Customer Retention using CRM

Customer retention is the set of activities an organisation harnesses to augment the number of repeat customers and enhance the profit earned from each existing customer. Customer retention refers to a company’s ability to keep customers interested in its product or service over an extended period of time.

It also serves as a business strategy in CRM, with the goal of increasing client loyalty while simultaneously decreasing customer churn rates. Create a loyalty or VIP programme, personalise the customer experience, re-engaging at-risk customers, and place a high emphasis on cus- tomer service are some of the tactics used to retain customers.

How CRM helps in Customer Retention?

CRM systems provide the tools needed to keep customers happy. A CRM contains a wealth of information on customers and their inter- actions with a company. It includes information about chats, previous activity, and purchases.

It can assist in the following:

• Information about the customer (identity, behavioural, and qualification data)
• Email marketing is a great way to get the message out there.
• Customer satisfaction surveys are conducted on an ongoing basis.
• Reactions on social media platforms
• Customer segmentation allows for more targeted communication with customers.
• Offer and promote products and services in a tailored manner.
• Customers should be notified of order updates or new product launches.
• Customer service follow-ups should be managed.
• Customer loyalty programmes use purchase history to determine eligibility.

---

Determinants of Customer Retention

Following are the determinants of customer retention:

Product and service quality delivered versus consumer expectations

Products and services aren’t judged on their own merits when deciding whether or not they are valuable. When it meets or surpasses the needs of every consumer, then it is worth its weight in gold. It is practically impossible for a customer to return to a company if their expectations for a product or service are too high and the delivery fails to meet or exceed those expectations.

Therefore, the discrepancy in product or service quality between what is supplied and what is expected of it is a critical element in determining customer retention. As a business, it is imperative that the product quality and client expectations are properly balanced.

Value

When we talk about value, we mean the opportunity to get a good product at a good price. The organisation may be able to provide products of excellent quality at a competitive price, or products of comparable quality at a price that is lower than the market average. Occasionally, firms try to raise the selling price of a lower-quality product by claiming that it is the same as a higher-quality product. Clients who realise a product’s true value is lower than its quality may lead to its detection by the company.

Product originality and appropriateness

Products that stand out from the crowd tend to be preferred by the majority of customers. A company’s chances of success are reduced if all of its items are the same. For a product that is in high demand on the global market, uniqueness tends to improve its value. It is even more important that the unique things are able to meet the needs of a wide spectrum of customers. The result is a more satisfied customer base because of the unique and well-fitting products on the market.

Loyalty

Customer loyalty can only be increased if a business regularly interacts and engages with its customers. During these conversations and exchanges, the needs of each unique client must be learned and then responses must be adapted accordingly. Even though the products are same in other marketplaces, customers’ loyalty keeps them coming back.

To keep their consumers coming back and spending more money, high-quality companies often provide membership cards with discounts. Customers are urged to take advantage of frequent shopping and credit card incentive programmes in order to strengthen their relationship with the brand. All the marketing efforts are initiated to keep the customers around.

Easy availability

There are a few products on the market that are tough to obtain. This could be due to a lack of retail locations or a poor marketing strategy. As a result, it’s possible that retention rates will drop. Because the product is in high demand, yet not widely available on the market or in retail places easily accessible to customers, a customer may be unable to purchase a certain brand of perfume. A company’s sales power and, consequently, client retention can both benefit from easily accessible products.

Customer support

A company’s ability to provide excellent customer service may be the most important factor in customer retention. Customer service can influence whether or not a customer stays loyal to a company. It is the company’s response to the customer’s questions and actions that constitutes customer service.

Because even the least misunderstanding could lead to dramatically divergent findings, it is imperative to answer these questions correctly. Understanding these challenges and determining the best approach to deal with them is the only way to be successful.

Customers form professional and emotional bonds with service providers that successfully meet their needs by answering all of their queries accurately. The ability to retain consumers is directly correlated to the quality of the company’s customer service.

Exist barrier

Companies who are able to successfully erect an exit barrier may retain customers. Making it more difficult for customers to switch from one brand to another by offering incentives and concessions or inventing and altering products depending on customer needs can help.

---

Strategies to Increase Customer Retention

Following are the strategies which are helpful in increasing customer retention:

Improve user onboarding

One of the most common causes of customer churn is because consumers don’t know how to use a product effectively. Customers should be made aware of the major benefits of a product as part of the onboarding process. Training sessions that teach users about best practices and conventional procedures are a wonderful approach to accomplish this. Customer satisfaction and turnover can be reduced over time by providing customers with the necessary resources.

For example, some people may not purchase smart watches as they are unaware of how to use them.

Amrita, a homemaker, went to the Panasonic store to purchase a microwave, but she was not comfortable with the digital model, so she dropped the idea of purchasing a microwave and went home. This could have been avoided if any sales executive had explained to her the use of the product in an easy manner through a video or a demo.

