The chances are, you already know that acquiring a new customer is dramatically more expensive than retaining an existing one. Whatever your sector, hanging on to your customers – by giving them good reasons to do continued business with your organisation – will lay the foundation for massively improved revenue and ongoing brand success.
Sometimes, the payoff can be staggering; according to research by Frederick Reichheld (who also invented the net promoter score), and as reported in the Harvard Business Review, increasing customer retention by just 5% can lead to profit increases of between 25% and 95%.
Making that kind of profitability a reality for your business is all a matter of trust and outstanding service, which you can enable by implementing an effective CCaaS (contact centre as a service), or VCC (virtual contact centre). When a buyer enjoys excellent customer service, and feels a sense of loyalty to your brand, they’re far more likely to return for repeat business and give exemplary feedback.
Customer retention, to put it another way, is all about a business’ ability to keep buyers engaged with the brand and coming back for more of the products or services on offer. And that matters, chiefly because it helps maintain the stability of incoming revenue streams; moreover, positive customer retention is the cornerstone of good feedback, and a primary contributor to word-of-mouth marketing.
In this blog, we’ll take a closer look at customer retention strategies, delineating why they’re important and examining some of the ways you can keep tabs on key metrics, before moving on to a deeper look into CCaaS. We’ll then walk you through the benefits and features of CCaaS as they relate to customer retention, service and experience, and come full circle as we recommend a CCaaS solution to fit your business.
Why are Customer Retention Strategies Important?
Whether in the B2B, B2C or public service environment, the way customers expect to be treated has undergone a sea change in recent times. Take for example a report by Forbes, which found that there is a potential 80% increase in revenue for organisations which elevate their customer experience (CX). The same report revealed that approximately 66% of all companies compete based directly on CX.
With customers having access to an almost overwhelming variety of choices as they shop, and so many companies competing for their business, buyers have the freedom to dictate their own customer journey. Their demanding set of preferences is something that brands have to accommodate.
To compound this, geopolitical factors and socioeconomic forces cause buyers to, increasingly, turn to ‘trust signals’ in the purchasing process. Faced with external pressures and the opportunity to pick and choose which brands to give their money, consumers seek to stand with businesses they can believe in.
Clearly, a top-quality user experience (UX) is paramount, and can represent a competitive difference-maker for your business. A key indicator of high customer loyalty levels and positive UX is a high customer retention rate, otherwise known as CRR. Marketers look to this metric to assess the latent profitability within their customer journey and evaluate whether there is scope to improve customer service.
To calculate the customer retention rate over a given period, or the percentage of customers who ‘stayed with you,’ use the following formula: E represents customers at the end of the period, N represents new clients gained during, and S represents the number of customers at the start:
CRR = ( (E – N) / S) x 100
Other metrics that illuminate customer retention include:
- Customer churn rate, or customer attrition rate. This figure represents the percentage of customers who were lost by your brand over a given period. In this way, it is effectively the opposite of customer retention rate.
- Customer lifetime value. Customer lifetime value indicates the total amount of revenue likely to be generated for your business by a customer over the course of their life, and is an important signal of trust and loyalty. A brand may even facilitate an initial purchase at an operational loss, if they feel that a buyer’s overall customer lifetime value will generate significant revenue.
Understanding CCaaS (Contact Centre as a Service)
As mentioned earlier, in our digital age, a high-quality CCaaS can be a crucial building block in building customer loyalty and increasing customer retention. CCaaS implementation often takes the shape of a VCC (virtual contact centre); many businesses look at this as more than just a service, seeing it as its own form of effective digital marketing.
CCaaS models give brands a customer service centre that merges a traditional contact centre with cloud-based, remote functionality. Contact centre as a service deployment allows businesses to proactively deal with customer enquiries, questions and complaints in the smoothest, most streamlined way possible, and also facilitates an efficient purchasing experience; it leverages the capabilities of automation software and omnichannel capabilities to deliver this. Social media and CRM (customer relationship management) integration, for instance, aid a business’ flexibility and agility.
