How to Increase Customer Retention with CRM

Often, when businesses pour large time and money investments into marketing to attract new customers, they ignore the goldmine sitting right under their noses: their existing customers.

But it can pay off in drastic ways to pay attention to existing customers. It costs five times as much to attract a new customer than to keep an existing one, and existing customers spend 31% more than new customers, according to Invesp. By all means, focusing on retaining and selling to existing customers is a great way for companies to reduce costs and boost revenue.

With that fact in mind, business owners and sales leaders looking to maximize their current cash flow would be wise to concentrate on customer retention rather than simply focusing on customer acquisition. But what’s the best way to tap this goldmine? A helpful tool to increase customer retention is a CRM system. So, let’s explore how your company can leverage a CRM system to increase customer retention.

What Is Customer Retention, and Why Is It Important?

Customer retention refers to how long a single customer stays with a company, as well as a company’s effort to keep customers engaged and loyal. Customer retention is measured by a company’s churn rate, which is the rate at which companies lose customers from one given time period to the next.

There are only so many customers in a given market, so no business can rely on a never-ending stream of new customers to keep itself afloat. Instead, companies must rely on customer retention strategies to prevent competitors from enticing customers away with lower prices or better products.

If you’re not convinced yet, here are some more concrete benefits of customer retention.

1. Increased Profits

As we said earlier, it costs less to serve an existing customer than to attract a new one. With a returning customer, your company already has their preferences and information on file, making operations, nurturing, and order fulfillment a breeze. As sales reps become more familiar with a customer, they’ll also naturally become friendlier, leading to more personalized interactions and stronger customer relationships.

Then, existing customers are likely to spend more money per order because they trust your brand and product quality, increasing revenue. 

Putting both of these elements (lower costs and increased revenue) together, a 5% increase in customer retention increases profits by more than 25%, according to Bain & Co.

2. Improved Brand Image

As your company improves its customer retention and customer loyalty, it will begin to gain a reputation for providing an amazing customer experience, boosting your brand image. You’ll have an easier time attracting new customers, working with suppliers, and marketing your business, as the world begins to associate your brand name with happy customers.

3. Attracts New Customers

Finally, a customer retention strategy isn’t mutually exclusive with customer acquisition. 

Focusing on building customer relationships and promoting customer loyalty naturally builds customer satisfaction. And what do happy people do? They share their joy with their friends and family, becoming a brand ambassador for your company. 

Existing customers are intimately aware of the exact scope and benefits of your product, meaning they’re more effective than any sales rep in matching your product’s uses to their friends’ pain points. Plus, it’s been proven time and time again that consumers are more likely to follow the recommendations of other consumers, a concept known as social proof. One glowing review could net you dozens of new clients!

How Can A CRM Help?

So how exactly can a company improve customer retention? The simple answer is by improving the customer experience during the marketing, sales, and customer service processes.

A customer relationship management (CRM) system is a tool that does all of those things by providing a centralized software platform for all of your employees to collate and manage customer data throughout the entire sales process.

With a CRM, sales reps and customer-facing employees can quickly pull up an existing customer’s file and previous interactions, and tailor messages and offerings to match each person’s unique needs and profile.

How to Increase Customer Retention with CRM

With all we’ve already discussed in mind, here are seven concrete and actionable tips and techniques you can use to leverage your CRM system to increase your customer retention.

1. Collect Customer Data

First and foremost, your CRM platform should act as a central repository for all of the little details you’ve learned about your customer, no matter how big or small. As you nurture a customer further, any one of those details could be the feather that tips the scale in favor of a sale.

Of course, any business should have records of each customer’s purchase history. But even more minute details such as “this customer mentioned playing golf” could help your sales reps gain a more comprehensive view of the customer’s personality and life, and having this information can help them tailor each customer interaction to become a more thoroughly well-fitting sales pitch.

2. Improve Engagement

Whether it’s marketing, sales, or customer service, your employees are likely going to be communicating with customers through a myriad of different channels such as email, phone, social media, and in-person events.

While it may be cheapest for your company to send social media messages or emails, the question begs: are customers happy with this communication channel? 

A CRM can help you answer this question by filtering communication metrics, conversion rates, and customer satisfaction metrics by channel, showing you the ones that customers prefer, either individually or as a whole. With this information, your company can invest more in the channels that customers are most comfortable using, boosting their engagement with your company. 