Work with customers to develop a realistic road plan

Setting and delivering on client expectations should be done in a reasonable manner. Scheduling a meeting with new clients should be considered so that companies can work together with clients to create a road plan that they are comfortable with. Realistic milestones and attainable objectives should be included in the roadmap. The customer success team, for example, should have easy access to this customer roadmap and be able to act on it.

For example, when a customer goes to the dealer to purchase a car, the sales executive makes a detailed plan wherein they both discuss the financials and time of delivery of the product, the specifications of the model, colour details, etc. This helps in the smooth delivery of the product on time.

Use client feedback

When it comes to retaining customers, user feedback is a must. This is a no-brainer, since a customer’s feelings and perceptions about the brand ultimately determine whether or not they stick around. Accurate feedback from customers is essential for businesses. There are a number of ways to do this, including customer satisfaction surveys and a user feedback bar on the website or platform. For example, companies like Zomato and Swiggy take customer feedback in the form of ratings. Their customers rate the food, delivery personnel services, etc. This helps Zomato and Swiggy improve their services.

Using customer experience and journey mapping

Customers’ journeys to and from the brand can be documented through customer experience mapping and customer journey mapping. To improve the customer experience, knowing the many paths’ clients travel before they buy becomes necessary.

Customer loyalty and retention rates are quite high for companies like Aston Martin, which have the ability to provide a really unique and highly personalised experience. For example, Spotify hired a firm for preparing its customer journey mapping. The purpose was to determine where music-sharing features best fit into the customer experience.

This mapping helped Spotify to identify pain points for users and address those pain points. Spotify has even launched the Spotify Merch feature, enabling artists to publish and highlight their merchandise directly on their profile pages. See figure for a better understanding.

See figure for a better understanding.

Get personal with social media support

When it comes to getting a quick reaction, nothing beats social media. When it comes to customer service, social media is a great tool since it provides instant and personalised responses. Customer service complaints and questions can be swiftly and easily resolved via social media.

As a bonus, it’s an excellent method to establish a uniform and integrated customer experience for the customers. For example, Country Delight, Max, Nyka, Myntra, etc. have their accounts on Instagram, Facebook, Twitter, etc. They connect with their customers through whatsapp, Facebook, and Instagram to maintain a personal touch and quick response.

Deliver the correct material at the right moment by segmenting customers

The way a company gathers, organises, and uses data is critical to its overall success. Segmenting clients and prospects depending on how they interact with business is a common feature of sales CRM software. These data can be used by businesses to create marketing strategies that are specific to the awareness levels of their consumers and potential customers.

For retargeting efforts, email segmentation is the key to delivering the right content to the right audience at the right time Existing customers don’t want to be bombarded with promotional offers for their first purchase. For example, if it’s a rainy day, you can see a notification from Zomato on your phone for ordering tea and spiced fritters. And if it’s a sunny day, it will tempt you to order ice-cream or soft drinks through attractive notifications.

Encourage dormant users by sending them automated emails

Making sure customers are as engaged as possible is one way to improve retention. Managers can use CRM system to send an automated email to a user who has been inactive for a long time. An email describing how to use more features, for example, could pique a user’s curiosity if tracking of how users interact with the product is done. It is possible to incorporate instructive content in emails, such as best practice guides or successful case studies from other clients.

For example, Myntra sends automated emails to its customers for the season’s best sales with a 50 to 80 percent discount.

Create personalised customer loyalty programmes

To keep customers coming back, design a unique reward system. As well as rewarding consumers, a loyalty programme gives the opportunity to connect more personally with them. Providing shops with a trackable loyalty points programme and detailed insights into customer behaviour is hugely successful for companies like Belly.

For example, Nyka’s customer loyalty programme, Big basket Premium, Hotstar Premium, etc.

Create a referral programme

Customers who are happy with a product or service are more likely to recommend it to others, so implementing a referral programme is a win-win. Companies can both raise new signups and keep the current ones happy by offering upgrades, credits, or other incentives to existing customers. For example, Airbnb Refer-a-Friend Program – US$18 credit per qualifying stay

How to Calculate Customer Retention Rate?

Customer retention rate can be calculated by following formula: CRR = ((E-N)/S) x 100
E = customers at the end of period.
S = customers at the start of period.

N = customers acquired during the period of measuring. CRR = customer retention rate

For example, there are 130 customers at the start of a month. In that month the company loses 9 and gains 23 new customers.

Number of customers at end of period (E) = 144 ………. (130-9+23) Number of customers at start of period (S) = 130
New customers acquired (N) = 23

So,

CRR= ((E-N)/S) x 100
CRR= 144-23/130 x 100=93% Retention rate = 93%