The Importance of Customer Retention and the Two-Strike Rule

Gladly Team

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5 minute read

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All too often, businesses spend a significant chunk of their resources chasing after new sales when the key to strong growth is retaining existing customers. After all, studies have found that a mere 5% boost in customer retention can increase revenue by 25% to 95%.

In this post, we’ll introduce you to the two-strike rule, explain the importance of customer retention, and provide strategies to ensure your customers stick around for the long haul.

What Is the Two-Strike Rule?

The two-strike rule refers to the idea that if customers have one bad experience with your brand (for example, if they receive an unsolicited promotional email or face major shipping delays), not all hope is lost.

If you successfully solve their issues, show them you care about their needs, and provide a positive experience, they’ll give your company another shot. (In fact, studies have found that 93% of customers will make repeat purchases with companies that offer excellent customer service.)

On the other hand, if someone has two poor experiences with your brand, they’re likely to never return. Worse yet, they may even warn their friends and family to steer clear of your company. That’s why it’s crucial for brands to ensure they’re building a customer-centric culture; consistently delivering fantastic customer experiences, investing in retention strategies, and using high-quality customer service to ensure customer issues and concerns are immediately resolved.

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Why Is Customer Retention Important?

Customer retention is the key to sustainable growth and a testament to whether customers are happy with your products and brand. Retention is a result of engaging and nurturing existing customers in a way that encourages them to return to your business consistently over time.

Beyond that, the marketing flywheel posits that beyond constantly returning for more, happy customers will promote your brand via free and organic word-of-mouth marketing, which drives customer acquisition.

But it’s not just enough for brands to understand the importance of customer loyalty and retention and hope for the best. Instead, they must implement customer retention tactics to nurture existing customers and maximize this opportunity for long-term revenue.

4 Customer Retention Tactics for Growing Brands

Now that you know the importance of customer retention strategies, you should also implement tactics that not only prevent churn but also increase positive customer sentiment for your brand. (Take note — these strategies work for brands across all growth stages and phases of customer service.)

  1. Launch a loyalty program. Especially when paired with personalized offers and rewards, tiered loyalty programs can encourage shoppers to make regular purchases and engage with your brand. Over time, this boosts not only customer retention but also customer lifetime value.
  2. Create a referral program. Referral programs are one of the best ways to leverage satisfied customers to drive new business, especially when you offer win-win benefits to both parties, such as a coupon for their next order.
  3. Use marketing to keep your brand top-of-mind. From personalized promotional emails to organic social media posts, marketing is a fantastic way to keep customers engaged long after they check out. You can also use marketing to offer exclusive deals to thank loyal customers.
  4. Invest in high-quality customer service. It doesn’t matter how amazing your products are if you don’t have excellent customer service. Taking care of customers when they need help is the ultimate way to turn frustrations into opportunities and show that you’re listening and care about their needs. To level up your customer service, we recommend leveraging an all-in-one customer support platform like Gladly, which lets you reach customers whenever and wherever they require assistance.
  5. With the right tools and tactics, you can prevent those two strikes from happening and get one step closer to using customer retention for business growth. However, it’s important to remember that customer retention is not an overnight solution, but a long-term strategy that requires equal effort as new customer acquisition.

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