This age-old question has left business owners scratching their heads for centuries. Until the Internet, companies could only influence customers who walked through their doors. Nowadays, businesses can reach customers anywhere and will do almost anything to grow their customer base.
In addition to gaining new customers, businesses are more focused on retaining existing ones as well. That's because a 5% increase in customer retention can lead to a 75% increase in customer lifetime value. Customers who are familiar with your company are more likely to buy from you again and will provide more value to your business over time.
However, even with modern technology, business owners still struggle to find effective ways to acquire new customers and retain them. If you want your business to be successful, define the most effective way to optimize lead acquisition as well as customer retention.
In this post, we'll break down what a customer base is and provide tips on how your company can grow and retain its customer base.
Your customer base is the group of people who repeatedly buy your company's products or use your organization's services. These customers frequently engage with your business and provide the most financial value to your company. Depending on the industry, your customer base can be a specific group of people or a target audience that's based on a buyer persona.
It's important to identify your customer base because these people are incredibly valuable to your business. They buy your products the most and rely on your company to achieve their goals. Recognizing these customers will help your marketing, sales, and customer service teams build a productive relationship with your customer base.
Within your customer base is a subset of customers who are referred to as your installed customer base. These customers are at a specific point in the customer journey that differentiates them from the rest of the people in your customer base.
Customer Base vs. Installed Base
The installed base refers to the group of customers within your customer base who are actively using your products. Unlike the customer base, this group excludes people who have not recently made a purchase or are not engaging with your business's offers. Identifying these customers will help your company provide timely service that will improve retention
For example, HubSpot's customer base would be anyone who has purchased or used one of our free or premium tools. However, HubSpot's installed based would only consist of the customers who are currently using HubSpot products in their day-to-day workflow. By highlighting this subsection of our customer base, we can personalize our marketing, sales, and customer service offers to fit the specific needs of our active users.
Now that you're able to identify your customer base and your installed base, you're probably wondering how to make them bigger. Let's talk about how you can use customer service to grow, develop, and retain your customer base.
How to Grow Your Customer Base
While marketing and sales teams play a major role in attracting and engaging your customers, customer service teams grow and retain your customer base by creating a delightful customer experience. This effort keeps customers coming back for more, creating opportunities for upselling and cross-selling. Below, are a few tactics your customer service team can use to build and retain your customer base.
1. Provide Excellent Customer Service
This one may seem obvious, but so many companies fail to deliver exceptional customer service. In fact, research shows 60% of consumers have stopped conducting business with a brand due to a poor customer service experience. Customers expect perfection and even one misstep by your company can result in churn.
If you want to provide excellent customer service, engaging with needy or unhappy customers shouldn't be viewed as a chore. Instead, your team should look at these customers as an opportunity to grow your customer base. Respond to their requests immediately and these customers will be more likely to purchase your products again because they feel like your company is invested in their success. HubSpot Research even shows 93% of customers are likely to make repeat purchases with companies who have great customer service.
Customer service is also a major influencer of customer retention. Studies reveal 67% of churn is preventable if a customer's issue is resolved during the first service interaction. This puts more pressure on your customer service team to fulfill the customer's request and do so in a timely manner.
2. Encourage Customer Advocacy
It can be difficult to attract new customers to your business, especially when they've never heard of your product or service. Customers are skeptical of advertisement and most won't be swayed solely by your marketing efforts. Rather, they need to feel confident your company is aligned with and invested in their goals.
One of the best ways to build trust with new leads is to leverage your customer advocates. These customers provide referrals and testimonials that improve your brand's credibility in the eyes of potential customers. In fact, research shows 91% of consumers trust online reviews as much as they trust personal recommendations. So, even if your customer advocates aren't directly referring new leads, encouraging and publicizing their feedback will help make your company appear more trustworthy.
3. Create Freemium Offers
Freemium offers are a great way to grab the attention of potential leads. With a freemium offer, companies give away something of value for free in exchange for customer information. The item given away can be as simple as a PDF download or more interactive like a free prototype software.
For example, HubSpot offers a freemium version of its marketing, sales, and customer service tools. Users don't have to pay to use these tools, but they do have to supply an email address and create a HubSpot account. This way, customers can get a taste of how useful HubSpot tools can be for their business. Then, HubSpot can analyze the product usage reports for these users and craft personalized customer service and sales offers based on the tools they use most.
4. Adopt Customer Service Tools
As you start to accumulate more customers, your customer service team must adapt to handle the increase in customer demand. One option your business has is to hire more reps to field service requests. This route is less desirable because it's expensive and time-consuming to complete. Instead, you can use customer service tools to expand the bandwidth of your customer service team without hiring new employees.
One tool that you can integrate into your customer service team is a help desk. A help desk is a platform that hosts a variety of useful customer service tools, like a knowledge base, a ticketing system, and a shared inbox. These tools automatically organize and distribute incoming service requests which makes it easier for reps to manage their open cases. Instead of having to keep track of what they're working on, customer service tools optimize your reps' workflow and free up time for them to take more cases each day.
5. Collect Customer Feedback
If you're running out of ideas for how to attract new customers, look at your customer feedback. Positive feedback tells you what you're doing well and what you should boast about to new leads. Negative feedback highlights where you need to improve and what needs to change to increase customer retention. Keeping close tabs on your customer feedback gives you a better idea of what your customer base values most about your company.
There are many effective ways to collect customer feedback. For example, provide customers with surveys after a purchase or service interaction. NPS® surveys are great because they provide your company with qualitative and quantitative data about your customers. If your team is having trouble collecting responses, check out some of these strategies you can use to obtain customer feedback.