Increasing customer engagement, and therefore retention, is often a stated objective in the implementation of CCaaS. Because repeat customers generate more revenue, give valuable feedback and create a better brand image, CCaaS software is a foundational element of excellent customer service – high satisfaction, a key payoff of CCaaS, motivates buyers to continued, repetitive business.
CCaaS-enabled Customer Retention Benefits
Cloud-based customer service software solutions represent one offering where your company can get ahead of the competition, and its implementation is a massive area of opportunity. But, aside from improving customer retention, let’s look at the benefits of CCaaS software in more granular detail.
- Increased quality of service
Salesforce reports that 89% of customers are likely to make repeat purchases following a high-quality buying experience. Outstanding customer experience is no longer a nice-to-have; it’s a must, as the modern buyer expects and demands proactive engagement. This means an ultra-smooth UX, underscored by easy interactions and quick resolutions. An efficient and effective UX is a core driver of CSAT, a metric used to track customer loyalty, and buyers appreciate brands that can deliver a dependably high-quality service.
- Customer engagement
Increasingly, customer retention is subject to the way the company or a CSR agent (or, indeed, a chatbot) represents their own values in a broader social context. Gone are the days when companies could simply opt out of hot-topic social conversations; customers want to see businesses take an agreeable position on matters from across the cultural spectrum. The social media and content marketing capabilities of CCaaS enable fingertip, rapid responses to trending conversations, and provide a highly-visible outlet for brands to express their values.
- Fast resolution and responses
Another thing demanded and valued by the modern customer is prompt service on the part of the company. Long waiting times spell danger; these days, rather than wait, customers will quickly become frustrated and are likely to take any future business elsewhere. First-contact resolution is a standard all brands should strive for, and becomes significantly more achievable with CCaaS. AI-enabled webchat, for instance, can do a lot of the legwork (Call Centre Management Association), since it can instantly respond to the most frequent enquiries with substantive and personalised information.
- Increased productivity and simplified workflows
Sometimes, the pressures of high call volumes can create an impossible situation for human agents who, in an effort to provide good service, spend more time on a greater number of customers, leading to longer wait times – thereby damaging retention. CCaaS can alleviate the pressure of high volume by automating a significant portion of the customer experience, and diverting enquiries to agents as and when necessary. This automation infrastructure also simplifies the human workload considerably, with repetitive, sequential, or simple logic-based processes (such as refund approval) trusted to intelligent software. Demonstrably, 29% of surveyed businesses had implemented live chat to reduce CSR workload, and 90% found it helpful in streamlining operations (Hubspot).
- Better-informed decisions
Because CCaaS comes with the ability to track analytics at a highly incisive and actionable level built into it, companies set themselves up to make data-backed decisions. Via customer tracking, businesses can reduce repetition of contact, improve handling time, increase personalisation and quickly provide agents with relevant information, such as whether a customer is new or existing, or their purchasing history. Similarly, a comprehensive data set allows for more nuanced A/B testing, which can help to improve the effectiveness of digital retail spaces. This better-informed decision-making feeds into an elevated customer service and increased loyalty.
- Personalised customer service
The modern buyer doesn’t want to have to give their information multiple times over several interactions with a company, and they certainly don’t want to receive impersonal, bland responses. Rather, the most trusted, loyalty-inspiring brands treat their customers not just as humans, but as individuals. They use their name, are aware of their preferences and cater the service to match their needs. Context-based, personalised support can be provided by an omnichannel customer journey and, by offering a variety of digital channels, customers can use their preferred method of communication – strikingly, this can increase consumer spending by up to 500% (Forbes).
- Reduced cost of operations
All businesses need customers. But when those customers are met with an unsatisfactory experience, they are likely to abandon that company, which now has a revenue gap to fill. As we said earlier, the cost of acquiring new business is dramatically higher than the cost of maintaining ongoing customer relationships. With higher retention rates enabled by CCaaS, companies stand to make significant savings on those acquisition costs.
