10 Techniques to Increase Customer Retention in 2019 (Why & How)

June 25, 2019

Customer Retention is a metric which is set to become more critical than customer acquisition for businesses. In the past few years, retention has become a big challenge for both marketing and product teams.

According to a report, only 2 out of 10 users who downloaded Android apps continued to use it after 3 days (see the graph below). This is the reason customer retention is one of the major priorities for companies this year. 

But why care about customer retention in the first place and how can one tackle it? That’s exactly what you’ll learn from this article. So let’s get right to it.


What is customer retention? 

In simple terms, customer retention is any activity done by a company to help its existing customers continue buying product or service from them. While it may sound simple, it’s very hard to tackle in real life. Let’s see how it’s calculated.

Here’s a simple formula to calculate your customer retention. On a side note, retention is always calculated for a specific time frame. You can calculate retention monthly, quarterly or yearly.

Formulae :

Customer Retention = (( Number of users at end-period – Number of users acquired during that period )/Number of users at the beginning of the period )*100 

Let’s say you have 100 users at the start of 2018, you acquire 30 new users and lose 10 users at the end of 2018. Then your customer retention would be 90%. In other words, you were able to retain 90% of your customers.

The retention rate differs depending on the industry and the type of business too. According to Marketing Metrics, if a customer has previously made a purchase from a company, there is a 60 percent chance that the customer will make at least one more purchase.

If you’ve worked for any B2B SaaS companies before, you might have heard the term churn rate and MRR (monthly recurring revenue). It’s an important metric for companies who have a recurring business.  Churn rate is exactly the opposite of customer retention, for example, if your retention is 90% then your churn is 10%. 

Customer Retention is equally important for both B2B and B2C companies, though the means to tackle it might be different.

You can track customer retention by using a tool like GainSight or just by monitoring the statistics manually using a Google Sheet. 


1. Attracting the right segment of users

It’s quite obvious that you will lose customers if you’re targeting the wrong user segment. Usually, you can fix this by analyzing the common behavior in the users who are churning out.

But as companies grow there’s always a chunk of users who onboard and leave because of expectation mismatch. While there might be other various reasons for their leaving, often companies term this as “good churn”.

Hubspot faced a similar problem with one of their product- Sidekick. They solved it by segmenting their target audience. For Saas companies, it all comes down to targeting the right audience and then showing users the real value of the product as quickly as possible.


2. Proper onboarding strategy

Most companies focus the bulk of the effort on acquiring customers. Hence a lot of times, companies lack a proper onboarding strategy. This directly affects customer retention.
So, if you’re aiming for high customer retention, it’s crucial that you create a proper onboarding strategy rather than “hoping for the best”. Here’s an article on onboarding that will be helpful in getting started.


3. Effective Communication

Customer relationship is the same as any relationship— communication is key.

Hence, it’s very important to communicate with customers through various channels like

  • Newsletters
  • SMS
  • Automated Calls 
  • Webinars 
  • Social Media

Another effective way to communicate with your customers is through voice calls. Use a cloud telephony platform and advertise specific numbers customers can call on. This helps in shaping personalized customer experience.
You could also solve the communication problem by building a customer success team. Many Saas companies are using customer success to reduce churn and increase their MRR.

“Customer Success is simply ensuring that customers achieve their desired outcome through their interactions with your company. That’s it.” – Lincoln Murphy, SaaS customer success expert


4. Engagement

Customer retention and engagement go hand in hand. It helps in building trust and loyalty. There are hundreds of ways to engage with your customers.

It could be as simple as sending them a reminder call for a product renewal or offering them a discount or telling them about platform changes etc. While you can use e-mails and SMS to accomplish your engagement efforts, voice calls provenly help you get a higher engagement rate among all the other channels.


5. Feedback and acting on it

Acquiring feedback from customers is quite crucial for any business. It can be helpful in two ways:

1. Customers feel valued

2. You get an in-depth understanding of what your customers feel and think.

Companies should aim to get feedback from customers in the most non-intrusive way possible. Automated IVR calls are great for soliciting feedback from customers, because they’re 3x more effective than SMS and email in fetching response rates.
You can easily schedule Automated IVR calls for feedback using a cloud telephony platform like Exotel. 


6. Sharing company’s journey and achievements

Make your customers feel like they’re a part of your company family by sharing your journey and achievements with them. This taps into them because your existing customers feel responsible for your success.

We put together this “2018 in Review” page to tell our customers about our progress and learnings in 2018. Not only did we share our achievements, but we also let people take a sneak peek at our office culture and events. The page helped us nurture both old and new customers. 


7. Using a customer engagement tool

Leverage tools like MoEngage and CleverTap to create custom automated flows for customer communication and engagement via push notifications, email etc.

Let me explain using an example –

Mr. David is the marketing head of a food delivery startup. One of his major challenges is in bringing customers back to the application. David uses a customer engagement tool to create a flow where an email/push notification is sent to a customer with a discount coupon after a few days of customer inactivity.

This is just scratching the surface, the possibilities are endless.


8. Increasing customer satisfaction

In the past few years, companies have shifted their priorities considerably to customer satisfaction.

Sarah from NiceReply says –

“Customer satisfaction is the difference between surviving and thriving”

Customers buying once is not enough for a thriving business, customers buying repeatedly is. According to a report, a loyal customer’s worth is more than 10 times their first purchase.

I’d recommend companies to follow a customer-first approach. For this, you need to: 

1. Give them reasons to come back
2. Build the brand
3. Create a proper customer roadmap 


9. Setting up/ building a customer retention team

If your resources allow you to set up a customer retention team, we highly recommend you to build one.

According to a research by Webengage, only 21% of B2C companies claim to have a Retention team. The problem is that most companies are so obsessed with customer acquisition that they forget the importance of retention.

Here are a few benefits of building a customer retention team:

1. A part of the marketing budget can be assigned and utilized for customer retention
2. Identifying the right technology to track users and their intent
3. Coming up with different strategies to communicate and engage customers


10. A/B testing

You might assume that doing X might help you increase customer retention by Y. But assumptions don’t help, actions do.

Hence it’s quite important to A/B test each step make sure you’re doing the correct thing.

At Exotel, we continuously split test our email campaigns to check which content, subject line yields us the best results. Always try improvising and testing things to find what works best when it comes to customer retention. Here’s a small case study about one of the experiments we ran on the homepage using Freshmarketer to improve our conversions. 


Final Thoughts

It’s quite clear that you need to have a strong retention system in place to keep the customers hooked to your product. Customer acquisition without retention is the same as filling a leaky bucket. This only results in an increase in customer acquisition costs and decreases the lifetime value of a customer.

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Himanshu Gupta
Written By
Himanshu is part of the content team at Exotel. He’s passionate about marketing, growth hacking & reading growth stories.

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