Create a lasting customer retention strategy

Customer
retention
must
be
a
top
priority
for
leaders
of
any
company
wanting
to
remain
competitive.
An
effective
customer
retention
strategy
should
support
the
company
to
maintain
a
healthy
stable
of
loyal
customers
and
bring
in
new
customers.
Generating
repeat
business
is
critical:

McKinsey’s
report
on
customer
acquisition
states
(link
resides
outside
of
ibm.com)
that
companies
need
to
acquire
three
new
customers
to
make
up
the
business
value
of
losing
one
existing
customer.

Customer
retention
has
become
more
difficult
in
recent
years

Working
against
this
goal
is
the
fact
that
the
customer
journey
is
more
complicated
today;
it’s
harder
to
meet
customer
expectations
and
keep
current
customers.
The
IBM
Institute
for
Business
Value

CEO
Guide
to
Generative
AI
for
Customer
Service
found
that
the

majority
of
service
professionals
(60%)
(link
resides
outside
of
ibm.com)
have
said
that
customer
expectations
have
increased
since
before
the
pandemic.

Organizations
that
succeed
at
customer
retention
will
benefit
by
encouraging
customer
loyalty.
Those
that
understand
the
importance
of
customer
retention
will
invest
in
the
necessary customer
experience management.
Retention
is
best
achieved
by
overcoming
barriers
to
switching,
maximizing
the
value
of
products
and
services,
meeting
customer
expectations
and
solving
customers’
pain
points.
It
is
achieved
through
a
mix
of

customer
service,
marketing,
customer
success
and
product
development.

Customer
retention
today
requires
a
mix
of
human
operational
discipline,
human
ingenuity,
and
technological
applications,
especially

artificial
intelligence
(AI).

Steps
to
create
an
effective
customer
retention
strategy

Effective
customer
retention
strategies
begin
the
moment
a
first-time
customer
makes
a
purchase.
It
is
incumbent
upon
the
company
to
optimize
that
customer’s
experience
to
encourage
repeat
customers
and
grow
a
healthy
customer
base.

Organizations
should
design
initiatives
that
are
either
company-led
or
customer-led
to
encourage
brand
loyalty
and
word-of-mouth.
The
goal
is
to
activate
first-time
buyers
and
then
keep
customers
from
switching
to
a
competitor.
Some
of
the
steps
to
building
an
effective
customer
retention
strategy
are:

1.
Make
an
excellent
product

Ultimately,
the
initial
battle
for
customer
loyalty
depends
on
whether
the
product
or
solution
they
buy
directly
or
from
a
retailer
is
worth
the
money
they
spent.
The
calculation
is
that
simple.
Companies
need
a
steady
mix
of
existing
and
new
products
that
meet
their
customers’
needs
or
address
customer
pain
points.
The
listed
customer
retention
components
will
be
less
effective
if
customers
immediately
regret
their
purchases.

2.
Perfect
an
omnichannel
marketing
strategy

Companies
can
reach
initial
customers
through
a
robust
omnichannel
marketing
strategy,
which
creates
personalized
experiences.
They
need
powerful
messages
and
strategic
targeting
in
their
marketing
to
attract
new
customers
in
the
first
place.
That
way
organizations
can
target
existing
customers
across
various
channels,
reminding
them
of
their
solutions
and
encouraging
those
customers
to
upgrade
or
purchase
new
ones.
AI
and
other
technologies
will
make
omnichannel
marketing
even
more
powerful
today
and
in
the
future.

3.
Enrich
the customer
experience (CX)

Effective
customer
retention
programs
are
only
possible
if
the
overall

customer
experience
is
firing
on
all
cylinders.
They
need
a
great
onboarding
strategy
to
drive
customer
happiness
from
day
one.
Next,
they
need
to
keep
that
marketing
engine
going
for
existing
customers
using
strong
customer
engagement
initiatives.
Having
them
see
marketing
messages
reinforces
their
interest
in
the
products.

It
is
critical
to
collect
customer
emails
and
send
them
a
steady
cadence
of
product
news,
tips
and
offers
to
keep
them
engaged
with
their
existing
products
and
the
latest
from
the
brand.
Companies
with

ecommerce
offerings
should
make
it
simple
for
existing
customers
to
purchase
these
new
products,
thus
continuing
the
cycle.

4.
Collect
customer
feedback

Collect,
analyze
and
distribute
customer
data
through
reviews
and
surveys.
It’s
also
important
to
track
and
analyze
social
media
conversations
about
your
brands.
Not
every
customer
will
contact
a
company
directly.
By
tracking
what
people
say
online,
a
company
can
follow
up
and
solve
the
customers’
issues.
By
doing
so,
it
demonstrates
it
hears
customer
complaints
and
cares
about
remediating
them.

5.
Prioritize
customer
support

Customer
support
teams
are
an
invaluable
part
of
customer
retention.
If
something
goes
wrong
with
a
customer’s
purchase,
the
customer
support—or

customer
care—team
must
step
in
to
fix
the
problem.
Keeping
customers
happy
and
willing
to
buy
a
company’s
products
requires
that
company
to
respond
to
issues
immediately.
The
company
should
also
introduce
self-service
tools
to
help
customers
who
prefer
to
find
answers
on
their
own.

6.
Embrace
AI

Companies
have
a
wealth
of
new
technologies
that
they
can
use
to
increase
retention.
Companies
can
use

artificial
intelligence
(AI)-powered
tools
like

chatbots
and

customer
relationship
management
(CRM)
systems.

For
chatbots,
they
can
use

generative
AI
to
provide
more
powerful
answers
to
users
and

natural
language
processing
(NLP) to
decipher
customer
inquiries
and
provide
automated
responses.

