Let’s start with a clear definition of customer retention:
Customer retention refers to the ability of a company or product to retain its customers over some specified period. High customer retention means customers of the product or business tend to return to, continue to buy or in some other way not defect to another product or business, or to non-use entirely.
It’s important to realize that customer retention begins the moment a customer has their first contact with your company or product(s), and continues throughout the entirety of their relationship with you.
Measuring customer retention is easy. You simply look at the different number of customers at the beginning and end of a certain period. This provides the retention rate for that period. But figuring out how can we improve the retention rate of your customers is where it gets interesting.
Mapping their behavior is an integral part of this process. To ensure digital growth, it’s especially important to provide a consistent, continuous and relevant experience to your customers, all throughout your digital ecosystem.
The Harvard Business Review states an increase in your customer retention with ‘only’ 5% can already increase your revenue anywhere between 25% and 95%. In this article they mainly focus on digital: if you see retention as loyalty, that loyalty is won by creating trust. “Price does not rule the web, trust does”.
In the end, loyalty is not won with technology. It is won through the delivery of a consistently superior customer experience. The Internet is a powerful tool for strengthening relationships, but the basic laws and rewards of building loyalty have not changed.
Looking at Amazon’s success, their customer retention strategies are primarily built upon a customer experience that focuses on the complete customer journey. At the same time they never stop analyzing and improving this experience.
Among others, Google, Airbnb and Intuit have embedded User Experience into the heart of their processes. Because an excellent user experience increases:
- Customer loyalty
- Brand loyalty
- Customer satisfaction
- Customer retention