Picture this: It’s a rainy, muggy night. Neither you nor your significant other feels like cooking, so you begin the time-honored tradition of debating where to pick up dinner. After some back-and-forth, you agree on driving across town to your favorite restaurant. It’s not the most convenient restaurant to reach in the rain – it’s not even the cheapest – but you’re still willing to go out of your way to eat there.
Why? Because that restaurant has done something to transform you from a garden variety consumer to a loyal, churn-resistant customer. And that makes them brilliant because customer retention is a gold-mine of low-effort profitability.
You’ve probably already heard repeat customers are five times cheaper to keep than it is to acquire a single new one, but here’s something you might not know. On average, repeat customers are responsible for 40% of a business’s revenue (source)
Boosting your retention rate by a mere 5% can increase your profits anywhere from 25% to a whopping 95%. So, if you’re not making efforts to keep your customers, you’re missing out on some serious opportunity. But just in case you need more convincing, consider these following two stories.
With the help of Cognizant, a consultancy and professional services powerhouse, one insurance company netted a 180% ROI by deploying targeted customer retention programs.
This one is even more staggering: Menchie’s Frozen Yogurt saw a 5300% ROI through a customer retention campaign.
How do you replicate their success? While every consumer base is different, I’ll show you five proven ways to boost your customer retention rate in this guide.
- Rock Your Returns or Refund Policy
- React to Their Feedback
- Automate Your CRM
- Build Killer Rewards Programs
- Elevate Their Experience
1. Rock Your Returns or Refund Policy
First up, you need a rockstar-ready return policy. 63% of shoppers online will check out your return policy before they ever make a purchase.
But a great return policy isn’t just necessary to acquire customers. It’s also crucial for keeping them coming back for more. According to a study from CommerceHub, 48% of those same shoppers say they would buy more online if the retailer offered easy returns.
A friendly return policy means happier customers. It also means better sales and lower churn rate.
Studies find stores with unyielding return policies have an almost 9% reduction in net sales, and their shoppers are three times more likely to churn.
But it isn’t just good for improving customer satisfaction. An awesome return policy and hassle-free process contribute to your overall customer experience and retention.
Chubbies, an online apparel retailer, saw this in action when they cut their return timelines by 50% and saw an immediate improvement in the customer experience. The fulfillment manager, James “Tater” Hargett, explains:
This effortless return experience is key to maintaining customer loyalty and repeat customer purchases.
Since the most important factor for building customer loyalty is to reduce customer effort, James hit it on the nose.
So, how do you create a great return policy? First, let’s look at some examples of customer-beloved policies and see how the big dogs are doing it.
Example 1 – ULTA
This beauty powerhouse sticks by their word, too: if a customer orders a foundation that isn’t right for them, the return process is easy and straightforward. Offering consumers multiple avenues of return, the brilliance of Ulta’s return policy isn’t just how generous and flexible it is.
It’s also how readable it is. Take a look at a quick analysis:
Organized with clear visual hierarchy and written at a user-friendly “Grade 9” level, it’s no wonder that Ulta’s return policy frequently makes the rounds as one of the best in the beauty industry, current controversy notwithstanding.
Let’s look at another list-topper.
Example 2 – Lands’ End
Concise and no-fuss, Lands’ End is another retailer whose return policy frequently nets some serious accolades. Like Ulta, Lands’ End gives consumers multiple routes of return and presents their policies in an easy-to-read format.
But they take readable to a whole new level. Check this out.
Short, scan-friendly, and written for ultra-readability, Lands’ End is the return policy consumers want and deserve.