6 Key Factors to Improve Customer Retention - Aircall Blog

6 Key Factors to Improve Customer Retention

Customer retention is often overlooked, but it brings tremendous value to a business and its bottom line. Here are six ways to improve your customer retention.
by
Emily Gregor

In 2013, an inventor named Jamie Siminoff appeared on the hit TV show, Shark Tank, hoping to land an investor for his company. He pitched his idea for a video doorbell, called Ring, and investors promptly rejected him. Five years later, Amazon acquired it for $1.1 billion. Ring is not just known for its incredible success story, though. Many look to the company for ways to improve customer retention.

Email: Ring’s Secret to Improve Customer Retention

For one thing, it sends new customers emails to share tips on properly setting up the product. It also sends emails to teach people how to maximize all the doorbell’s nifty features.

As simple as this strategy is, it’s proven to be so effective that Ring’s online sales in the United States increased by 180% in December 2020. And that’s despite privacy concerns and allegations against it. It sold more than an estimated 400,000 units that month, and this number has only grown since then.

The Impact of Community

However, Ring is not the only company to reap the rewards of its stellar customer retention strategies. Starbucks has 19.3 million members in its customer rewards program, which generates nearly 50% of the brand’s revenue. Meanwhile, the community that Aerie Clothing has built on social media is said to be the reason many expect it to reach a valuation of $1 billion in the next few years.

These companies make it clear that there is great value to be had in focusing on your existing customer base. As Amazon founder and CEO Jeff Bezos put it:

“We see our customers as invited guests to a party, and we are the hosts. It’s our job every day to make every important aspect of the customer experience a little better.”

While the importance of customer retention is undeniable, many companies struggle to develop strategies that allow them to hold on to their existing customer base. If you’re searching for a way to improve the customer experience and lifetime value of your existing customers, this article will help you explore the different things you can do to improve customer retention in your business.

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How to Measure Customer Retention Rate

The customer retention rate refers to the percentage of customers that remain with your business over a specific period. Holding onto customers is key to growing and sustaining a business.

You should always aim to have a 100% customer retention rate, but it’s important to remember that this number depends on the industry. A rate that is acceptable in your specific niche may be considered too low in another.

Based on a recent study conducted by Statista, here are the top four average customer retention rates across different industries:

Retail: 63%

A reasonably low customer retention rate characterizes the retail industry, thanks to high competition, low barriers to entry, and low barriers to exit. That means that companies within this space must work extra hard to provide an excellent customer experience if they want to hold on to their market share.

Professional Services: 84%

Companies geared toward providing professional services have a much longer sales cycle than B2C companies. As a result, their customer acquisition costs are also higher. 

Because of this, many invest in their relationships with existing clients by focusing on creating a highly personalized customer experience. Some even go the extra mile to provide each client with a dedicated team member responsible for their concerns. All this means that the customer retention rate in the industry is very high.

IT Services: 81%

Companies in the IT industry often tailor their services to fit the client’s needs, providing them with stellar customer service and thus, increasing their loyalty. However, customer relationships are also tenuous; failing to achieve the desired outcome may ruin a reputation and a lost client, so it’s important to monitor and constantly improve the quality of the customer experience to ensure high retention rates.

Media: 84% 

Media companies may not personalize their services for each client. However, they often handle large volumes of customers. Most also have large and flexible marketing budgets, making it easy for them to retarget past clients. This leads to high overall customer retention rates.

Whatever industry your business belongs to, you should strive to keep your customer retention rate above the average. While this number differs per market, many consider a churn rate of 15% or above to indicate you may be operating inadequate or ineffective customer retention strategies. If your retention rates fall below 85%, it might be time to explore ways to improve customer retention.

Calculating customer retention is a fairly straightforward process. It only requires the following information:

  • Number of customers who made more than one purchase in a specific period 
    • Shopify, for example, recommends that businesses look at an entire year to gain a better insight into their customer retention rate.
  • Number of unique customers 
    • This refers to the number of different customers purchased from your business within a specific period. This does NOT mean the number of orders made.

When calculating your customer retention rate, use this formula:

# of customers who made more than one purchase ÷ # of unique customers

Strategies You Can Use to Improve Customer Retention 

Many companies mistakenly believe that growing their business is all about gaining new customers or tapping into new markets. As a result, they end up neglecting the customers that they already have.

