How to Develop a Retention Strategy to Increase Customer Lifetime Value

Lucidity Lancaster
August 16, 2022

Starting a new business can be tough. You spend long hours working on building your product, pitch deck, and marketing that product to consumers. You’ve spent all this time working towards acquiring customers and you’ve finally got them! Well, what now? You need to shift your strategy to focusing on customer retention.

Customer retention is exactly what it sounds like. It is retaining or holding on to your customer base. When customers need to make a repeat purchase, make sure they are coming back to you rather than a competitor, and ensure that they continue using your product/service over time. You spend a lot of time, effort, and capital to acquire customers, so make sure not to lose them. By improving those retention efforts you can increase your customer lifetime value.

So what is a customer lifetime value? It is how much a business can earn from over the course of their entire relationship with a customer. Customer lifetime value is important to acknowledge because as much as first impressions matter, it is building your long-term relationship with a customer that allows you to engage with them over time. Keeping this in mind when building out your customer base can help you work towards the development of extremely loyal customers. You should consider your customer lifetime value in comparison to customer acquisition cost to assess the effectiveness of your overall marketing strategy.

A strategy fully focused on acquiring new users is unsustainable. You can only acquire so many new customers. If you don’t turn some of your focus to the customers you have, they will feel neglected and you may lose them. If you see that your customers are not sticking with you, you likely have a deeper product issue that needs to be addressed. By focusing on customer retention strategies, you’re creating loyal users that feel valued.

How can you increase your odds of retaining customers?

Develop a clear strategic plan grounded in your business’s goals and objectives — Before you start creating your retention strategy, it is important to note that every business is different, so your strategy will be unique and specific to your needs. Think about your short term and long term goals for your business. Using those goals as a guideline will help you shape an effective strategy that meets your needs.

Clear onboarding process — Onboarding is the process of obtaining the knowledge needed to use your product or service. If your onboarding process is clear and user-friendly your customer will begin using it quickly and feel more inclined to use your product again. If they don’t completely understand how to use your product, why would they be a recurring customer?

Surprise your customers with treats, free enhancements, and rewards — Everybody loves free stuff! The surprise element will keep your customers on their toes and interested in your product. If they receive a gift in an email from you once, they may be more likely to read other promotional material you send them that may otherwise end up in the trash. These treats will also endear them to you, and show your appreciation for their loyalty.

Gamify the experience where possible — A great way to make giving your customers rewards more seamless is to gamify the experience. You can do this by giving your customers an objective to complete or incorporating a competition element. This will be a great way to keep users engaged and coming back for more over time.

Make them feel exclusive — One way to segment users is through frequency of use and purchase. By making customers feel super exclusive, you’ll make them feel special. They’ll feel like they picked the right brand to support since they are being rewarded for their loyalty and not just treated like other customers.

Good customer service — Despite your best efforts to design a perfect product and user experience, issues will always arise. You need to make sure that when they do, you’re there to address them quickly and competently to keep users coming back for more. Good customer service can leave the customer feeling happier with the product than they were before the issue arose and are more likely to recommend it to others.

Use data to make product enhancements — Ultimately, users want a good product. Not only that but they want a product that continues to get better over time. You will already be running analytics on your product’s performance. Put that data to good use! The market will continue to change and improve so your company and your product will need to change with it.

Seek user feedback — Reaching out to customers for feedback, will make them feel heard. It makes them feel like they are a part of the product development process. Seeking user feedback is especially important in the case of digital products where you should be seeking user input and taking it into account when deciding where to spend your development dollars to either improve existing features or build new ones.

Keep customers in the loop — If you want your customers to stay engaged you need to let them know what you’re up to! Send out newsletters, post updates on social media, etc. to keep customers aware of product or service changes. That way when new features are launched, they can start using them and give feedback right away.

Key Takeaways:

If you take nothing else from this article, the number one thing to remember is to keep your focus on the customer. Again your focus should go beyond just obtaining customers. Keeping customers will help to ensure your long term success. This line of thinking should feed into your initial development decisions, your decisions regarding product improvements, and new feature development.

If you are struggling with user retention, reach out to the team at Camber Creative! Camber has a world class Audience and Revenue team and countless other industry professionals that would be happy to help take your business to the next level.

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