to sustainable business growth, positive online brand reputation and overall brand image.

Customer retention management is a thoughtful process that blends knowing your customers with actions that show you care.

Customer retention is your ability to retain your customers over time, while customer retention management involves the strategies, actions and processes used to achieve this.

Key Components of Client Retention Management

Let’s look at the key elements and components of customer retention management.

Active Support and Engagement

Keep in touch, solve problems fast and always listen. Building exceptional experiences is an unaltered component of customer relationship management.

Provide them regular updates, identify chances to upsell and encourage feedback loops where customers can share their experiences and concerns. You can consider starting and maintaining a customer community to empower them with their own collectively helpful brand circle.

Lifecycle Experience Enhancement

Focus on improving every touchpoint throughout their journey, every experience you deliver must be fresh and rewarding. When you’re thoughtful in your intention, you’re bound to have a happier audience with higher customer lifecycle value.

Customer Growth and Success

Build a customer success team that helps your customers derive maximum value from your product and helps your customers succeed with what they buy from you.

Customer retention management works both ways — customers get bang for their buck, and you get sustained business growth.

Run a solid loyalty program because it’s only in your favor — almost eight in 10 Americans tend to buy more from brands that have a rewarding loyalty system in place.

Now that you know the key elements of customer retention management, let’s get down to its benefits.

4 Benefits of Customer Retention Management for Businesses

The time to think about investing your time in customer retention for your business is now. Here are more benefits to consider when managing your client retention.

Healthy Bottom Line:

I’m sure it’s no news to you that retaining a customer is much cheaper than acquiring one. Loyal customers tend to spend more over time, cutting down on the scramble (and expense) to grab new ones.

Steady Cash Flow:

A solid crew of repeat customers gives you a financial steadiness that’s pure gold for any business. It means you can plan ahead with more confidence, knowing that you have a certain stream of revenue to always fall back on.

Increased Referrals:

Happy customers act as brand ambassadors. They are also the ones with the highest net promoter scores (NPS). It brings in folks who are already leaning towards liking what you do because someone they trust gave them the nudge.

Shine in a Crowd:

In a world where everyone’s shouting for attention, having a band of loyal customers sets you apart. People stick with you not just for what you sell but for how you make them feel. That’s something your rivals can’t easily copy.

How to Implement a Customer Retention Management System

To ensure your people stay back in your client pool, you need to be customer-first, through and through. Here’s a quick guide for you to implement a customer retention management system for your business.

1. Find the Right Customer Fit

For high retention and reduced customer churn, you need to find your ideal product-market fit. Scout for and onboard the customers who genuinely need and connect with your product.

It reduces friction and sets a strong foundation for loyalty, emphasizing the role of accurate targeting in retention.

You can launch a product-market fit survey and disburse it among your potential customers to gauge how well they respond to your solution as the one that fits their needs.

Better still, use an AI-powered platform that can scout for deep consumer insights from unstructured conversations. It can shape a healthy user understanding in your team, with knowledge that often gets brushed under the carpet of meaningless online chatter.

Pro tip: You may consider implementing established frameworks to go about this. Consider using the Product-Market Fit Pyramid, a framework first introduced in The Lean Product Playbook. This framework provides a sound structure for you to define and achieve your product-market fit.

2. Set Specific Retention Goals

Define what keeping customers means to you in vivid detail. Is it a certain percentage of people who stick around, an uptick in how often they engage or how much they’re willing to spend over time?

Setting these metrics to navigate by means you can track your customer journey, adjust your sails when needed and ensure everyone’s rowing in the same direction, towards keeping your customers close and satisfied.

What’s Your North Star Metric?

The answer lies in the insight from customer journey analytics. Such deeper analytical reporting allows you to understand the impact engagements from every touchpoint have on the overall likelihood of a conversion or churn.

It helps you analyze each interaction data using multi-level drill-downs — all to paint a clear picture of the key customer experience metrics that impact retention.

3. Align Your Teams With Product Strategy

You probably have a customer service strategy in place, but is your customer retention vision aligned with your product strategy? And most importantly, are your teams working in unison to support this larger vision?

This is a key step in managing your customer retention. Your teams need to function as a close-knit group where everyone from customer service to marketing experts is on the same page.

Always, Always Ensure There Are No Gaps in Knowledge Transfers Between Teams

Different teams, especially in larger organizations, often run the risk of working in siloes and with minimal clarity on the broader impact independent efforts make.

That’s why it’s important for you to use a Unified Customer Experience Management (Unified-CXM) platform — to manage and pivot all your efforts in one direction, ensuring maximum impact at the anterior, where customers expect consistency from you on all fronts.

Customer retention management is an ongoing activity impacted by evolving customer behaviors and market dynamics.

Continuous retention data tracking keeps inertia at bay and helps you pivot efforts and investments dynamically so you don’t lose market share. To that end, defining and measuring customer retention metrics becomes vital.

Top Customer Retention Management Metrics to Track

There are many ways to find out how satisfied and likely to linger around your customers are, but these metrics below are directly proportional to customer retention management.

1. Customer Retention Rate

Measures the percentage of customers who remain with your company over a specific period. The average customer retention rate reflects the effectiveness of your loyalty and satisfaction strategies.

