Let me start off by making one thing clear: 65% of your revenue comes from existing customers.
Customer What is retention? Retention refers to a customer continuing to use a business’ product or a service and to pay for the said product or service. It is a key… is by far the best thing you can do for your customers. And consequently, for your company.
Some companies are only interested in acquiring new customers and pay little to no attention to customer retention. But are you actually acquiring customers if they are going to enter from the front door and leave from the backdoor right away?
This is why every business needs to pay more attention to customer retention and find the best fitting strategies for them. That is exactly what I talked about in our customer retention strategies article if you are interested.
But in case you are not the one to be redirected, let me explain once again what customer retention is and why it is important for every business out there.
What is Customer Retention?
Customer retention is a set of strategies companies adopt to make sure their customers are still interested in their products and services and will keep buying from them. So, it’s basically an umbrella term that can include customer loyalty too.
While customer loyalty focuses on making fans out of customers, customer retention is more interested in keeping them buying in effective ways. But the end goal is obviously, customer loyalty and creating a community of loyal customers.
Why is Customer Retention Crucial?
Customer retention matters for three simple reasons.
You get to have your customers market your product for you (keep in mind that 92% of customers tend to make a purchase if recommended by friends and family),
You get to receive actionable feedback that actually provides important information since your existing customers are way more familiar with your product and how you operate,
And you get to profit a lot more, and I mean about up to 95% more, for a 5% improvement in customer retention.
Now that we are on the same page about what is and why is customer retention, it is time to find out how top tier brands achieve it. Let’s take a look.
How Do Top Brands Retain Customers?
There is this common misconception that top brands don’t have to work on customer retention since they are already the best of the best, and people will automatically keep buying from them. A big fat no way, people.
If I told you a certain product of a certain brand was not user-friendly, was overpriced, and had no extra benefits worth my time, wouldn’t you lose interest in that product as well? What if I added, “oh, by the way, I am talking about Uber” right after? Would you really feel the same way about it just because it is the Uber? I don’t think so.
Just because they make good revenue doesn’t mean big companies get to get cocky.
What do they have those huge marketing teams for?
And what exactly do those teams come up with to make the huge differences no other can compete with?
Let’s look into that:
Uber is one of my favorite big companies, and there is a solid reason for that. They had the most original idea of the last two decades. It was so revolutionary that taxi drivers all around the world protested it. Because it worked. And even in 2020, it kept working. Although their revenue from the riding segment went down by 24%, the revenue for Uber Eats went up 200% in 2020.
That is why there is the misconception that it is the product itself that keeps people using the app. And to be fair, it is not half wrong. The product itself is practical, affordable, and almost necessary for big-city dwellers. But that is mostly about customer acquisition.
Believe it or not, you can’t keep most of your customers interested even if you have the best product of the decade because we humans are designed to get bored eventually, even when the product in question is our most fundamental need. So what Uber did was look for the best ways to retain its customers, and I think they found quite a lot of ‘em.
From the very start, what made Uber so enticing was the referral program that reached up to 30 dollars for a referral at one point. What’s more, these referrals were double-sided and benefited practically everyone. I am not even mentioning the whole Uber trend when it first made it big, and these invitation codes were everywhere. But since it was only a one-time deal with the referral program, there needed to be another retention strategy…
…and there came Uber Cash. It was basically an in-app wallet feature that would make payments a lot easier while also getting users to save 5% for every $100. Ease of use. Check. Enticing deal. Check. Customer satisfaction. Check.
And then, in 2018, there came the reward program. It basically introduced tiers that users (riders, as Uber likes to call) would be placed in according to the points they have gathered and it delivered (pun intended). With this program, Uber not only showed how they can take unique actions for customer retention but also managed to identify and automatically offer better service for their most loyal customers.
So, in the end, in Uber’s lifetime of over a decade, it managed to come up with customer acquisition solutions that also worked as customer retention solutions, and vice versa. Kudos for that.