- Make buyer loyalty an incentive
Customer retention can be improved by loyalty programs and other rewards for repeat business. When a buyer makes multiple purchases, they represent ongoing sales and, aware of this fact, appreciate some recompense. This might include special offers, discounts or a referral program. A lack of recognition, though, can lead to a customer feeling unappreciated and unengaged. Through analytics, CCaaS gives companies access to massive amounts of customer data; this is information which can be used to provide a greater number of personalised loyalty benefits.
Key CCaaS Features for Customer Retention & Loyalty
Having walked through the customer retention benefits available via the implementation of CCaaS, it’s important to touch on some of the under-the-hood capabilities that make them possible.
Note that the following list does not map directly to the above. It’s more about the baked-in CCaaS features that help create the optimised conditions for improved customer retention.
- Personalisation for improved engagement
CCaaS, with multiple channel data tracking, allows a company to track the customer journey from point to point, and use that information to streamline the purchasing experience. Moreover, integration with CRM software and live conversation monitoring helps to furnish the experience with context and personalisation.
- Omnichannel communications
CCaaS solutions live in the cloud, making it easy to add various digital channels to the customer communication experience and keep them in good back-end condition. With CCaaS it’s possible for a customer to seamlessly segue between SMS, email, VOIP and live chat, for instance, and even explore communicative mediums like social media and video. And, since agents can oversee all channels from one workstation, there is less time wasted.
- Data tracking and analytics
Components such as AI-based interactions and call recording give companies a deeper, more textured field of customer information, which can be actioned and used to create trust and loyalty. Data analytics can improve things internally, too, since real-time reporting helps sales teams stay motivated and receive assistance where necessary.
- Aligned customer service teams and invest in employees
Agents are best-equipped to deliver outstanding customer service when they have access to all relevant data and are pulling in the same direction as the other departments within the organisation. CCaaS allows staff to work remotely, with a back-end infrastructure in harmony across the entire company. Collaboration is made much easier, and routing technology means cross-department interactions are streamlined and efficient. Additionally, reduced operational costs give businesses the chance to continually upskill employees, improving the potential and skill set of each individual agent.
- Improved flexibility and scalability
A purely cloud-based communication solution means an organisation can quickly pivot and adapt to external forces, such as the global pandemic, and remain nimble as business landscapes develop. CCaaS grows with your organisation, and through the potential for unlimited customizability, can evolve to suit changing requirements.
- Self-servicing via artificial intelligence
AI-powered webchats and IVR (interactive voice response) solutions mean that, rather than waiting until an agent is ready to deal with their inquiry, customers have the freedom to take care of it themselves. Businesses can set up automation protocols that take care of simplistic customer processes, with the ability to revert to a human agent as and when needed, meaning that many customer experiences become quick and convenient, with unparalleled usability.
CCaaS Customer Retention Strategies: The Takeaway
Customer retention is a key issue affecting all businesses, and improving CRR is indispensable within a business strategy to ensure future-proof operations. Optimising the customer experience through the implementation of CCaaS is a key driver of loyalty and trust, and in modern purchasing environments, these are the central pillars upon which customer retention is built. Cloud-based CCaaS enables improved customer retention through an improved UX, automation infrastructure, CRM system integrations and omnichannel flexibility, among other factors.
Finances Online provides some insight into the potential for efficiency gains presented by CCaaS, reporting that cloud contact centres experience 35% less downtime than on-site solutions, yet can be 27% cheaper. This is leading organisations across sectors and regions to explore the possibilities afforded by CCaaS, with Juniper Research predicting that global CCaaS revenue growth of 216%, 2022-2027.
Clearly, now is the time to implement a resilient and future-proof CCaaS solution. Our VCC allows your organisation to grow, by giving you all the benefits and features of a leading cloud-based communication solution with minimal setup required. Whether you’re a charity, retailer, public entity or construction firm; our software is built specifically with your industry in mind, and fully customisable to match your long-term goals.
Maximise your communications, and make your company a pleasure for your clients to deal with. Book a demo today to find out how our VCC can take your communications to the next level.