The Challenges of Customer Retention

by | Feb 2, 2021 | Blog


Here’s a good story about the importance of customer retention:


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A few years ago I noticed our kitchen sink was leaking.


This paved the way to the discovery that in fact our garbage disposal had broken and would leach water down into the cabinet space below every time we ran the faucet or dishwasher.


Of course, I spent the requisite two to three hours valiantly searching for ways that I could DIY this home repair myself.


I watched countless minutes of YouTube videos explaining how to remove old disposals and install new ones. Googles images of tools I would need and hadn’t yet heard of, much less owned astounded me.


I became exceptionally skilled at decoding wet and blurry model numbers that looked like they belonged in a Salvador Dali painting.


Finally, I browsed Amazon, The Home Depot, and Lowes for the precise equipment I would need to actually execute the project successfully.


All of the above inevitably led to one final search: for the nearest, cheapest professional who could come by in the next 24-48 hours and do the job for me.


Fortunately, I was able to find a guy who lived in my community and operated a one-man home improvement business right out of his home.


He was fast, convenient, and affordably priced.


Then, he told me to give him a call if any other appliance broke down and needed fixing.


I thought to myself, this will be the start of a beautiful, lifelong partnership.


One Big Problem


Flash forward two years later, when our dryer needed repairing. I knew just who to call.


There was only one problem: my friend never gave me a card.


I didn’t recall the name, and I had neglected to save the number in my phone.


Now, when I really needed him, I couldn’t remember who this guy was, or how to get in touch with him.


Instead, I ended up going with someone else who was more expensive.



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Customer Retention Rate: Why Retain?


This brings me to the real crux of this blog: the challenges of a strong customer retention rate.


By now, you’re familiar with the idea that a customer retained is more valuable than a customer earned.


At the very least, it’s less costly. Partly, this is a product of the familiarity an existing customer has with your services.


Fewer marketing resources need to be devoted to a customer that knows what you offer.


There’s no need to explain who your brand or what you stand for. The customer knows your values, and how you stack up against competitors.


Typically, existing customers already have a working definition of these concepts.


But there are other reasons why retaining a customer is a more efficient strategy than acquiring a new one.


Existing customers will frequently become brand ambassadors themselves They refer new customers to your business and save legwork for your sales team in the process.


These customers also have a tendency to remain loyal to your brand for long periods of time.  


Although to be fair – this has a lot to do with the customers themselves and things like “churn rate,” which determines how often customers cease being customers.


But regardless of the “why,” it’s a fairly accepted notion that a strong customer retention rate is a big deal for businesses.


And yet, according to industry statistics, the majority of companies spend more time focusing on acquisition than retention.


In effect, this is like ditching your friends at a party to hang out with the new kid.


What gives? Where does the disconnect lie between business and customer? And what’s preventing so many companies from successfully retaining customers they’ve already acquired?

poor customer retention

Where’s the Strategy?


Going back to my friend the handyman.


He had initially won me over with quality service and a good price point.


But even when I, the customer, WANTED to be retained — I wasn’t. 


This was simply because of he didn’t have a customer retention strategy.


There were no follow-up emails, phone calls, surveys, or texts.


All of the responsibility was on me to remain in touch and engaged with this guy’s small business.


The result: he lost my business . . . forever.


If he had just reached out again, taken my email address down or given me a call 6 months or a year later, I probably would still be using him for my home repair needs.


But unfortunately, like many small businesses, he either didn’t have the resources to build a customer retention strategy, or it wasn’t on his radar to build one.


Are You Appreciated?


A byproduct of a poor customer retention strategy is that your customers will feel out-of-touch and unappreciated.


They may get a sense that no one is listening to them, or that no one from your company cares.


According to online reports, this is a $75 billion-plus problem.


  • 67% of US consumers look elsewhere because of poor customer service
  • Up nearly 37% since 2016.


Manufacturers and distributors, you may be hiring relationship reps for this very purpose, which is a great first step.


But make sure that you’re not just catering to your top customers.


It can make a difference to smaller accounts.  Personal follow-ups show someone is concerned about their needs and hoping to provide solutions.


Examine your own customer experiences.


After shopping at a store or using a service, did the company follow up with you in a way that made you feel appreciated?


Did they reach out to you with a thank-you email, or a special offer or promotion simply for being a loyal customer?


For example, every once in a while, I receive these promotions from Uber offering up to 30% off rides. These are offered for a limited time, essentially for being a “good” customer.


Now, I know Uber may not truly care about me as a person. That’s not my expectation.


My hope is — they care enough about my business to let me know they appreciate my continued loyalty.


Have You Been Engaged?


Finally, a lack of appreciation is one reason why a company loses touch with its customers.


But a poor engagement strategy in general loses customers for good.


Just because a company sends me an email, doesn’t mean they’re engaging customers.


There’s a fine line between useful engagement materials and spam.


It’s incumbent upon a company to know who their customers are, what they want, and what they will and won’t tolerate.


In the age of digital marketing and machine learning, this should be more important—and easier to do—than ever before.


Now, maybe this is like the example with Uber, where you offer your loyal customers a deal or discount.


Maybe it could mean introducing a special promotion with gamification tools that keep your brand top-of-mind while activating those customers who you may fear are slipping away.


Maybe it involves a survey soliciting customer feedback, whereby customers can feel like their voice is actually getting heard and the brand is concerned with getting better.


Or, maybe it requires proactive customer service protocols, with an active social media account, phone call follow-ups, text message notifications, or eCommerce chat bots.


Whatever tactics you choose to employ, it’s becoming increasingly important to integrate them through a holistic, omni-channel marketing strategy that offers the ability to engage with customers at a variety of different touchpoints.




The point is — customer retention is an ongoing process that should never be left to the customers themselves.


You can have the best products and services and the premier price point in your industry.


But if you don’t have a coherent customer retention strategy… 


One that demonstrates appreciation and provides continued gestures of engagement…


You’ll likely find even your best customers won’t stick around for very long. Just ask my favorite local handyman . . . whoever he is.


Looking to revamp your customer retention strategy? We’ll help you develop innovative ways to engage and show appreciation to your customers — and keep them away from your competitors.


Book a meeting today.

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