The customer journey doesn’t end after your visitors complete the action you want them to take – and neither should your conversion optimisation efforts! I’m’ sure that you’ve all heard it before, but if you’re still not convinced that customer retention is valuable, take a look at a study by Frederick Reichheld of Bain and Company (the inventor of the Net Promoter Score). It shows that a 5% increase in the customer retention rate can increase profits by 25% to 95%. So, let me put the question this way: Are you ready to increase your profit?
In this article, we will dive deeper into the topic of customer retention, look at how to calculate the customer retention rate and present different CRO customer retention strategies to make your online business boom.
Customer loyalty, is it that simple?
Customer loyalty – sounds simple, but is rather complex to implement. Today, it is important to meet the demands of hybrid customers. They expect individual offers that are perfectly tailored to their current needs. At the same time, consumers are increasingly willing to switch. In recent years, the seller’s market has changed into a buyer’s market, and as a result, the power of each individual customer is becoming stronger and stronger. Customer loyalty is therefore not a well-intentioned piece of advice, but a strategic heavyweight in times of individualism, saturated markets and increasing competitive intensity.
Customer retention refers to the ability of a company or product to retain its customers over a period of time. In contrast to acquiring new customers, customer retention management is significantly cheaper and also easier, as you are already in contact with your customers. At the same time, it aims to minimise the number of lost and migrated customers. On one hand, customer retention management wants to keep customers; on the other hand, existing customers should be encouraged to invest more in the company through cross-selling and upselling within the framework of retention marketing.
And what does customer retention have to do with CRO?
Conversion rate optimisation (CRO) are the actions and strategies used to increase the number of people on your website who do what you want them to do. Basically, it refers to converting visitors into users or customers, whether they buy a product, like a post or request more information. Want more basic information on CRO? Then read our guide to customer feedback and conversion rate optimisation (CRO). So, CRO stands for optimising all processes on your website and making it as easy as possible for your visitors and customers to love your products. CRO increases your customer retention rate.
The importance of customer retention for an online business
Focusing on customer retention has many benefits for your online business.
- Cost savings: Customer retention is usually more cost-effective than new customer acquisition. A good customer retention rate also means higher customer lifetime value and lower customer acquisition costs.
- Positive Word-of-Mouth: Loyal customers are more likely to tell their friends and family about your brand.
- A better bottom line: increasing the customer retention rate by just 5 per cent can increase sales by 25 to 95 per cent.
atrify measures all-round customer satisfaction with customer feedback
Read how atrify uses Mopinion Feedback to adapt their cloud-based platform to the needs of their customers.
So combine this focus with your CRO efforts, and you get a remarkable result.
How do you calculate the Customer Retention Rate?
The customer retention rate is calculated using the following formula: the difference between the number of customers at the end of the measurement period minus the number of customers lost during the measurement period is divided by the number of customers at the beginning of the measurement period.
The analysis of customer retention can also yield the following key figures:
- The percentage of customers who return as visitors week after week
- The percentage of customers who buy month after month
- Whether a newly released product led to an increase or decrease in customer retention
Despite the great importance of customer loyalty measurement, many companies still do not pay enough attention to it. Instead, they make decisions based on other KPIs that are not as critical to long-term business success.
While we’re on the subject of calculating customer retention rate, let’s make sure you don’t forget about churn rate.
CRO strategies to increase your customer retention rate
Let’s look at some concrete examples of CRO strategies that can increase your customer retention rate:
Personalisation with A/B testing
Through extensive use of collected data, companies can now personalise in a more targeted way than ever before. The focus is no longer on the company, but on the customer himself. Successful companies are using digital technologies to take personalisation concepts to a new level: They are incorporating social media, stored data and even beacons to create a detailed framework that would have been unthinkable in the past.
One way to use A/B testing is this: Let’s say you own a sports e-commerce business. A customer of yours, who already has an account and a long shopping history, has just purchased a children’s bike from you.
In this situation you already know: the customer is male, regularly buys bicycle and jogging supplies from you, and now he is also a father/uncle/ godfather and is shopping for a child. To further personalise the emails for this customer, it would be good to find out when you have better response rates. So you can test this with A/B tests:
Send an email with new offers for bicycle helmets. It may be a cliché, but it works: One offer leads to a pink bike helmet and the other leads to a blue one. Depending on which helmet the customer clicks on, you can again collect more information.
The modern customer expects more than consistent email messaging. They want content that is truly designed for them. How do we know this? According to the DMA, 58% of all email revenue is generated through targeted and personalised emails. So the more tailored offers you can send your customers that really get to the heart of the matter, the higher your customer retention rate will increase.
Multivariate testing uses the same basic mechanisms as A/B testing, but compares a larger number of variables and provides more information about how these variables influence each other. As with A/B testing, website traffic is split between different design variations of a page. The importance of a multivariate test is to measure the effectiveness of the different element combinations in achieving the actual goal.
Here, you can test your Call to Actions (CTA), for example. Test 3 different versions of your CTA with 3 different contents to find out which CTA works best.
A usability test is conducted to check the usability of a software or hardware with potential users. You can optimise your website with a usability testing tool and increase your customer retention rate. Usability testing tools usually include the following features: Hallway testing, remote usability testing, export reviews, automated expert reviews and A/B testing.
Give your customers an experience they want to return to. Don’t give your customers a reason to leave your website, give them one to stay and to return! Using any of the above software will help you provide your customers with a seamless and engaging website experience.
Collect feedback to improve overall satisfaction
We live in a customer-centric world. This means, then, that customer feedback should always be at the heart of your marketing strategies and has become a crucial tool for maintaining a satisfied customer base. By regularly analysing customer feedback, businesses can address the needs of their customers and ultimately increase retention.
Here are three ways to do this:
- Optimise your email marketing strategy with feedback.
Do you regularly send surveys to your audience to improve, optimise and personalise your content? Data from Campaign Monitor shows that emails with personalised subject lines are 26% more likely to be opened, and marketers have seen a 760% increase in revenue from segmented campaigns.
- Optimise your website with feedback forms.
To keep your website in top condition, we advise you to include feedback forms in your websites to constantly collect and evaluate feedback. An optimised website helps your customers to reach their goals as well as possible and to convert again.
- Optimise after-sales measures with customer feedback.
The customer journey doesn’t end at the sale, and neither should your CRO measures. Do you collect NPS scores? Do you send requests for product reviews or ask for feedback on the delivery of your products? If these processes are optimised, your customers will be happy to buy from you again.
Your customer retention rate won’t increase on its own
These tips and tricks on CRO and retention should have given you the inputs you need to start optimising and putting your customers at the heart of your organisation today.
Ready to see Mopinion in action?
Want to learn more about Mopinion’s all-in-1 user feedback platform? Don’t be shy and take our software for a spin! Do you prefer it a bit more personal? Just book a demo. One of our feedback pro’s will guide you through the software and answer any questions you may have.