Businesses that don’t prioritize customer retention are losing money. Research shows that U.S.-based corporations could save over $35 billion annually if teams focused on increasing customer retention rates.
But what exactly is customer retention, and what can you do to ensure that those numbers are heading in the right direction? Below, we discuss what a good customer retention rate is, factors that can influence retention rates and how your business can build a loyal customer base.
What is customer retention?
Customer retention refers to your company’s ability to keep customers coming back after you’ve acquired them. Your customer retention rate gives you valuable insights into customer loyalty and the health of your business.
To calculate your customer retention rate, subtract the customers you’ve acquired (N) from the number of overall customers in a set time period (E). Divide that number by the total customers at the start of the period (S). Finally, multiply that number by 100 to get the overall percentage.
For example, let’s say you had 2,000 total customers (E) at the end of the fourth quarter and acquired 400 (N) during that time. You also had a total customer count of 1800 (S) at the start. You’d subtract 400 from 2,000, then divide by 1800. After, you’d multiply by 100 to get a retention rate of 88%.
What is a good customer retention rate?
In an ideal world, we’d love to keep every customer we’ve acquired, but that’s unrealistic. So, how do you assess where your company stands when it comes to customer retention?
Customer retention rates vary by industry, but generally, an ideal rate for the telecom industry is 78%. For IT and broadband companies, the average falls around 78%. With these key figures in mind, you can gauge where your company stands compared to its competitors.
What key factors influence customer retention?
Once you’ve calculated your customer retention rate, you might wonder what factors make that number go up or down. Below are a few things that can influence how well your business can retain customers.
Responsive and effective customer support
Effective customer service is vital to keeping customers loyal to your business. Customers don't give second chances to companies that fail to deliver exceptional support. 96% of customers leave a business after just one bad customer service experience.
Additionally, customers want fast response times to service inquiries. Research shows that two-thirds of customers expect your company to respond to their service request within five minutes or less. Businesses that want to improve customer retention need to ensure customers receive timely responses to support requests.
Personalized customer service
Personalization is no longer a nice-to-have but a must-have for providing an exceptional customer experience. There are many advantages to offering personalized customer service, such as increased profitability, brand loyalty and improved net promoter score (NPS).
In fact, research by McKinsey shows that companies that use personalization increase profitability by 40%. The same study found that those companies experienced a 20% improvement in customer satisfaction. The bottom line? Companies that treat customers as individuals are more likely to retain them for the long term.
Omnichannel support options
Omnichannel customer service, or a lack thereof, can significantly impact your customer retention rate. Not all customers want to call your contact center for tech support. 38% of customers prefer using digital channels such as SMS, email or chat to access customer service.
This is especially true for Gen Zers seeking tech support. Less than 20% of Gen Zers want to call your contact center for support. Most prefer using digital channels like email or chatbots for customer service. Companies looking to keep customers long-term should ensure they can access support on their preferred service channels.
Tips for improving your customer retention rate
Telecom and broadband are fiercely competitive markets, making it easy for customers to switch providers. So, how do you make your company too good to walk away from? Here are a few steps your company can take to improve customer retention.
Improve contact center agent training
Your contact center agents’ performance is vital to your customer retention efforts. Set them up for success from day one with a strong contact center agent onboarding program.
Consider using tools like virtualization or virtualized tech support to help agents answer customer inquiries quickly and effectively. Virtualization allows agents to simulate all the functionality of physical devices. However, unlike a library of physical devices, virtual ones update dynamically, ensuring agents have access to accurate information to guide customers through troubleshooting.
Agents can even switch between multiple versions of a phone or tablet, allowing them to provide a more personalized tech support experience for your customers. As your agents help customers quickly resolve tech issues, this increases first-call resolution rates. And if customers can rely on your business for fast and effective service, this helps keep them around for the long term.
Implement the right technology
Customers want immediate access to reliable and fast customer support. But even the best agents in the world can’t answer every customer’s inquiry within five minutes of reaching out to your contact center.
Technology can help you scale customer service effectively to maintain competitive tech support. For example, your contact center can implement live video support for faster, more accurate issue resolution.
Additionally, chatbots provide numerous benefits to both your customers and business. With chatbots, customers can access instant support 24/7 and skip the long contact center queue.
They’re also an excellent tool for companies that want to tailor customer service to Gen Z, a generation that uses chatbots at much higher rates than previous ones. With chatbots, you can provide access to the instant self-service customers want while cutting unnecessary business costs. It’s a win-win.
Collect data to gauge performance
You need to analyze and collect data to understand the efficacy of your customer retention efforts. Make sure your company is tracking critical metrics for customer support success.
While metrics like customer retention rate may seem obvious, consider tracking other metrics such as NPS, first-call resolution and customer churn rate. Additionally, survey customers to collect feedback about their tech support experiences.
All of this data can yield valuable insights into your customer retention efforts, helping you identify what’s working and what isn’t. This enables you to understand the success of your business and pivot your strategy as needed to meet customer demands.
Improve your company’s customer retention rate
Knowing how your company’s customer retention rate compares to industry standards is vital for gauging the health of your business. By understanding key factors influencing retention rates and tracking vital metrics, you can pivot your customer service strategy to stay competitive in increasingly crowded broadband and telecom markets.
Are you looking to increase your customer retention rates and easily scale customer service? As a leader in omnichannel customer support, Ozmo is trusted by TELUS, Google Fi, Verizon and more. Learn more about the future of tech support today!