What they may not realize is that it’s actually a lot easier to sell to existing customers than it is to acquire new ones. In fact, businesses successfully resell to a past customer anywhere between 60% and 70% of the time. The success rate when selling to a new prospect is just 5% to 20%.

Now that we have defined what a customer retention rate is, how to calculate it, and what it means for the success of your business, let’s explore a few tangible strategies that you can apply to improve customer retention.

Create an Experience-Driven Business 

When companies invest in transforming the customer experience, they perform better than those who don’t. This is because they show how they value their people, customers, processes, and technologies.

In fact, one Forrester report, The Business Impact of Investing in Experience, A Spotlight on Asia Pacific, found that experience-driven businesses perform better when it comes to hitting growth targets, acquiring new customers, and retaining existing customers.

How do you become an experience-driven business? Creating emotionally rich experiences for your audience is one of the most effective ways to improve customer retention. You can achieve this by expanding your content marketing capabilities, enhancing the customer experience across different channels, and investing in technologies that provide in-depth customer analytics.

Build Better Customer Relationships 

The most successful businesses are built on trust. According to a survey conducted by the Concerto Marketing Group, 83% of customers will recommend your brand to others if they trust you. Meanwhile, 82% are more likely to stay loyal to your brand if they trust it.

Here are a few things you can do to foster trust and build better customer relationships:

1. Respond to Customer Feedback

How clients feel about your business, product, or service plays a critical role in customer retention. Understanding their sentiments, especially their likes and dislikes, allows you to refine the customer experience to meet their needs better.

Of course, collecting customer feedback is not enough. You must also address any issues or concerns that they have. This means following up after a bad experience, listening to their suggestions, and having a system for implementing their feedback.

2. Connect on Social Media 

Social media channels allow businesses to interact directly with their audience. For instance, National Geographic uses Instagram to publish stunning images submitted by photographers from across the globe. Meanwhile, the Starbucks Facebook page focuses on providing information by posting job opportunities, new drinks and desserts, secret menu items, and more.

These kinds of posts make consumers feel more emotionally connected with your brand. 

Many customers also prefer reaching out to companies via social media channels. In fact, answering a complaint posted online can increase customer advocacy by as much as 25%. On the other hand, failing to address a complaint on social media can decrease customer advocacy by as much as 50%.

3. Provide Exclusive Rewards and Discounts

Rewards and discounts are tricky. Offering too many will condition customers to expect your prices to drop constantly. These deals become even riskier if your company’s margins are tight since they could ultimately lead to a significant loss of revenue.

However, first-time customers greatly appreciate exclusive rewards and discounts. Giving them credits or a code to use for their next purchase is a great way to ensure that they will keep coming back. Exclusive rewards and discounts are also incredibly effective at bringing back customers who haven’t purchased from your business in a while.

Re-Engage Customers

For many businesses, like B2B service companies, re-engaging customers is a time-consuming and challenging task. However, if you’re in retail or eCommerce, it can be as easy as introducing a customer loyalty program or an ambassador program. 

Not only do these strategies improve customer retention by motivating people to keep purchasing your products or services, but it also drives them to spread the word about your brand. Companies with effective loyalty programs have reportedly grown revenues 2.5 times faster than their competitors. 

Meanwhile, giving loyal customers rewards for sharing your content on social media, for example, can also yield huge returns. 76% of customers claim that they trust content published by “normal” people more than content pushed by actual brands. That means that your brand ambassadors not only remain your customers, but they also drive new leads to your business.

Train Your Support Team to Improve Customer Retention

Businesses should keep in mind that customer service means more than just being helpful when answering questions and addressing concerns. It also means training your staff to create a positive customer experience.

People buy products and services because they want to achieve a specific goal. That means that your customer service representatives have to understand your customers and what they want out of their relationship with your company if you want to provide a high-quality customer experience.

Here are several things that you can do to ensure that your customer service team is equipped to improve customer retention rates during every support interaction:

Start with the Hiring Process 

Ideally, your contact centers should have a low turnover rate. If your turnover rate is high, you’ll spend more money on sourcing and hiring talented candidates. It’ll also be more difficult to build meaningful customer relationships. 

Especially in accounts-based service departments, a client can come to rely on a particular contact person. As a result, if that trusted figure leaves the business, it could seriously damage the strength of your relationship with your client. It might even cause them to switch to a competitor.

So if you want to improve customer retention, you should also focus on employee retention. This begins with having clear criteria for hiring, so that only qualified candidates land the role. From there, you need to have a comprehensive onboarding and training program that helps new recruits understand your customers and tailor their service to each client’s specific needs. 

