Businesses have a lot on their plate. You are focused on rendering the best services, keeping customers happy, dealing with employees, and staying afloat in an ever-changing industry. You don’t want to spend all your time worrying about how to increase customer retention.
But that’s exactly what happens when you don’t have an effective CRM system in use.
CRM stands for “customer relationship management,” but it could just as easily be “customer retention management.” CRMs are designed to help you collect, organize, and analyze data about your customers that can be used to improve their experience with your company and make them more likely to stay with you.
Using a CRM improves customer retention in numerous ways, and I’ll discuss them in this article.
What is Customer Retention and Why is It Important?
Customer retention is an organization’s ability to keep customers loyal to its business. It’s an important metric that measures the rate at which customers continue to do business with a company over a period of time.
You can track CRM customer retention by taking a look at the churn rate – lowering the churn rate means improving customer retention.
Most companies allocate massive resources to customer acquisition, but most of it aims at achieving the customer’s first interaction. Customer retention metrics, on the other hand, factor in a customer’s first purchase as well as successive interactions with the business.
With data from a CRM, you can get insight not only into customer loyalty, but also into their satisfaction, engagement, and repurchase tendencies.
That’s not all. I will elaborate more on the benefits of high CRM customer retention rates in the section that follows. After that, we’ll proceed to the main topic of this article, which is how CRMs help increase customer retention.
Benefits of High Customer Retention Rates
Customer retention rate is a great way to measure how well you’re doing at keeping your customers happy, and it can also be an indicator of how much value you’re providing. High customer retention rates mean that your customers are satisfied with their experience using your product or service, which means they’ll be more likely to continue spending money on it. This leads to higher customer lifetime value (LTV).
So what’s the big deal with keeping existing customers? Well, for one thing, it’s much easier to keep them than it is to gain new ones.
Customer retention costs 5 times less than customer acquisition, but with a sound customer retention strategy factored in, people will stay loyal to your organization and provide repeat transactions. Customer retention is vital for the short and long-term success of businesses as it gives you the ability to analyze customer success and experience data.
You’ve already done the hard work of convincing them that your product is worth their money; now all you have to do is keep them happy so they don’t look elsewhere for similar solutions.
Having high customer retention rates ensures your company’s growth: if the rate is low, it means that you’re failing to retain customers for repeat business and referrals for future clients.
Key Customer Retention Factors
The most important factor that affects customer retention is the type of platform that the company provides. For example, if a company provides an e-commerce platform, it will likely have lower customer retention rates than a company that provides a platform for marketing analytics or HR software.
Another factor that determines customer retention rates is the amount of time it takes for your customers to see results from your product or service. If you can show measurable results in as little as a few weeks, you are more likely to retain customers than if they have to wait months or years before they see any tangible benefits from using your product or service.
Several more factors affect customer retention rate, but we can group them into the following three:
- The quality of your product or service
- The level of customer service
- The price of your product or service
Each of these factors will impact your customer retention rate and your bottom line, so you have to optimize them all. Next, let’s discuss how CRMs can increase customer retention.
How do CRMs Help Increase Customer Retention?
Customer retention is one of the most important metrics and also one of the hardest to achieve. The reason? It comes down to a simple fact: your customers are human beings with complex lives, and they’re going to make decisions that sometimes aren’t in your best interest.
How do you combat this? You do this using CRM (customer ‘retention’ management) software, of course! In this section, I’ll outline some of the most significant ways in which CRMs help increase customer retention.
As a business in this day and age, you will receive data from different sources, which becomes cumbersome as the company grows. Lack of organization of this data will take a hit on your productivity.
A CRM system collects all of your company’s customer information in one place, including notes about each customer’s experience with your brand, purchases, and interactions with your support team. This information is organized into categories that are easy to find and search through when you need it.
CRMs process all of this raw data and transforms it into useful information about your customers – how they find your business, how they interact, what they like or dislike, and what they expect.
This can be very valuable in building trust between you and them. This trust in your brand will translate into higher customer retention rates.
Data analysis is the heart and soul of any CRM, but it can also be the most challenging part for companies because they have to rely on the data their customers have provided. Customer relationship management software provides organizations with the tools they need to better understand how customers interact with their products, and how those interactions can be improved.
For example, Microsoft Dynamics features analytics and reporting functions that allow you to view your customer base as a whole, or break it down into demographic groups, such as age or income level. You can then see what kinds of customers engage with your product most or least, track how often they use your product, see what kind of content they consume, and more.
This type of analysis lets you tailor your marketing efforts to reach more of the right kinds of people. You’ll understand your customers more, know what they want from you as a brand, and identify areas where you can improve their experience with your company. This will ultimately lead to higher customer satisfaction rates and loyalty.
CRMs also give users a personalized experience based on the information they enter into the system themselves. For example, if a user enters information into the system, they will be given recommendations and served based on those inputs.
This means that customers who are interested in similar products or services as other users can get recommendations for them as well. A good CRM system allows you to customize different aspects of your product or service for each person using it by providing them with different options or information based on what they’ve done before (or after).
