Written by Wayne Elsey, Founder and CEO
Wayne Elsey is the founder and CEO of Elsey Enterprises. Among his independent brands, he is also the founder and CEO of Funds2Orgs.
Marketing is exceedingly fast-paced. Every day, there's something new to try, test, explore, and learn. Of course, many businesses often focus on acquiring new audiences, but they miss the low-hanging fruit—customer retention. The reality is that maintaining your current customer base is cost-effective and can even help promote brand loyalty and increase your bottom line.
In this article, we'll explore how to improve customer retention, which will help you in many ways. Everyone knows Airbnb, and in the sharing economy, it's the global marketplace if you want to travel and don't want to stay at a hotel. Of course, the company has helped countless house and apartment owners earn additional income, but it's also focused on lasting customer relationships. So, let's start with this excellent example of focusing on customer retention.
Airbnb’s customer focus
Using its review system is one of the primary ways Airbnb helps ensure customer retention. Once a guest completes a stay at a host's house or apartment, each can write a review. As we know, people want to see reviews, experiences, and feedback, and it's a great approach to trust-building. From a customer retention point of view, it's an opportunity to make sure both parties are accountable, but it also builds on trust and transparency in the Airbnb community.
Trust-building leads to greater customer retention as people naturally gravitate to hosts who are Superhosts with lots of excellent ratings or good reviews overall. Airbnb is great at communicating with its customers, making recommendations, and offering ideas based on past travel and preferences. The company also makes it a point to deliver special offers and promotions to customers to incentivize them to book again.
But what if something goes wrong? Airbnb has its customers covered. For example, they could contact customer service at any time, 24/7/365, in various ways, including chat, email, and telephone. That's important because people are different. Only some people want to chat or use the phone to deal with concerns. Further, Airbnb makes it a point to resolve issues promptly to retain customers by making them feel their needs get addressed on time.
In sum, there's a reason Airbnb has over 5.6 million property listings. It's created a thriving community of people who enjoy staying in private homes worldwide. The review system, excellent customer service, and continuous marketing efforts with new offers and ideas keep people engaged and wanting more. The company is also acutely aware of the importance of fostering long-term customer relationships and memorable experiences they can share with the Airbnb community.
The problem: Neglect
As mentioned, sometimes, companies need to focus more on acquiring new customers. However, your best approach for increasing your brand loyalty, engagement, and sales is with your current customer base. In fact, if you're looking to grow your company, it's the first place you should look because if you do, you could take advantage of a great opportunity. So, let's explore some of the negative things that happen when you don't focus on customer retention.
Increased customer churn: If you focus on customer retention, you can retain your customers and increase customer churn. Customers want to feel engaged and valued. If this doesn't happen, they may go to a competitor.
Customer lifetime value decline: As we know, when you lose a customer, you lose their revenue, but you also see a decline in long-term profits, especially if your customer churn rate is high. Nurturing customers increases lifetime value and ongoing revenue, ensuring your company's long-term profitability.
Loss for upselling and cross-selling: Your current customers bought from you because they thought you could give them what they wanted. As a result, when you focus on customer retention, you can upsell and cross-sell those likeliest to purchase from you—especially with new products or services.
Resolving the problem: Concrete steps
Now that you know why you should focus on customer retention, what concrete steps can you take as a business to prioritize it in your company efforts? Each of the following seven steps is foundational to having a robust customer retention program. By following these steps, you can ensure that your customers engage with you and want to continue buying from you.
Customer-centric culture: The first thing that everyone in your company has to value is a customer-centric culture. That means prioritizing excellent customer service and keeping customers front and center in everything you do.
Personalize the customer experience: In business, exceptional customer experience is vital. So, tailor your marketing and communications to meet the preferences of your varying customer segments.
Offer exceptional customer service: At a time when customers have to deal with ineffective chatbots, delivering exceptional customer support allows you to lead in the industry. Promptly answering customers and giving them a human experience is vital.
Implement loyalty programs: A rewards program is a great way to show your customers that you care and incentivize them to continue to patronize your company. Offering discounts, VIP access, and special events engenders engagement and trust.
Content marketing engagement: Content marketing focused on customers increases engagement. For example, look to entertain (always), inform, and educate on how to use or improve their experiences with your products or service.
Ongoing communication: Make it a point to communicate regularly with your customers. Listen to your customers. They will tell you what they want from you. If there's feedback, be open and show appreciation.
Use data analytics: It's vital to leverage data and analytics. Doing so will give you insights into your customers' behaviors and preferences. Ultimately, that will allow you to customize your marketing efforts and anticipate their needs.
Prioritize what matters
Airbnb is one of many companies that prioritizes customer retention. In fact, several other well-known brands realize the importance of maintaining trust and engagement with customers for the long term. Each of the following companies works strategically to retain customers, and as a result, they have a loyal fanbase of customers and repeat business.
Amazon: One of the best customer retention programs is Amazon’s Prime membership. It offers free shipping and almost immediate delivery of purchases and provides access to its streaming services.
Starbucks: Starbucks' Rewards program offers customers the chance to earn points whenever they buy a coffee or make another purchase. Moreover, the program leads to free drinks, other offers, and birthday treats.
Apple: Apple is another excellent customer with a sharp focus on customer retention. They deliver seamless tech integration and heavily prioritize the customer experience. How does it do it without a membership or loyalty program? It's simple—they offer the best products in the market.
Embracing customer retention
We know we live in a very fast-paced world, and one of the things it means is that customers have many choices. New customers are always nice, but you must pay attention to those who support and patronize your business. So, one of the best things you could do for your business is tap into the broader potential of your customer base. And when you do it, you help foster brand loyalty, increase engagement with them, and drive growth and profitability.
Remember that you're not alone as you reimagine your customer relationships. Many companies, including Airbnb, Apple, Starbucks, and Amazon, should inspire you to think creatively about how to amp up and embrace a unique and concerted focus on your customers.
Next time you go for a cup of coffee or look to buy a new cell phone, see how the companies treat you and what you get for being a loyal customer. Then, emulate what they're doing for your own company. One final point: speak to your customers. Get them involved in your customer retention strategy development because they'll tell you what they want.
© 2024 Wayne Elsey. All Rights Reserved.
Wayne Elsey, Founder and CEO
Wayne Elsey is the founder and CEO of Elsey Enterprises. Among his independent brands, he is also the founder and CEO of Funds2Orgs. This social enterprise helps nonprofits, schools, churches, civic groups, individuals, and others raise funds while helping to support micro-enterprise (small business) opportunities in developing nations and the environment.