2. Coca Cola
Being a company established almost 140 years ago, you can just tell Coca Cola knows how to retain customers. From music videos to putting their iconic red on everything, Coca Cola had a great history of customer engagement.
But when you are a B2C non-SaaS business, tracking and figuring out loyal end customers wouldn’t be helpful, especially when you are as big as Coca Cola. Still, this didn’t mean they wouldn’t be able to come up with customer retention strategies. And one killer campaign rose above all other strategies.
The ‘Share a Coke’ Campaign
When Coca Cola launched the “Share a Coke” campaign, people went crazy – and I mean crazy. What they did for the campaign was basically changing the brand name on Coca Cola bottles and cans with actual people’s names, at first in Australia in 2012 and later to this day. You can tell it was a hit.
But what exactly was it that Coca Cola did so well? So what they put some names on it? Oh, it meant a lot. When you are in a long-term battle with a rival company almost as big as you, you have to seize every customer retention opportunity because if your customer leaves you, they go to your rival. But although long-time nemesis Pepsi decided to make fun of the campaign later on, this didn’t hinder the “Share a Coke” campaign’s success and the Coca Cola Facebook page had 870% more traffic and about 76,000 virtual Coke cans made it online.
This success had three undeniable reasons:
When one of the biggest companies out there says that they will replace their brand name with your name, it somehow sounds cool. And Coca Cola obviously made use of it. At first, it was the most popular 250 names in America, but with time they started distributing even the most obscure names, and this one’s coming from experience; it was really cool back in the day. So, just by changing the name on the bottle, Coca Cola had even the most fanatic Pepsi drinkers looking for their names on the beverage aisle.
Clear and Powerful CTA
“Share a Coke” was hands down the best CTA back in 2014. It had just the right words in it. The word “share” had such a warm, fun, and friendly ring to it, while “coke” sounded like good ol’ coke instead of directly saying Coca Cola, because coke equals Coca Cola, duh. So, not only did Coca Cola place a call to action into their best campaign ever they also used just the right words. Plus, the campaign is still going on with updates every year, so you know the CTA lasted (and will last) for a long time.
Now, in a scenario where Coca Cola hadn’t adapted social media into their “share a coke” campaign, things would have turned out different. They could still make it work with TV commercials, but would we be talking about it after nine years? Probably not. Plus, let’s not forget how influential the share a coke memes were. Whether they were made by consumers or Coca Cola staff, they sure helped with retention and acquisition.
What Uber accomplishes with the good old loyalty card strategy and Coca Cola with personalization, Amazon does it with a seamless user experience. The only difference is they sprinkle a bit of personalization and loyalty strategies too.
Amazon is very well known for its personalized user experience that helps users find related purchases in the form of suggestions, with specially designed landing pages and home pages for regions and quick, simple payment thanks to being able to save your payment method.
Keep in mind that 70% of customers say they have abandoned their shopping carts because of bad user experience and Amazon’s reign will make much more sense.
Now, we all know what Amazon Prime is, but you may not know how much it changed the game for eCommerce, even though Amazon is a top baller already. According to a survey by Digital Commerce 360 with 1000 buyers, 51% of buyers say they keep using Amazon because they have an Amazon Prime subscription and they get to have free delivery and other benefits.
To talk with numbers, according to the report by CIRP, Amazon raised its Prime member number to 147 million in March 2021 from the 118 million of March 2020. What’s more, in the first quarter of 2021, Amazon Prime had a 30-day What is the conversion rate? Conversion rate is the percentage of visitors that visit your website or landing page and convert. Converting in this context means that the visitor does… of 69%, a first-year renewal rate of 93%, and a renewal rate of 98% after the first year.
Also, let’s not forget about the Prime Day event that Amazon introduced for Amazon Prime users only. On Prime Day, Prime members get to have special offers and discounts on products, what makes it better is these offers are on products most likely to be purchased by the members. So, in the end, Amazon not only achieves customer acquisition by offering perks for Prime users but also customer retention by making sure Prime customers feel special. Wow.