Your CRM will monitor your customers’ engagement patterns and deliver you these insights. With these insights, not only will you personalize their experience when interacting with your product, but you can also improve targeting and reach customers via their preferred channels.
Further, when you market your products or services by factoring in insights from your CRM, you will create better strategies, CTAs, and creatives. These lead to more conversions and increased customer retention.
Automated emails can be configured based on a trigger or a customer’s last interaction with your business. Your organization can send birthday and holiday wishes and relevant updates, promotions, coupons, and incentives.
The constant, personalized communication with your customers will ensure that your brand is on their minds, and this also fosters a high level of trust, which reduces churn rate and boosts customer retention and loyalty.
Mapped Customer Journey
Customer relationships are key to the success of any company, but it can be difficult to understand why customers churn. One of the most important ways that CRMs help improve customer retention rates is that they help them map a customer’s journey through your product and the entire sales process.
This can include the steps from when a customer first signs up to when they stop using the product or service, or it can be as simple as how many times they’ve logged in in a month. This way, you can determine what worked and what didn’t, so that you can improve your sales cycle and make sure that each customer gets exactly what they need from you.
By taking a deeper look at where your users are dropping off, and answering some key questions, you can identify areas where improvements may be made. For example, if tickets come in from general queries three times per week, ask yourself why? Are there too many steps on your purchase flow? Do you have a lack of clarity regarding your value proposition? It may take some time to identify these areas for each customer base that currently interacts with you, and there may be multiple areas that need improvement.
The ability to map a customer’s journey, and then use that information to provide better service, is a key factor in increasing retention rates. You may want to read our article on Salesforce Journey Builder.
One of the biggest reasons companies adopt CRMs is to improve their customer service.
If a customer finds it tough to reach out to your organization when they need guidance or information about your product or service, they’ll most likely bounce and opt for an alternative. This is even more crucial if your product or service is new to the market and users send inquiries.
You can document the communication history between specific customers and your organization. This is a powerful tool to have at your disposal. Support staff can access a customer’s records while chatting with them and know precisely who they are to help them better.
You can prioritize customers based on value and set up things like follow-ups and satisfaction evaluations with this data, for instance. When customers build healthy relationships with a brand, they will not give your competitors a look in.
Integration features in CRMs can help you improve customer retention rates by giving you more opportunities to connect with your clients and make sure they are getting exactly what they need from your company.
CRMS are designed to be used by a variety of different employees in a company. Integrations allow employees to see what other departments are doing or planning on doing with their customers, so as to provide better service.
For example, if an account manager needs to send out a survey but doesn’t know whether or not the sales team has already done so, they can check the CRM’s integration features to see if there are any surveys scheduled for that customer. They can then contact their colleagues if necessary and ask them about any surveys that were sent out so that they don’t send one too soon or too late.
Further, integration with other platforms, like email marketing and social media, allows your company to communicate with customers more frequently and effectively. This helps customers feel cared for and valued, which increases the likelihood they will stay loyal to your brand.
In order to gain and retain loyal customers, you need to provide the best possible service at all times. This can be difficult to do when you’re dealing with a large number of customers and have limited resources available to you. Automated reporting can help improve customer retention rates in several ways:
First, it helps them identify which customers are at risk of churning, so they can reach out to them proactively with offers or discounts before they cancel their subscriptions. This can be done by analyzing usage trends and determining when customers are most likely to churn.
Second, these reports allow you to monitor sales activity and identify trends so that they can adjust their marketing efforts accordingly.
Automated reporting also helps you track KPIs to determine which features work or are most popular with their customers, so they can focus on improving those features and making them easier to use. This may require some customer research (e.g., asking users what they like or don’t like about a feature), but it can also be done by analyzing usage data over time.
All in all, you can reduce the time it takes to compile and analyze data on your customer base and make more informed decisions about how best to serve them. So, you will spend more time engaging with individual customers, which will lead to higher satisfaction rates and improved customer retention rates overall.
Better Internal Communication
Internal communications are often overlooked when it comes to customer retention. After all, if you have a customer service team and they’re doing their job, what else is there?
But the truth is that internal communication can be just as important as your customer service team when it comes to improving customer retention rates.
It’s important for companies to stay connected with their customers, and that means making sure that everyone – from salespeople to support staff – is on the same page and working towards the same goals.
This can be difficult for small and medium businesses with a lot of moving parts and limited resources, but it’s necessary if you want your customers to stick around for the long haul.
The business landscape is increasingly competitive, so customer retention is vital for any B2B or B2C company looking to build a thriving business. I don’t view customer retention as a mere metric, but as a central goal for businesses.
We’ve covered the main benefits of customer retention, the factors that determine this metric, and the ways in which a CRM can help you increase customer retention.
In the end, you have to evaluate your CRM and utilize the ideas mentioned above to improve your customer retention rates. If you haven’t implemented a good CRM for your business and are reading this article to know if they improve customer loyalty, the answer is: Yes, CRMs can help you increase customer retention and yes, they’re worth investing in.