For
CRMs,
they
can
use
AI
and

machine
learning
to
automate
the
retrieval
and
analysis
of
customer
data
they’ve
collected.
Large
Brazilian
bank
Bradesco
turned
to
IBM
Watson®
to
personalize
its

customer
service
interactions.
IBM
trained
Watson
on
62
products
and
it
can
now
answer
283,000
questions
a
month
with
a
95%
accuracy
rate
and
only
5%
requiring
further
assistance
from
a
human.

7.
Invest
in
customer
success
teams

This
investment
is
especially
important
for
companies
that
sell
either
as-a-service
solutions
or
high-cost
goods
or
services.
Customer
success
works
directly
and
proactively
with
customers
to
ensure
that
there
is
high
customer
satisfaction
from
their
products
or
services.
They
provide
best
practices
for
customers
and
solicit
feedback
for
product
improvements.

If
the
company
sells
digital
products,
they
can
track
customer
usage
and
increase
outreach
if
the
customer
has
decreased
usage,
which
is
a
sign
of
dissatisfaction.
For
products
or
solutions
that
are
renewed
annually,
customer
success
teams
can
work
in
tandem
with
sales
teams
to
secure
a
commitment
before
that
renewal
date.

8.
Communicate
mission
and
values

Many
customers,
particularly
millennials
and
Gen
Z
buyers,
are
more
invested
in
an
organization’s
mission
and
values.
Organizations
with
strong
missions
or
values
should
spend
time
and
budget
on
communicating
their
perspectives
through
advertising,
direct-to-consumer
messaging
and
customer
engagement.

This
communication
is
especially
important
if
an
organization’s
prices
are
higher
than
the
competition.
Knowing
they’re
supporting
an
ethical
organization
that
gives
back
to
their
communities,
for
instance,
will
make
it
harder
for
values-driven
customers
to
pick
a
competitor
that
does
not
share
those
perspectives.

9.
Make
it
easier
to
make
returns
or
get
refunds

Customers
can
request
refunds
or
wan
to
exchange
products
for
various
reasons.
Organizations
that
make
this
a
difficult
process
may
experience
short-term
benefits
(not
having
to
subsidize
the
cost
of
that
product).
However,
they
will
very
likely
lose
that
customer’s
loyalty
and
eliminate
the
possibility
of
selling
them
more
products
in
the
future.
Organizations
interested
in
maintaining
long-term
customer
loyalty
should
take
the
temporary
hit
for
long-term
success.

10.
Track
customer
retention
metrics

Customer
retention
initiatives
all
produce
valuable
insights
that
companies
can
use
to
recalibrate
their
approaches
and
establish
key
performance
indicators
(KPIs).
At
the
top
level,
they
want
to
know
the
number
of
new
customers
and
the
number
of
customers
over
a
period
of
time.
First,
they
should
identify
the
date
range
they
want
to
track
(for
example,
one
month,
six-month,
one
year).
They
should
track
how
many
customers
they
have
at
the
beginning
and
end
of
the
period.

Doing
so
can
produce
important
metrics
like
customer
retention
rate
(CRR)
and
customer
churn
rate
(CCR).
While
every
company
is
different,
Salesforce
recommends
aiming
for
a

CRR
rate
of
85%
(link
resides
outside
of
ibm.com).
By
adding
in
information
about
purchasing
lifecycle
of
those
customers,
they
can
also
identify
customer
lifetime
value
(CLV)
and
net
dollar
retention
(NDR).
They
should
also
track
net
promoter
score
(NPS).

11.
Use
customer
loyalty
programs

Encouraging
repeat
purchases
sometimes
requires
a
company
to
reward
people
for
their
patronage.
A
customer
loyalty
program
can
incentivize
customers
to
buy
more
from
a
company.
Another
option
is
to
create
a
customer
referral
program
where
current
customers
have
incentives
for
introducing
new
customers
to
the
company.

Why
customer
retention
strategy
matters

Customer
retention
is
a
necessary
component
to
growing
a
company’s
bottom
line.
Happy
customers
are
prone
to
make
repeat
purchases
over
a
longer
period
of
time,
driving
“80
percent
of
the
value
creation
achieved
by
successful
growth
companies,”

according
to
McKinsey
(link
resides
of
ibm.com).

Prioritizing
and
excelling
at
customer
retention
ensures
that
a
company
has
a
healthy
revenue
foundation
and
can
focus
on
supercharging
growth.
They
can
achieve
that
through
recruiting
new
customers
and
up-selling
or
increasing
the
volume
of
products
purchased
by
existing
customers.

Happy,
repeat
customers
are
also
more
likely
to
share
their
experiences
with
their
social
networks.
Word-of-mouth
recommendations
and
testimonials
can
bring
in
new
customers,
improve
brand
recognition
and
reputation,
and
increase
the
efficacy
of
marketing
efforts
while
decreasing
costs.
Therefore,
customer
retention
should
be
a
key
component
of
any
business
strategy.

Customer
retention
solutions

A
Forrester
Consulting
study
of
the

financial
impact
of
IBM
watsonx™
Assistant™
on
organizations’
customer
service
found
a
three-year
370%
ROI
and
cost
savings
of
$6.00
per
contained
customer
conversation.

IBM
iX®
helps
the
world’s
most
influential
companies
create
experiences,
products
and
services
that
reinvent
their
relationships
with
customers
and
employees.
IBM
can
help
modernize
customer
and
field
service
operations
with
data
and
AI
so
companies
can
offer
great
customer
experience,
drive
revenue,
improve
customer
retention
and
maximize
business
value.

Learn
more
about
IBM
watsonx
Assistant
for
customer
service

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