Nurture Authenticity

Brand authenticity means being honest and transparent in everything that you do.

For example, Zappos is known for being authentic and transparent. Zappos connects with its customers through its products and packaging. Its #IAmNotABox campaign helps customers reuse product boxes in unique ways. This can range from making paper dolls to learning tips and tricks to see the world from another lens.

To further drive this point, former Zappos CEO Tony Hsieh is so committed to conveying an excellent customer experience that all employees must undergo the same training process as their call center agents, regardless of rank or position. This strategy helps staff recognize their customers’ pain points and resolve them across every level of the business.

When brands are more authentic, they can form genuine connections with their customers, stand out from the competition, and increase customer loyalty at the same time. 

Track Customer Support Performance 

Customer service analytics gives businesses insight into how customers interact with their support team across various channels. Besides tracking your staff’s performance, this also allows you to monitor customer satisfaction levels (and find ways to improve both).

With a thorough analysis of these metrics, you can obtain a full view of the customer experience. The insights you get from these metrics will help you provide your audience with better support and increase your customer retention rate.

Implement Ongoing Training Opportunities 

Employee training programs are one of the best ways to improve customer retention. These programs teach your sales teams and support staff how to successfully convert prospects into actual paying customers—and keep them happy in the long run—by focusing more on meeting their needs.

For example, your customer support agents should learn how to transfer a customer’s phone call to another coworker without having the customer repeat their information and concerns. This is incredibly crucial, given that 76% of all consumers prefer using phone calls to reach a customer support representative. 

Training your staff how to minimize repeat questions and share information across teams helps reduce the amount of time it takes to resolve callers’ issues. This is a critical factor in determining how satisfied someone is with the level of customer service they receive from a company. If you can create an amazing customer experience, people will increase their support and continue buying your products or services in the future.

Establish Clear Performance Metrics 

To know whether your business is doing a great job of retaining customers, you must first clearly establish your metrics and KPIs. These numbers will allow you to see if your company meets its goals or needs any improvements.

For example, keep a close eye on the number of sales made by existing customers after enforcing specific customer retention strategies. If you see an uplift in repeat sales, you can determine how impactful your strategy is. By comparing sales lift to your established targets, you can gauge whether your business is doing enough to retain its current customers or if further improvements are needed.

6 Ways to Improve Customer Retention 

Research shows that a mere 5% increase in customer retention can increase profits by anywhere from 25% to 95%. Additionally, existing customers are 31% more likely to spend more on their average order value with your business. From these statistics, it is clear that customer retention has a significant impact on your company and its bottom line.

But unfortunately, not many businesses recognize this. According to SEMrush, 44% of businesses focus on customer acquisition, while only 18% focus on customer retention. Thus, a lot of companies are still using ineffective strategies to hold on to their existing customer base.

So what steps can you take to increase customer retention rates?

1. Increase Customer Engagement

Customer engagement refers to how your business interacts with its customers across various channels. This brings a ton of benefits to your company. For one thing, more interactions mean more customer insights. You can use insights to inform future marketing decisions and fine-tune your sales processes.

It also results in people finding your brand more valuable. This makes them more likely to repurchase from you. In fact, 73% of companies with above-average customer experience ratings perform better than companies that focus less on their customer experience.

2. Focus on Growth Drivers 

It is also essential to focus on the factors that drive customer retention. One way to achieve this is by conducting regular customer research to figure out the needs and wants of your target audience. You can also use data derived from customer interactions to identify the areas that need to be strengthened or improved.

For example, think about whether the customer experience you provide motivates clients to repeatedly purchase your products or services. Once you have analyzed the factors that drive customer retention, assess each area in terms of your overall business growth goals and resources. The middle ground of your analysis should be the basis of the customer retention strategies that you implement.

3. Iterate on the Phone Customer Service Experience 

Many businesses mistakenly believe that phone calls are an outdated form of customer service. However, research shows that an estimated 48% of customers still prefer speaking with a real person on the phone whenever they run into issues with a product or service. Additionally, 75% of customers believe that calling a customer service representative is the best way to receive a fast response to a question or concern.

Despite the somewhat recent dominance of email and social media platforms, phone calls are still one of the most personal forms of customer service. Clients feel that they have your agent’s undivided attention when they’re on a phone call. Whereas on live chat, they may feel like the agent is handling three cases at once. A phone call also allows your customer support agents to hear the emotion in a person’s voice and form a more genuine connection. 

