Churn is bad for business, no matter your industry. After all, it costs 5 to 25 times more money to acquire new clients than to retain them. That’s why top brands place so much emphasis on customer retention.
If you’re thinking about starting or reworking a loyalty program, here are a few things to keep in mind.
Understanding Customer Retention
Before you can improve retention, you have to understand the underlying metrics and what they mean to your business.
- Repeat customer rate is the percentage of clients who return for a second purchase.
- Purchase frequency shows how often clients are returning to make repeat purchases.
- Average order value refers to what customers spend per transaction.
- Customer lifetime value equals the purchase frequency multiplied by the average order value. Increasing this value is the end goal of retention marketing.
Using Customer Loyalty Programs to Improve Retention
Customer loyalty programs encourage repeat business and improve purchase frequency by providing value to the customer, whether it be via points-based rewards, discounts or credits. Rewards can be easily tracked via an app connected to unique customer accounts.
Those customer accounts can be used to create a more personalized experience for clients, including valuable content, targeted rewards and special offers. Email marketing is a perfect way to deliver this added value.
Tips for a Successful Loyalty Program
Always deliver what you promise. Trust is essential in retaining customers. If your clients act according to your program parameters but don’t receive the reward you’ve promised, they may take their business elsewhere.
Try to tie loyalty programs directly to your company mission, perhaps by benefiting a charitable cause. This encourages repeat business by making it more than just a transaction.
Your current clients are your greatest asset. Reward them for their loyalty, and they’ll help you grow your business for years to come.