In 2020, a lot changed. We had to buy so many things without even seeing them that we became experts in choosing what online shops are safe and which are shady. But still, no one wants to buy online if they cannot return the item. That’s why almost all products on Amazon have a 30-days return option. But what about the return price? Do you actually want to pay more just to return an impulsive purchase? Enter Amazon Prime once again. Among other perks, Prime also lets you return goods for free which I find revolutionary as a never satisfied online shopper.
I’ll admit it, I am a die-hard Apple fan and even though I have caused quite a lot of chaos in family gatherings, I still think I have good reasons to be a loyal Apple customer. Of course, I won’t be listing them all but I really could. Almost everything about Apple – its products, services, and features – contributes to customer retention. And that is not something you can achieve overnight.
Be it an iPhone, iPad, or just iPods, there is something about it. If you think it’s just popularity, I can’t say you are wrong but it’s more than that. The way Apple designs its products is very simplistic as we know, but at the same time has great details. The way speakers are placed on the device, the shape of a pod, even the weight of an Apple pencil have a long thought process. And they all work better together. People want to be a part of the Apple experience – maybe consciously, maybe not – for these simple little details.
I say this every time and I’ll say it again. Apple’s customer service is something else. You know it is true because they won’t let any unauthorized third parties serve you, instead, they started offering customer service in Apple stores to make sure you receive just the right service. In all levels of customer service, What is Customer Experience? Customer experience refers to the experience of customers with a business’s products and the overall brand. When offering products and services to a group of people,… is considered. Employees are given special training to read customer behavior, engage in personalized customer service, and put the customer needs first.
Moreover, the scope of each Apple product’s warranty makes a difference. I had my devices replaced with a brand new product several times just because they needed repairing. Not many brands can do that. And that’s just another reason why customers stay loyal to Apple.
Everybody knows how big of a deal it is when Apple decides to launch a new product. With invitation-only launches and rumors for months, Apple makes sure to draw the public’s attention. This not only guarantees quite a lot of customer acquisition but also makes the existing Apple users feel a little bit more special. The chances of dropping a brand when they draw this much attention get lower and lower.
But, What About the Rest of Us?
After seeing the outrageous retention rates of these top brands you might be thinking, “but, how do I make it work for me?”.
The harsh truth is, their strategies probably won’t work for you.
All these top brands have been in the business for at least a decade and at most over a century. Their methods were just the right ones for their time and what they did was build onto their existing fame and value with more modern strategies each year. And the reason why it won’t work for you is exactly that. You are in 2021, and the strategies you can adopt are completely different.
Still, these brands all share the same vision: the customers matter and customer loyalty will carry you above. Customer retention will do the exact same thing for you if you know how to utilize it and optimize it to your advantage. For Uber, it is the good old loyalty card system, for Coca Cola, it’s their unique marketing strategy, for Amazon, it is the seamless customer experience, and for Apple, it is perfect customer service and obsessive loyalty thanks to their exclusivity. And it is up to you to decide which quality of your brand will guarantee customer loyalty.
Every company has its own special way of retaining customers and it is the same for the top brands. But it is important to keep in mind that the strategies these companies use may not work out for you.
Instead, I hope that you can use this article to set a clear vision for your own customer retention strategies that you will come up with exclusively for your brand.
Frequently Asked Questions
What is an example of retention?
There are several ways of retaining customers and one of the important strategies is offering a great customer experience that can help your customers navigate easily through your product; or great customer service, which will make your customers feel the exclusivity of your brand.
What is the best strategy for retaining customers?
There isn’t a fixed set of strategies that apply to all types of businesses but it is important to keep in mind that your main aim is to satisfy your customers so extensively that they won’t want to leave you. Then, all that is left is to decide how you can apply this vision to your company and brand.
How does Coca Cola retain customers?
Being a very seasoned company, Coca Cola adopted many successful customer retention strategies over the years. Currently, one of their best strategies is customizing their products into personalized experiences for each buyer.