3. Focus on Digital Marketing

Of those aforementioned communication channels, the one that’s most likely to net you positive returns is digital marketing, which easily integrates into your CRM for all-in-one management.

According to Invesp, the top 3 marketing tactics for customer retention are email marketing (56%), social media marketing (37%), and content marketing (32%). By integrating directly into email, social media, and web browser applications, CRM systems can help you create and deliver these marketing messages all from one platform. 

Some CRMs even include marketing automation functions, which will automatically access your CRM’s customer data to customize each message to its recipient. In other words, it can automatically create and send personalized marketing messages en masse with the click of a button!

Because it costs almost nothing to send digital marketing messages, your marketing team can send as many messages as it takes for your customer to finally be enticed into another sale.

4. Use Workflow Automation

Similar to the last point, a CRM can help the sales team by enabling workflow automation, which automatically sends task reminders and emails after a certain time has passed or actions are completed.

In some cases, a customer (returning or otherwise) might slip through the cracks in the sales process because a sales rep forgot to follow up with their email or complete a certain task. Sales is a dance to an intricate rhythm, and if the sales rep misses a beat it ruins the dance entirely. Through workflow automation, a CRM system will automatically send reminders and emails to your sales reps to help them complete the next step of the sales process. This improves your conversion rate, and helps reps close more sales overall.

5. Enhance Your Customer Service

When a customer has a question or issue with their purchase, the first place they’ll turn to is your customer service center. How your service reps handle this interaction will become a deciding factor in the customer’s decision to do business with your company again – in 2020, 40% of US customers reported they stopped doing business with a company due to poor customer service, according to Statista.

In a 2018 study, surveyed consumers reported that the most important aspects of customer service, to them, was getting their issue resolved in a single interaction, a knowledgeable customer service rep, and not having to repeat themselves when transferred to a new agent. Two out of three of those responses relate to customer service rep knowledge.

In other words, a surefire way to improve customer service would be to give service reps full access to the company’s CRM so that each rep is equally capable of looking into a customer’s account for the details of their transaction, and diagnosing and solving their issue.

Additionally, through the workflow automation we mentioned earlier, a CRM system can automatically send an email after every service interaction asking the customer for feedback and suggestions. With this information, your company can continuously improve its customer service process and drive more customer loyalty.

6. Segment Your Customers

CRMs can help you segment and track which customers are most likely to make repeat purchases and become returning customers. Before a potential customer even makes their first purchase, sales reps and CRMs often use a technique called lead scoring to identify how likely a potential customer (lead) is to make a purchase.

Once the lead becomes a customer, that information doesn’t become obsolete. Using the scores and customer data you’ve gathered on your existing customers, salespeople can then segment their customers based on scores to focus their upselling and cross-selling efforts on the customers who had the greatest need for the product and the extra budget to pay for it.

Some CRMs even include predictive scoring features, which use predictive AI to fill in the blanks in a customer profile when lead scoring. This means that, using information from a customer’s previous purchases, a company could accurately predict if a customer would be interested in purchasing a new product.

7. Ensure Customer Success

Finally, with a CRM, sales managers can gain a bird’s-eye view of their entire sales funnel, seeing how many customers are at each stage. Rather than focusing on customer support to solve problems as they arise, a company can drive customer satisfaction by observing issues in the sales process and preemptively fixing them. A CRM can provide clear performance metrics, such as conversion rates between sales funnel stages, which will highlight any major issues or bottlenecks in your sales process.

By fixing these issues, your company can deliver an amazing sales experience for its customers without any troublesome customer support interactions. An easy shopping experience will encourage them to come back for more.

Conclusion

Though it may not be as exciting as prospecting and qualifying droves of new customers, focusing on customer retention is a great strategy for companies to reliably reduce costs, increase revenue, and improve their brand image. A CRM system can help a company improve its customer retention by providing a holistic view of the sales process, allowing it to drill down into the details of what makes customers satisfied.

But a CRM is a tool that’s only as powerful as its wielder. Hopefully, by reading this article, you’ve gained a thorough understanding of how to leverage a CRM platform to its fullest potential to maximize your customer retention, making your company and customers happy for years to come.