Customer Retention Management & How to Build It

Why do you, as a business, even bother to improve your customer experience? Is it just to make them momentarily happy? Or for a single good review? I guess not. It’s because you want to retain your customers. You want them to have high product stickiness and want them around for the longer haul.  

That can only be made possible by customer retention management. Your customer success team strives to drive continual value to your existing users every day, but it needs a dedicated approach to manage customer retention effectively.  

Here’s what you need to know about customer retention management to implement it with vision. 

What is customer retention management?

Customer retention management embodies the strategies and activities a business undertakes to maintain and boost customer loyalty, ensuring long-term engagement and minimizing churn. It focuses on making customers feel valued and important through direct actions like personalized rewards, swift problem-solving and genuine interactions. 

It uses customer surveys and conversation analytics to get to the heart of what customers desire, enabling you to tailor your approach and connect more deeply. It’s crucial for you to focus on keeping your existing customers happy — it’s not just economically savvy but also key to sustainable business growth, positive online brand reputation and overall brand image. Customer retention management is a thoughtful process that blends knowing your customers with actions that show you care. 

Customer retention is your ability to retain your customers over time, while customer retention management involves the strategies, actions and processes used to achieve this. 

Key components of client retention management

Let’s look at the key elements and components of customer retention management.  

1. Active support and engagement  
   Keep in touch, solve problems fast and always listen. Building exceptional experiences is an unaltered component of customer relationship management. Provide them regular updates, identify chances to upsell and encourage feedback loops where customers can share their experiences and concerns. You can consider starting and maintaining a customer community to empower them with their own collectively helpful brand circle.
   
2. Lifecycle experience enhancement 
   Focus on improving every touchpoint throughout their journey, every experience you deliver must be fresh and rewarding. When you’re thoughtful in your intention, you’re bound to have a happier audience with higher customer lifecycle value. 
   
   Dig Deeper: What is Customer Lifecycle Management?
   
3. Customer growth and success 
   Build a customer success team that helps your customers derive maximum value from your product and helps your customers succeed with what they buy from you. Customer retention management works both ways — customers get bang for their buck, and you get sustained business growth. Run a solid loyalty program because it’s only in your favor — Almost eight in 10, Americans tend to buy more from brands that have a rewarding loyalty system in place. Check this video out. 👇
   
   Now that you know the key elements of customer retention management, let’s get down to its benefits. 

4 Benefits of customer retention management for businesses

The time to think about investing your time in customer retention for your business is now. Here are more benefits to consider when managing your client retention. 

📈 Healthy bottom line: I’m sure it’s no news to you that retaining a customer is much cheaper than acquiring one. Loyal customers tend to spend more over time, cutting down on the scramble (and expense) to grab new ones. 

💰 Steady cash flow: A solid crew of repeat customers gives you a financial steadiness that’s pure gold for any business. It means you can plan ahead with more confidence, knowing that you have a certain stream of revenue to always fall back on. 

👥 Increased referrals: Happy customers act as brand ambassadors. They are also the ones with the highest net promoter scores (NPS). It brings in folks who are already leaning towards liking what you do because someone they trust gave them the nudge. 

💫 Shine in a crowd: In a world where everyone’s shouting for attention, having a band of loyal customers sets you apart. People stick with you not just for what you sell but for how you make them feel. That’s something your rivals can’t easily copy. 

How to implement a customer retention management system

To ensure your people stay back in your client pool, you need to be customer-first, through and through. Here’s a quick guide for you to implement a customer retention management system for your business. 

1. Find the right customer fit

For high retention and reduced customer churn, you need to find your ideal product-market fit. Scout for and onboard the customers who genuinely need and connect with your product.  

It reduces friction and sets a strong foundation for loyalty, emphasizing the role of accurate targeting in retention.   

You can launch a product-market fit survey and disburse it among your potential customers to gauge how well they respond to your solution as the one that fits their needs.   

Better still, use an AI-powered platform like Sprinklr AI+ that can scout for deep consumer insights from unstructured conversations. It can shape a healthy user understanding in your team, with knowledge that often gets brushed under the carpet of meaningless online chatter.  

Pro tip: You may consider implementing established frameworks to go about this. Consider using the Product-Market Fit Pyramid, a framework first introduced in The Lean Product Playbook. This framework provides a sound structure for you to define and achieve your product-market fit.  

2. Set specific retention goals 

Define what keeping customers means to you in vivid detail. Is it a certain percentage of people who stick around, an uptick in how often they engage or how much they're willing to spend over time? Setting these metrics to navigate by means you can track your customer journey, adjust your sails when needed and ensure everyone's rowing in the same direction, towards keeping your customers close and satisfied. 

