On average, you’ll spend 5X more trying to acquire a customer than you could be spending by learning how to improve customer retention. Getting customers to spend more and keep coming back is critical to getting the right ROI for your marketing efforts.
Of course, it all starts with making your customers very happy with their furniture purchase. But simply providing a great customer experience during the sale itself isn’t enough to generate loyalty. To start, you have to get them to go through with that first purchase. Then employ strategies that get them to buy more, buy sooner and keep coming back. And it takes more than just running more expensive ads.
Learning how to improve customer retention isn’t easy. But we’ll walk you through it. Here’s what you need to know.
What’s a Repeat Customer Worth?
The evidence is overwhelming. The real value of a customer is in their repeat business.
- Acquiring a new customer costs between 5 and 25 times more than nurturing repeat customers.
- In line with the 80/20 rule, around 80% of your sales will come from 20% of customers. Focusing on nurturing that 20% is the way to expand the pie.
- A customer who has done business with you for three or more years, spends 67% more than they do in their first year.
- Highly-engaged customers buy 90% more and buy 60% more often than casual customers.
- A very satisfied customer (5 stars) will generate 2.6 times more revenue than a customer that was just satisfied. The just satisfied customers may not even write a review.
- A 5% increase in retention rate can lead to up to 95% in increased profits.
But don’t think you have to start from scratch. You can change the dynamic with your former customers as well, starting today.
- It costs 16 times more to build loyalty and trust with a brand-new customer than it does with someone who has already been your customer in the past.
Wow! We need to retain more customers. We’ll look at how to do that. But first, let’s quickly look at why people leave and why they stay.
Why Do Customers Leave?
Many studies have looked at this and it’s very interesting, to say the least.
First of all, it’s important to note that retention doesn’t necessarily equal loyalty. This represents one of the biggest misconceptions in retail marketing and explains why so many loyalty programs fail.
A study conducted by the respected McKinsey Group found that 25% to 50% of a brand’s highest-spending customers buy from them and their competitors. If this is the case, you’re not competing for loyalty. You’re competing to earn a larger share of their purchases. To do that you have to stay top of mind when they’re ready to make another purchase. You can’t count on loyalty bringing them back.
Second, your existing biggest-spending customers also shop around. 31% will buy somewhere else if they find a better price.
Here are some other revealing stats and facts that show us how to improve customer retention.
- 41% will never buy from you again after two bad experiences.
- 34% who switch brands do so because of one bad experience.
- 80% say they left a brand because they felt they misused the data they collected about them.
Now, why do they stay?
- 60% say surprise/exclusive rewards
- 56% say personalization
- Over 50% of customers stayed after a bad experience if the company offered them some kind of compensation. Most people do believe in second chances.
- They feel connected emotionally or get personally invested.
Now, let’s walk through specific strategies that show us how to improve customer retention. And we’ll start with one of the simplest and possibly most important.
With current technology, it’s easier than ever to retarget existing customers and visitors. You don’t even have to know their names or have any contact information.
You’ll have 3 primary options for remarketing:
- Email – if they’re a subscriber
- Social media – Facebook is a great example.
- Google Ads
Let’s take a closer look at these.
Google Ads Remarketing
Using Google AdWords’ remarketing feature, you can show ads to people who’ve recently visited your website. As long as they retain their browser cookies, you can continue to send them some very targeted ads down to the very canopy bed they were looking at.
These ads appear in Google searches and also on their partner sites.
You can set the frequency and duration based upon your goals. For example, if you’re trying to get a would-be customer to come back and complete their purchase, they need to see your ad frequently over the next several days. If however, you’re trying to bring existing customers back to buy something else, you might opt for less frequency over a longer duration to avoid “ad fatigue”. That’s when people begin to tune out and even get annoyed that your ads are following them around.
Anyone who is on the Internet much at all has seen these ads.
Social Media Remarketing
Social media remarketing is similar. But you have many more options: After placing what is called a pixel on your website, you can target people who:
- Visited your website in a given amount of time
- Visit your website and follow you on Facebook
- Liked your content
- Follow you
- And more
As long as you show relevant ads that make this not seem like cyberstalking, people actually enjoy the experience. This is a great way to stay top of mind with existing customers and get fans to finally become customers.
Social Media Engagement
Social media is a great way to meet new potential customers. But it’s an even better way to keep the ones you have. And if you focus on the latter, you’ll get the most out of social media.
That’s because engaged followers become your brand ambassadors. They share your posts and click on your links. They comment and like. And all of this activity provides social proof to potential customers. Social proof is a form of trust building in which a person who doesn’t know you sees others interacting and enjoying your brand.
This builds instant trust and interest in your brand that would be hard to earn otherwise. Social media engagement isn’t easy to generate. But once you get that ball rolling, it’s nearly unstoppable. Those retained customers keep bringing in more and more new customers. Now, let’s look at some important tips on how to improve customer retention by building social media engagement.
How to Engage Customers on Social Media
- Focus on content first. An occasional ad is okay. But social media is where you share new arrivals, helpful videos, upcoming events, user (customer)-generated content (UGC) and more.
