It's not exactly bold, controversial, or outrageous to say that companies need to retain as many customers as possible — that's every bit as sensible as it is lucrative. In fact, a study by Bain and Company found that a 5% increase in customer retention in the field of financial services produces more than a 25% increase in profit. And that trend extends well beyond that industry.

As obvious as it is that customer retention should be a priority for any business, it can still be tricky to understand how to generate and sustain it. That process starts with knowing who the most central players to customer retention are at your company. And, surprisingly enough, your service team is at the top of that list.

According to HubSpot's 2020 State of Customer Service Report, "Retaining customers is absolutely the number one way service teams can have an impact on the bottom line." It's arguably their most pertinent, practical, significant contribution to your organization. But aiding your support team's operations to boost retention is often anything but straightforward.

The process comes with its share of challenges, and in the interest of helping you navigate them, we reached out to some of our service experts to share their insight about how to handle some common problems. We've also provided a picture of the customer retention landscape in 2020 and offered some advice on how to approach the issue in the coming year.

Free Resource: Customer Churn Analysis Template

1. You provide poor customer service.

Poor customer service is, at once, one of the most detrimental and straightforwardly addressable challenges to customer retention. When someone has an issue or concern with your product or service, they need to be quickly and thoroughly accommodated.

If you can't offer them that kind of assistance, you're going to have a problem with keeping them on board. Exemplary customer service provides a valuable touchpoint between you and your customers. It allows them to vent concerns, offer feedback, become better acquainted with your product or service, and feel valued.

If you want to better address this point, hire and train a staff of support professionals who can reliably respond to customers and help guide them through their challenges.

Ensure that they're patient, professional, and persistent. Keep them well-informed and able to consistently adapt to emerging trends and tactics to make sure they're able to make your customers know you care about them.

If you can convey your customer appreciation through active assistance and sincere concern over their issues with your product or service, you can put yourself in a solid position to retain them, going forward.

2. Your outreach isn't timely or relevant.

Selective, targeted communication is key to optimizing your customer retention. You need to connect with customers at optimal times to get a jump on customer needs as they arise. In many cases, automation can help get you there.

As Ilana Hamer, HubSpot Customer Success Manager, puts it, "Customers don’t always know what they need to do to be successful, and they don’t know who to ask. That's why it's crucial to use automation to highlight the customers that need help before they even know that they need it, and put [yourself] front and center to make sure they move in the right direction.

"You don't need to reach out to everyone all the time — what's key is that you reach out to the right people at the right time with the information they need to be successful and delighted with your product or service."

Customers don't want to be inundated with messages from your company, but they don't want to be cast by the wayside either. If you're interested in retaining them, take the time and invest in the resources to give them relevant, helpful information as their need for it comes up.

3. Your customers are disengaged.

Keeping customers engaged is an absolute must for any business looking to improve its customer retention. If your users de-prioritize your product or service and put it on the back burner, they might start to see it as disposable and unnecessary. You need to keep your offering top of mind to ensure that customers are more inclined to fold it into their routines and keep using it down the line.

As HubSpot Customer Success Manager Kerby Billy puts it, "I find that in general customers who are more engaged with the platform and consistently logging in to take actions towards achieving their goals can get more value out of their subscription. In turn, they retain better than less active customers.

"Trying to connect with unengaged users and trying to re-engage them can be challenging, but leveraging sequences and directly calling clients has helped manage the outreach on that front.

"When I’m able to connect with these customers, asking questions about what’s going on with their business in general and determining why they bought HubSpot, to begin with, helps me understand things from their perspective and align with them."

It's not revolutionary to say that customers who actually use a product or service consistently are more likely to keep using it, but it's still worth mentioning. Keeping your customers engaged is central to improving retention.

4. There aren't enough helpful resources for customers to easily reference.

Not every issue or concern your customers run into will be significant enough to warrant getting in touch with customer service. Personally interacting with a human service rep is a hassle for all parties involved — particularly if the problem at hand winds up being a quick fix.

Having the necessary information to handle common issues readily accessible can help smooth over some potential frustration and save your users time — both of which make for more satisfied customers and improved customer retention.

That's why it serves you to invest in and maintain resources like knowledge bases. They allow you to trim the fat from your service interactions — ensuring that the contact you have with customers is necessary and efficient. That kind of coordination can take the stress off your customers, demonstrate thoroughness and professionalism, and ultimately help you retain users.

The State of Customer Retention in 2020

Valuing Customer Service Teams

Customers today have higher expectations than ever before, and according to the HubSpot 2020 State of Service Report, roughly 93% of service teams can vouch for that. But as customer expectations rise, it would appear as though some companies aren't taking them seriously enough.

That same report found that 31% of teams think their company considers customer service as an expense, not an opportunity for growth — up 2% from last year. That sentiment has some major implications for customer retention.

The quality of a company's service department often has a significant bearing on that business's ability to retain customers. A study from Vonage found that US businesses collectively lose an estimated $62 Billion annually over bad customer service experiences.

Given the implications that poor customer service has on retention, that 31% figure and the year-over-year growth behind it is alarming. In 2021, companies will be best served by making investments in their customer service infrastructures and taking those departments seriously.

Still, to stop here and say too many businesses aren't taking their customer experiences seriously would be disingenuous. Several companies are taking other strides to better understand their customers in the interest of retaining them.

Listening to Customers

From 2019 to 2020 there were increases across the board in the number of companies who report tracking customer satisfaction, online reviews, and NPS (Net Promoter Score). In short, more companies are making a conscious effort to listen to their customers — and for good reason.

Higher growth companies with better customer retention are often more inclined to actively listen to their customers. Tuning into your customers' thoughts, consistently gauging how they feel about your business, and asking for and acting on their feedback are all significant assets to effective customer retention efforts.

Leveraging Service Tools

Customer service resources like help desks, shared email aliases, CRMs, live chat software, and knowledge bases have a documented effectiveness when it comes to bolstering service infrastructures, increasing customer satisfaction, and boosting customer retention.

HubSpot found that in 2020, high growth companies were more likely to have adopted these kinds of tools than the average, and low growth companies were much less likely to have adopted service tools than the average.

A sound customer service infrastructure — one that can appropriately cater to customers while keeping them engaged — is central to customer satisfaction and, in turn, customer retention. So it's in your best interest to at least consider investing in a suite of service tools.

Looking Forward to 2021

If there's any lesson to be learned from this article it's this: Prioritize improving your customer experience if you want to improve retention. It might seem obvious and borderline self-explanatory, but too many companies don't take the proper steps to boost customer satisfaction.

How can you get there? Well, for one, you can take your customer service team seriously. Invest in quality reps, keep them engaged and happy, and understand that their contributions lead to growth. They're so much more than just another expense, and you need to treat them as such.

You also need to have a pulse on how your customers feel about your offering and any emerging trends in your space that draw significant interest from your target audience. And finally, consider investing in tools that can both make life easier on your service reps and enhance the efforts they put in.

Improving customer retention can be every bit as challenging as it is vital, but if you take the proper strides to keep your customers engaged and enthusiastic about your business, you'll be in a solid spot to keep them on board.

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 Customer Churn Analysis Template

Originally published Dec 3, 2020 8:00:00 AM, updated June 15 2021

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