A high churn rate, or, in other words, a low customer retention rate is a huge problem for a brand. Customers who leave your brand for a competitor are affecting your bottom line in ways beyond churn. If you are failing to retain customers, you’re going to experience a big loss in revenue.
Customer retention should be high on the priority list of any customer success employee. Why? Because retention drives revenue.
Customer value increases exponentially with repeat customers. Acquisition costs are so much higher. Brands that work to increase customer retention rates save so much more than those who do not.
Bain & Company released a study, which shows that an increase as small as 5% in your customer retention rate can increase profits by up to a whopping 95%! That’s a pretty big return on a low effort investment.
How do you create healthy customer retention? You create a connection between your brand and your customer. The more connected your customer feels to your brand, the more likely they are to stay loyal to you, and in turn, increase their lifetime value. You can create deep-seated connection through an online community.
Increasing Customer Retention Through Community
In the digital age we live in, connection is more important than ever before. You need to ensure you create a space for your customers to connect with your brand as well as with other customers alike.
There are so many benefits to introducing a community to your brand overall, but especially for your CX strategy. From meeting and exceeding customer experience expectations, to encouraging brand loyalty, to personalizing your customers' experience to identifying at-risk customers.
You can improve retention rates through all of these! Let’s discuss the many ways in which an online community can improve your chances of reducing churn rate!
You’re Meeting their CX Expectations
88% of people feel that access to a community improved their customer experience.
A community can facilitate the 5 most important aspects of a good CX. Customers overwhelmingly want their interactions with a brand to be fast and convenient. They want self-service options, they want access to real people if they need them, and they absolutely want to feel like the brands they shop with care about them.
By offering customers a dedicated space that not only speeds up the time they spend trying to solve a problem, but it’s meeting them where they are ie. It's super convenient.
Offering a community means that your customers no longer have to try to contact you - the connection is right there in their Google search - where most customers now start their journey. They can choose to speak with real people (other customers or brand representatives) or to search your knowledge base or Q&A section to find the answer to their questions. You’re simultaneously creating a self-service option and a place to find real people to speak with.
Finally, a brand that creates an online community is showing they care about their customers, how they feel about your brand and products, what they want from you, and that you value their time. 74.5% of consumers agree that access to an online community makes them feel more valued as a customer.
So you achieve an excellent customer experience through community - how does this come back around to customer retention? Because happy customers are repeat customers. The more connected you allow your customers to be to your brand, the more inclined they are to repeat purchases.
You’re Encouraging Brand Loyalty
Happy customers are lifetime customers. Community has been proven to increase brand loyalty - 60% of people are more loyal to a brand because of their access to a community.
Apart from directly impacting your CX, a community can encourage positive feelings about your brand and improve customer loyalty.
You are offering your customers a direct line to your brand and other customers alike, creating deeper bonds and relationships that make it more and more difficult to leave. The more time your customers spend in the community, the more positive impact there is on renewals, sales, and brand affinity.
You’re Identifying at Risk Customers through Listening
An online community allows customers the chance to be totally and completely honest with their frustrations - and they can do it in a space in which you control. It’s surprising how many businesses don’t see the value in listening to their customers.
Encouraging your customers to share feedback and issues within your community not only empowers them and encourages trust in your brand but it enables you to gain an unparalleled understanding of what you’re doing wrong. You can address this directly and in turn, improve your customer retention!
Your community manager or moderators can identify the customers who are not satisfied and help them to rectify whatever it is that is wrong. You have the opportunity to help make an unhappy customer happy through direct support. You no longer have to wait for them to churn to see that you’ve done something wrong - you can help them through their issues, on their time, and keep them satisfied in the long run.
You’re Personalizing your Customer Experience
91% of consumers are more likely to shop with a brand that takes the time to personalize their experience.
Community not only meets customer experience expectations, but it exceeds them. Data-driven may sound super analytical (and it is), but it can help create a totally personalized experience for your customers.
You have a full picture of your customers that use your community - what interests them, what content they like, which products they use down to the features they enjoy or dislike. You can tailor your customer’s experience to their specific preferences. Offering your customers more than what they expect can improve both your retention and satisfaction ratings.
You’re reading this for a reason - either you’re interested in the multi-faceted benefits of an online community, or you’re experiencing high churn rates and you’re looking for a solution. The key takeaway you should consider though, is that your customer is the backbone of your business. You need to ensure their happiness to build your success. Read more about how you can improve your customers’ experience and in turn, increase your retention rates with our free eBook Enabling Customer Success with Community Building.