Customer Retention Rate = ((Customers at the end of the period – New customers acquired during the period) ÷ Customers at the start of the period) ×100

2. Churn Rate

The flip side of retention is that this metric tracks the percentage of customers who stop using your service or buying your products. It surfaces gaps you need to fill up to reduce losses.

Customer Churn Rate = ((Customers at the beginning of the period – Customers at the end of the period) ÷ Customers at the beginning of the period) ×100

3. Customer Lifetime Value (CLV)

Estimates the total revenue a business can expect from a single customer account. It underscores the long-term value of maintaining relationships.

Customer Lifetime Value = (Average purchase value × Purchase frequency × Customer lifespan) ÷ Customers acquisition cost

4. Net Promoter Score (NPS)

Gauges customer loyalty and satisfaction based on their likelihood to recommend your brand. A high NPS indicates strong customer advocacy.

Net Promoter Score = % of Promoters – % of Detractors 

5. Average Revenue Per User (ARPU)

This metric calculates the average amount of revenue each customer generates, helping assess the financial impact of retention efforts.

Average Revenue Per User (ARPU) = Total Revenue ÷ Total Number of Users

6. Repeat Purchase Rate

Measures the proportion of customers who have made more than one purchase. It’s a direct indicator of repeat business and customer loyalty.

Repeat Purchase Rate (RPR) = (Number of User Making Repeat Purchases ÷ Total Number of Users) ×100

7. Customer Engagement Score

A composite metric that evaluates customer interactions with your brand, including usage frequency and depth. It signals engagement levels and potential loyalty. 

Brand and Customer Engagement = (Total Number of Interactions, Likes, Comments, Shares ÷ Total Number of Followers) ×100

That’s many metrics to track, indeed. However, brands that manage customer retention strategically have been known to witness quick gains in the form of recurrent sales, referrals and revenue. The next section delves into such inspiring success stories. Let’s take a look.

Examples of Customer Retention Management for Industries

1. Using Community Management to Get Into Customers’ Good Books

Brand: Costa Cruises

Industry: Travel

Costa Cruises operates luxury cruise liners across 5 continents, fielding customer questions about trips, fares, and deals on multiple social media channels.

Typical travelers look for quick answers and personalized recommendations on their preferred channels like WhatsApp and social media.

Paying heed to the customer’s voice, the company adopted multichannel community management to answer customer queries across channels and enable community managers to engage with the community effectively.

The outcome: With a lean team of 5 community managers, Costa was able to respond 25% faster, improving customer satisfaction and retention rates like never before.

Your takeaway: Don’t underestimate the power of a strong customer community in enhancing client retention. Pick community forum software with a strong omnichannel focus to support your customers where they are!

2. Bring All Your Operations Onto a Simple, Smooth Interface

Industry: FMCG

This global eyewear company has upped its game in how it clicks with customers and makes sure they come back. I spoke about using a Unified-CXM to tackle experiences head-on — and they did just that.

They pulled everything into one place – think of it as the ultimate customer service hub. While they did expect to answer their questions faster, what they really wanted was to understand what each person needed. They used social listening to hear the chatter around their brand and made every chat feel personal.

How did that yield? This strategy didn’t just make their service smoother; it massively boosted the happiness of customers. They managed to slash wait times — and saw their customer satisfaction scores go through the roof — quadrupling, in fact.

Your takeaway: This eyewear crew knew what was up by syncing all their customer info. It made every chat a shot at forging tighter bonds, turning new customers into die-hards.

A quick tip – merge your customer data to lift satisfaction and watch those customers stick around.

From the moment customers discover you until the point where you get the chance to keep them around, they’ve been on quite a journey with you.

They’ve experienced a lot, and to make sure every single interaction they’ve had shines at an A+ level, you’ve got to smooth out any bumps for your customer service team, your marketers and everyone else in the mix.

Frequently Asked Questions

What Innovative Technologies Are Transforming Customer Retention Management?

Customer retention management uses technologies to improve nuanced customer experiences of existing clientele. Some of these innovative technologies are:

  • GenAI-backed conversational AI for highly personalized interactions
  • Predictive analysis to proactively detect and address concerns that arise from product use
  • And even blockchain to ensure customer trust remains tethered to your brand

Can Customer Journey Mapping Improve Customer Retention Management Outcomes?

Yes, mapping the customer journey identifies pain points and moments of delight, allowing for targeted improvements that directly increase retention by making experiences smoother and more satisfying.

What Impact Does Social Media Have on Customer Retention Management?

Far from just a marketing tool, social media has evolved into a critical retention platform. It facilitates a two-way conversation, allowing brands to engage in real-time, gather candid feedback and foster a community.

What Best Practices to Follow in Developing a Customer Retention Management Program?

Here are some of the best practices to develop a standout customer retention management program:

  • Create personalized touchpoints grounded in deep customer insights
  • Actively solicit and incorporate customer feedback
  • Ensure a consistent omnichannel customer experience across all channels
  • Measure and refine strategies based on performance metrics
This blog post has been re-published by kind permission of Sprinklr – View the Original Article

For more information about Sprinklr - visit the Sprinklr Website

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Call Centre Helper is not responsible for the content of these guest blog posts. The opinions expressed in this article are those of the author, and do not necessarily reflect those of Call Centre Helper.

Author: Sprinklr

Published On: 29th Apr 2024 - Last modified: 30th Apr 2024
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