To improve your phone customer service experience, make sure agents are trained to react to customers’ emotions and show empathy. This humanization of the customer experience, combined with personalizing each interaction, is the best way to level up your customer support experience.

4. Reduce Wait Time by Channel 

A survey conducted by live chat provider Velaro showed that 60% of callers are likely to hang up after waiting on hold for only a minute. A further 34% of those customers claim that they would not call back. This is a huge problem, given that a customer spends an average of 90 seconds on hold when calling any support department. This can even be a lot longer in some industries.

If callers tend to hang up before they even have a chance to speak with one of your representatives, it can be challenging to meet customer expectations. So to reduce wait times, make sure that your customer service team is large enough to handle your call volume. 

Another effective strategy is collecting the customer’s information so an agent can call them back when they become available. Many find this option appealing, with 63% of customers claiming that they would prefer a callback over a wait on hold.

5. Create Effective Hold-Time Messages

Your company may experience high call volumes from time to time, which will make your customers wait longer than usual for support. This means you may need to review your staffing and scheduling needs. It’s also worth implementing strategies t omake the wait more bearable so people don’t get frustrated and hang up. One simple method is to use effective hold-time messages.

Hold-time messages may come in the form of music or pre-recorded advertisements, which are both effective in different ways. For instance, research shows that callers who hear music while on the line stay on hold an average of 60 seconds longer than those who do not. On the other hand, between 16% and 20% of callers make important purchasing decisions based on information that they hear while on hold.

Some companies have also started making their hold-time messages more interactive by incorporating trivia and games. Others use a mix of male and female voices to make them more engaging. You can also opt to use a call-queuing feature, which tells customers how long they’ll have to wait before speaking with the next available agent. This makes them less likely to hang up, as they can see the progress they’re making toward the front of the line.

6. Reduce the Physical/Digital Divide

To improve customer retention, it’s crucial to meet your customers where they are. For instance:

  • How easy is it for customers to reach out when they have a question or need further information? 
  • Can they contact you via social media? 
  • Do you have an online form that they can use to send a message? 

With these questions in mind, you should focus on providing an omnichannel customer service experience that integrates all your existing platforms for efficient customer interactions. This will allow you to provide a consistent customer experience—no matter what channel customers use to reach out to your business.

Companies with great omnichannel customer service have an 89% customer retention rate on average. However, businesses with poor customer engagement across multiple support channels only retain an average of 33% of their customers. These statistics show how important it is to provide high-quality, consistent service across all your support channels.

Improve Customer Retention to Grow Your Business

If they want to grow, companies should focus on customer retention, rather than just customer acquisition. Too many businesses are focused solely on acquiring new customers and neglecting those who already use their products or services. This is a big mistake. It’s much more cost-effective to retain customers you have an established relationship with. They are more likely to become your most loyal customers too.

Helping you build strong customer relationships like these is precisely what we aim to do at Aircall. We can help your business become more customer-centric by providing you with cloud-based call center software designed to help improve customer experiences and increase engagement. 

Aircall’s Top Features

Our top-of-the-line cloud phone system has many features, including: 

  • The ability to set up international numbers to avoid high phone bills when dealing with customers in multiple regions 
  • Encourage collaboration by enabling your staff to comment on assigned calls and share your customer base with sales and product development departments
  • Call center-based features, like skill-based routing, allow you to route calls to the agent with the right technical skills to handle customers’ specific concerns
  • To help reduce customer frustration and shorten wait times, Aircall also allows for call queuing, queue callback, and parallel calls

How Aircall Improves Productivity

Our software provides several productivity-based features, too. For instance:

  • Custom filters enable agents to find the exact customer information and previous conversation they are looking for. 
  • Aircall’s platform lets you create customizable tags to facilitate smart decision-making and smoother follow-ups. 
  • You can integrate all of these features with your existing CRM and Helpdesk tools to keep all conversations connected.

Lastly, Aircall’s powerful analytics will give you insight into the quality of customer support that you are currently providing. This includes call monitoring to boost quality assurance and a live feed feature that helps optimize support reps’ productivity.

With these tools, it will be easy for your business to access the data you need to create and implement strategies tailored to your customers’ needs.


Are you ready to improve customer retention rates for your company? Schedule a consultation with our team, and we’ll help your business create more valuable customer relationships.

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