What factors impact customer retention?
Your customer retention rate isn’t a metric that’s set in stone. By changing certain aspects of your business—particularly the ways in which you treat and interact with your customers—you can take steps toward improving your customer retention rate.
So what actually impacts customer retention rate?
Below, we’ve listed some of the key factors that tend to play a major role in influencing your customer retention rate. Pay close attention to these factors as you strive to boost your customer retention rate and build better relationships with your customers.
By ensuring your customers have positive interactions with your brand, you can increase customer satisfaction and, in turn, boost your customer retention rate.
After all, satisfied customers who have had good experiences with your brand in the past are those that are more likely to return in the future. Even a single positive experience can lead to a loyal customer who continues to make purchases from your company for years to come.
Improving customer satisfaction is often easier said than done. This may be in part because you don’t fully understand which aspects of your customer journey are most satisfying to customers—or, on the other hand, which aspects may be driving them away from your business.
One of the best ways to gauge customer satisfaction and get actionable data is to provide an opportunity for customers to give you feedback.
For example, you might request customer feedback after they make a purchase or interact with one of your customer service reps. You can also use Mailchimp’s free survey tool to send out surveys to your audience, which allows you to measure customer satisfaction and better understand your audience.
With customer satisfaction data and insights on hand, you can address weaknesses and double down on strengths. By taking steps to improve customer satisfaction, you can potentially improve your customer retention rate and build a more engaged audience.
Brand trust describes the level of confidence consumers have in your brand when it comes to delivering on what you promise. A high level of brand trustworthiness can go a long way in helping to build customer loyalty and retain customers. That’s because customers want to buy from brands that put their values into action, meet expectations, and deliver on their promises.
Making hollow promises and consistently falling short of the expectations you set for your company is a quick way to lose customers. Even relatively loyal customers will likely switch over to another brand if they find their expectations aren’t being met.
By establishing your brand as trustworthy, you can increase your customer retention rate and even keep customers who may have had one or two negative experiences with your brand. If your audience views your brand as trustworthy, they may be willing to overlook a single negative interaction because they have confidence in your brand as a whole.
So how do you develop brand trust? The keys to brand trust are transparency, authenticity, and the ability to set clear expectations for customers. Avoid making promises you can’t deliver on, add value to the lives of your customers, and own up to mistakes when they occur. This can help your brand appear as trustworthy in the eyes of your audience.
Quality of service
Of course, quality of service plays a large role in customer retention. Almost everyone values a company that offers excellent service in addition to a good product. And, in a crowded industry, providing high-quality service can make you stand out from competitors.
After all, if two companies offer a very similar product, but one of them has higher service quality, customers will typically flock towards the brand that offers the better experience.
With this in mind, it’s important to take steps to optimize your customer service department and offer support at every step along the customer journey. Use audience management tools to personalize customer service interactions and speed up resolution times.
Additionally, invest in your customer service department and track customer satisfaction by sending out surveys and analyzing relevant customer service metrics.
What is considered a good customer retention rate for a business?
What’s considered a good customer retention rate varies widely depending on the type of business you run and the industry you work in. While your aim should always be to retain 100% of your customers, this rarely works out in reality and may not be possible in certain industries.
Some industries have much higher average customer retention rates than others. While certain industries come close to a 100% customer retention rate, other industries average a much lower rate.
For example, insurance companies tend to have a high customer retention rate, in large part because it’s a hassle to switch from one insurance company to another. In contrast, the e-commerce retail industry tends to have a fairly low customer retention rate because there’s a lot of competition and customers can easily switch from one retailer to another.
In order to evaluate your own company’s retention rate and determine whether or not it’s good, you must research competitors within your industry. By comparing your customer retention rate to your closest competitors, you can get a better idea of how you fare when it comes to customer retention.