What is customer retention?
Customer retention, by definition*, is the activity that a company undertakes in order to reduce customer defections. Successful customer retention starts with the first contact an organization has with a customer and continues throughout the entire lifetime of a relationship.
Pretty simple, huh? It is what we all try to do constantly and have been working on since starting our businesses! But how have you been going about actually doing it? There is a big difference between actively increasing your customer retention and just going about your business thinking your product or service will be enough. It takes both.
What are some of the benefits of customer retention?
- • Increased Revenue
- • Lower customer acquisition costs
- • Increased referrals
A recent customer retention success story
Griff’s Deli, in Bowling Green, KY has implemented an extremely successful retention program. They are the perfect example of a company providing great service and excellent food, but they don’t rest on that alone. The are proactive in engaging their customers to be sure their competitors don’t steal them away. Here is how they are doing it:
Using their customer retention software provided by TL Connects, they have setup an automatic text message that sends out to any customer in their database that has not visited their deli in 30 days. An example of this custom message reads:
“John, We miss you here at Griff’s Deli. Get 20% off your next purchase! Offer expires **/**/****”
The brilliant part of Griff’s message is that it expires within seven days of the send date, creating instant urgency for the customer to return to the restaurant quickly. Equally as brilliant is that the owner doesn’t even know when they are sending out. The texts are automated and send out automatically to any customer who is absent for 30 days. The owner only deals with the program when taking up money from redeemed offers.
These kinds of customer retention strategies are a win-win for both merchants and customers. The merchants get customers returning every month at least, whom otherwise might forget about the shop or go elsewhere. The customers win by getting a great deal and the feeling of being wanted and appreciated. The customer will probably be happy enough also to tell their friends and family, which is another huge win for the merchant as well!
Here are some of Griff’s customer retention stats from a 30-day period in the Fall of 2014:
Griff’s has an awesome database with over 10,000 loyal subscribers and over 80,000 check-ins. Wow! How tremendous is that? During this 30-day period, their automated customer retention software generated 1,749 text messages, or textALERTS, to subscribers not visiting in 30 days. Of those messages, 263 people returned to redeem that offer! Griff’s offer brought in an estimated $2,104 extra revenue. (based on a $8 avg. ticket price after discount is applied) That projects to over $25,000 extra revenue annually, all due to setting up a customer retention program.
John, We miss you here at Griff’s Deli. Get 20% off your next purchase! Offer expires in 12/3/2014
You may be asking “Why is this so successful?” or “How can they bring back so many customers?”. The answer is in their technique. They use text messages instead of email or apps. Text messages have an open rate of 98% and most people read the message within 3 minutes of receiving it. That is one large reason why it works so well.
Customers are always ready for a deal and even though they may love your product or service, a great competitor offer can always lure them away. A customer retention and loyalty program can make it harder for your competitors to steal your customers. It is very important to keep your brand in front your customers as much as you can. However, that can be difficult to do for most busy business owners. So, make sure to check into an automated retention program. You can plainly see how soon the program could pay for itself.
* definition courtesy Wikipedia