3. Align your teams with product strategy 

You probably have a customer service strategy in place, but is your customer retention vision aligned with your product strategy? And most importantly, are your teams working in unison to support this larger vision? This is a key step in managing your customer retention. Your teams need to function as a close-knit group where everyone from customer service to marketing experts is on the same page.  

Always, always ensure there are no gaps in knowledge transfers between teams.   

Different teams, especially in larger organizations, often run the risk of working in siloes and with minimal clarity on the broader impact independent efforts make. That’s why it’s important for you to use a Unified Customer Experience Management (Unified-CXM) platform — to manage and pivot all your efforts in one direction, ensuring maximum impact at the anterior, where customers expect consistency from you on all fronts. 
 

Customer retention management is an ongoing activity impacted by evolving customer behaviors and market dynamics. Continuous retention data tracking keeps inertia at bay and helps you pivot efforts and investments dynamically so you don’t lose market share. To that end, defining and measuring customer retention metrics becomes vital.  

Top customer retention management metrics to track

There are many ways to find out how satisfied and likely to linger around your customers, but these metrics below are directly proportional to customer retention management. 

1. Customer retention rate: Measures the percentage of customers who remain with your company over a specific period. The average customer retention rate reflects the effectiveness of your loyalty and satisfaction strategies.
   
2. Churn rate: The flip side of retention is that this metric tracks the percentage of customers who stop using your service or buying your products. It surfaces gaps you need to fill up to reduce losses. 
   
3. Customer lifetime value (CLV): Estimates the total revenue a business can expect from a single customer account. It underscores the long-term value of maintaining relationships. 
   
4. Net promoter score (NPS): Gauges customer loyalty and satisfaction based on their likelihood to recommend your brand. A high NPS indicates strong customer advocacy. 
   
5. Average revenue per user (ARPU): This metric calculates the average amount of revenue each customer generates, helping assess the financial impact of retention efforts. 
   
6. Repeat purchase rate: Measures the proportion of customers who have made more than one purchase. It’s a direct indicator of repeat business and customer loyalty. 
   
7. Customer engagement score: A composite metric that evaluates customer interactions with your brand, including usage frequency and depth. It signals engagement levels and potential loyalty. 
   

That’s many metrics to track, indeed. However, brands that manage customer retention strategically have been known to witness quick gains in the form of recurrent sales, referrals and revenue. The next section delves into such inspiring success stories. Let’s take a look. 

Examples of customer retention management for industries

1. Using community management to get into customers’ good books 

Brand: Costa Cruise 

Industry: Travel 

Costa Cruises operates luxury cruise liners across 5 continents, fielding customer questions about trips, fares, and deals on multiple social media channels. Typical travelers look for quick answers and personalized recommendations on their preferred channels like WhatsApp and social media. Paying heed to the customer’s voice, the company adopted multichannel community management to answer customer queries across channels and enable community managers to engage with the community effectively.    

The outcome: With a lean team of 5 community managers, Costa was able to respond 25% faster, improving customer satisfaction and retention rates like never before. Read the full story here 

💡Your takeaway: Don’t undermine the power of a strong customer community in enhancing client retention. Pick community forum software with a strong omnichannel focus to support your customers where they are! Tool selection can be a hassle, save time and make an informed choice with a personalized demo of Sprinklr’s omnichannel community software today.

2. Bring all your operations onto a simple, smooth interface 

Brand: Global Optics 

Industry: FMCG 

This global eyewear company has upped its game in how it clicks with customers and makes sure they come back. I spoke about using a Unified-CXM to tackle experiences head-on — and this brand did just that. It pulled everything into one place – think of it as the ultimate customer service hub. While it did expect to answer questions faster, what it really wanted was to understand what each person needed. To this end, the brand used social listening to hear the chatter around its brand and made every chat feel personal. 

How did that yield? This strategy didn't just make service smoother; it massively boosted the happiness of customers. The company managed to slash wait times — and saw its customer satisfaction scores go through the roof — quadrupling in fact. Read the complete story here.

💡 Your takeaway: This eyewear crew knew what was up by syncing all their customer info. It made every chat a shot at forging tighter bonds, turning new customers into die-hards. 

A quick tip – merge your customer data to lift satisfaction and watch those customers stick around. 

From the moment customers discover you until the point where you get the chance to keep them around, they've been on quite a journey with you. They've experienced a lot, and to make sure every single interaction they've had shines at an A+ level, you've got to smooth out any bumps for your customer service team, your marketers and everyone else in the mix.  

That’s where Unified-CXM steps in. 

It’s easy to learn more about how we do it at Sprinklr. Hit us up for a free demo today.