- Be consistent. Post regularly. Existing customers will notice if you’re gone all week and then suddenly post a lot at once. Spread it out and be consistent.
- Engage with customers and fans. Like and share related posts, especially if they tag your brand. Comment when people comment. Social media is a two-way street. If you engage, you get more engagement.
- Run contests. A contest is a great way to spread brand awareness and get customers back into your store. Ask customers to tag your store in a themed picture. Offer a nice prize.
- Promote events. Planning and promoting events is a great way to build social media buzz and keep customers coming back.
Cart Abandonment Tactics
Whether you’re using a cart for checking out online or using the cart to engage customers to reserve products to buy in the store, cart abandonment tactics will be valuable to all retailers. To identify the right cart abandonment tactics for you, you should first understand why people abandon carts. Let’s look at some top reasons:
- Lack of trust. Something about your site made them feel uneasy.
- High shipping costs. You can’t calculate shipping until the end so this often creates a problem.
- Confusion. The checkout process wasn’t seamless. Maybe you ask unnecessary or repetitive questions. Or the page wouldn’t take their credit card number.
- They were “just looking”. It happens online even more than it does in your showroom.
- You don’t take their form of payment.
- Technical glitch. They lost their signal or your site froze.
So the tactic you apply should address why people are abandoning carts. Do some testing to find your most likely culprits. Then start implementing solutions like…
Cart Abandonment Emails
The Internet is a distracting place and with attention spans getting shorter every day, any small hiccup can distract a person from completing their purchase. Fortunately, it’s very easy to set up event-triggered emails to invite people back to finish their purchase.
Cart abandonment emails work. Abandonment emails have a 46% open rate and a 13% click-through rate. Only one email beats those stats and that’s the welcome email. If you send an email, people will see it. And you will likely be able to re-capture that sale simply by inviting them back.
Considering those reasons for abandonment above, you might also:
- Offer free shipping or a discount if they spend over a certain amount.
- Ask for feedback on why they abandoned their cart.
- Get them to take the plunge even though they were just browsing with the right offer.
Streamlining Your Shopping Cart
The other major retention strategy is to fix whatever is driving customers away. Go through the process yourself to test it. Ask others to do so and provide feedback. Run tests on different shopping cart setups.
You may need to expand your payment options or reduces the screens in the checkout processes. Or it may be something more involved. But you should think of everyone who starts the checkout process as a customer. If you’re losing people here, it will be hard to retain customers elsewhere.
How to Engage Customers After the Sale
Did you know that 75% of customers who buy again from a brand do so within 90 days? It’s essential that you work to obtain this second sale to solidify connection to your brand.
Like so many things in business, timing is everything. So next let’s break down what kinds of strategies you’ll use at different stages in the buying cycle to up-sell, cross-sell and increase customer value.
How to Engage Customers First 30 Days After the Sale
Within the first 30 days, you’re high on a customers mind. In fact, the time between purchase and arrival is critical because this is when a customer’s satisfaction is at its highest level, believe it or not. Their new dress hasn’t even arrived. And they’re ready to buy more.
Even after that dresser arrives, they’ll be floating on cloud 9 admiring their new purchase, showing it to friends and generally feeling good about it. Here are some great ways to capture this moment and make another sale.
- Check in on the customer. Once the item has been received, send them an email to ask how they like their item. Show that you care about them after a sale. And encourage their feedback is something wasn’t right. Encourage them to rate the item and your store.
- Invite them to connect with you on social media. This gives you more multi-channel ways to connect with this customer.
- Remarket complementing items through social media, AdWords or email. If you have matching end tables, bed, chairs, make sure they know that they exist. And remember, this can be automated. It doesn’t have to be a manual process.
- Send a limited time offer they can’t refuse. This instantly reinforces loyalty to your brand. You’re rewarding them for making a purchase. They will remember that.
How to Engage Customers 60 Days After the Sale
Whether you achieve the 2nd sale within those first 30 days or not, you can always do better. Take what you’ve learned from the data collected from your customer to send them relevant emails and ads. If you still don’t feel that you know much about this customer, send them a style quiz so that you can personalize their experience.
Share your latest collections and encourage them to use your room design tool to create a whole new room.
How to Engage Customers One Year After the Sale
After 60-90 days, you need to avoid ad fatigue so you’ll back off on ad frequency and focus more on earning their engagement on social media.
One year after a sale is their anniversary. It’s time to celebrate. Recognize this anniversary with another limited time offer they can’t refuse. If they’ve forgotten about you, this is a great way to bring them back into the fold. If they’ve been with you all of this time, this feels like a reward for their loyalty.
Engaging and re-engaging customers at different stages are how to improve customer retention and increase profits.
How to Improve Customer Retention
It costs a lot to acquire a new customer in the furniture industry. But losing that customer costs you even more. If you figure out how to improve customer retention by just 5%, you can increase profits by up to 95%.
We’ve explored many tactics you can use to retain customers. First of all, understand why customers leave and why they stay. Then employ strategic methods to retarget, re-engage and retain your customers. Have you cracked the code to retaining customers at your own business? Find out how MicroD can help grow your customer base.