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Positive vs negative customer retention strategies

Published on 23 July, 2021

If you think that growing your business is only about attracting new customers, there is a very profitable segment of your business you are missing out on. Customer retention is the ability of your business to keep customers coming back again and again and is the key to growing a successful business. Keeping your current customers happy is just as important as acquiring new customers, perhaps even more so.

Attracting new customers is often more expensive than retaining your existing ones. However, keeping your customers happy and building their loyalty so they continue to purchase your products or services is often far more cost-effective. Therefore, developing effective positive and negative customer retention strategies should be at the heart of everything you do. So, what are positive and negative customer retention strategies, and how can they play a major role in expanding your business?

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What causes customers to leave?

Customers tend to leave a business because of:

  • Experiencing unfair treatment: When customers feel that they have been treated poorly by a company, they are likely to want to move elsewhere. This poor treatment can be about how a company handles a complaint, ineffective service automation, or generally poor customer service.
  • Lack of human service: When customers have a problem, they want to speak to a human rather than using a chatbot or scouring a website for answers. If they don't get the human service they want, they may very well decide to leave.
  • Cost of services and products: Price is the biggest reason why people decide to leave a company. However, many customers will stay with a business despite the price if they feel that they are always treated well. Therefore, offering both better customer expensive and lower prices is a sure-fire way of attracting and retaining customers.


What is a positive customer retention strategy?

What you used to attract your customers first isn't necessarily going to be what keeps them. The experience you deliver must be based on trust and help customers recognise and appreciate the value of your service or product. This means that when your customers are looking to buy or renew a service, they will always choose you.

Positive customer retention strategies include actions that will increase customer loyalty while reducing customer turnover. A positive customer retention strategy helps you provide and extract more value from your customers. It comprises activities a business can use to increase repeat customers and increase each customer's profitability. By rewarding customers for remaining in a relationship with you, your business can build your customer relationships and maximise the revenue you get from each one.

What are the benefits of customer retention?

For the long-term success of any business or brand, customer acquisition is not the only priority, customer retention is as well. There are many benefits to customer retention, including:

  • Increased repurchasing behaviour: Customer retention and repurchasing are inextricably linked, and the positive relationship between the two has a huge impact. Customers who stay will inevitably continue to buy products and services from the company, which increases the company's turnover.
  • Less sensitive to price increases: Retained customers are loyal to the product or company and are therefore more likely to accept any price increases.
  • Customer recommendations: When customers feel satisfied and loyal, they will be inclined to post positive reviews and share their experiences with friends and family. Positive word-of-mouth acts are incredibly valuable to any business and one of the most effective forms of advertising.

Examples of positive customer retention strategies

There are several customer retention strategies that will help you to stop customers from leaving your business.

Always deliver great customer service

Customer service should be your primary customer retention strategy. Customers measure how useful your service is at every step, but especially when they have a problem. Offering quick, efficient and friendly customer service will strengthen their confidence in your product, service and business and encourage them to stay longer.

Care for your customers

Customers often decide to leave when they feel that a business has stopped caring about them. To customers, caring means taking their feedback seriously, responding to them appropriately and resolving any problems they have.

Keep in touch with your customers

Communication is crucial in any positive customer retention strategy. When you communicate effectively with your customers, you will learn what they need and, as a result, they will likely choose to stay with your company and continue using your products or services.

Personalise emails and messages

By segmenting your customers, you can send them personalised messages, offers and rewards. For instance, you could surprise your customers on their birthdays with a personalised message and an offer. It shows your customers you care about them and encourages them to continue feeling loyalty towards your brand.

Strive to maintain a good record

Loyal customers are those that will stay and not be swayed by your competitors to leave you. Keep an up-to-date customer database where you can find out who your loyal customers are and then work on maintaining a positive relationship with them.

Provide quality services

You should constantly strive to ensure your company, services, and products are the best on the market. It makes business sense, after all. But offering quality services and products also means your customers won't want to leave you.

Employee training

Giving your employees the training they need to enable them to contribute to the business constructively will undoubtedly benefit your customers. But what is also just as important is ensuring your employees understand the importance of customer retention and their role in it.

Surveys and polls

Surveys have an important role in positive customer retention strategies, enabling you to get to know your customers and how they perceive your business, products and services. Interesting questionnaires, surveys and polls that ask your customers for their experience, suggestions and views will show your customers that their views are important to you and boost your customer retention rate.

Customer Surveys - SM CTA

What is a negative customer retention strategy?

Negative customer retention strategies are focused on proactively losing customers. Choosing to end customer relationships may sound like an unusual business approach. However, not all customers are profitable, while others may not be the best fit for a product or service or a loss-maker. There are several reasons why a business may choose to end a customer relationship, such as:

  • Unhappy customers: Even if you have a great product or service, there may still be customers who aren't satisfied. Unhappy customers can share their dissatisfaction with others, whether it's posting negative reviews or telling their friends and family.
  • Customer uses unethical means: If a customer tries to use a product or service in a potentially unethical way or associate it with something that goes against your business values, you will want to end your relationship with that customer.
  • It's a business decision: It may be that the customer hasn't done anything wrong and they are loyal to the company. However, a business-related decision is made to lose a segment of customers that may not be profitable, for example.

Examples of negative customer retention strategies

Negative customer retention strategies are used to end customer relationships when it is no longer profitable for a business to retain certain customers and ensure it is done correctly. For example:

Increasing the cost of products or services

Customers often look for products or services that are the most affordable or cost-effective. Therefore, increasing costs will likely result in a customer choosing to purchase a product or service elsewhere.

Lack of attractive deals

Offering deals that are not so attractive or affordable will help in deterring potential unsuitable customers or encouraging existing customers to look elsewhere.

Reducing the services you provide

Customers will often stay with a company even if they have put up their prices. A way to counteract this is to reduce the number of services you offer as part of your negative customer retention strategy.

Stop communicating with customers

It's not usually a recommended way to conduct business. Still, by not responding to emails and reducing your communication with customers, they will likely look to move elsewhere.

Closing the customer's account

Closing a customer's account may seem like a drastic move. Still, it might be appropriate in certain circumstances, particularly if the company has already warned the customer and then proceeds to close their account.

Your customers are the lifeblood of your business, which makes creating effective positive and negative customer retention strategies so important. You need to remember that your relationship with your customer doesn't just end when they have purchased from you. For a business to be successful, it needs to focus on retaining customers and put them at the heart of everything you do. But at the same time, you must also recognise when it's time to end your relationship with certain customers for the business' good. Negative customer retention strategies ensure that you let go of customers in such a way that your brand won't be negatively affected.

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