Welcome to At The Sharp End – Yorkshire’s weekly business innovation show, where we believe innovation is the key to business growth.
In today’s episode +Ian Sharp (Director, Khemeia) is joined by +Jon Stephenson (Head of Business Insights, Khemeia)
to talk about what is a retention strategy.
In this episode you will discover:
– Retention strategy definition
– How to know when to switch to a retention strategy
– Examples of retention strategies
1. What Is A Retention Strategy?
As Jon put’s it, “the fact of keeping a customer for a period of time.” In other words, it’s the attempt to keep your customers after the point of sale. Every business needs some form of retention strategy.
2. Sales Versus Retention
Without a retention strategy you’re putting more pressure on your sales and marketing team(s) to seek and attract new customers. But actually it would be much more effective to retain your customers rather than finding new ones and leaking your old customers.
Statistics suggest that it is considerably harder to acquire new customers than it is to retain existing customers. So why work harder than you have to- seek ways of keeping your existing customer with a retention strategy.
Did You Know: an increasing customer retention rates by 5% increases profits by 25% to 95%
3. Examples of Retention Strategies
Freemium is a pricing strategy that involves giving something for free for a certain period of time or initially and then after your trial has ended you have to pay to continue or to use extra features.
For example, Dropbox is a great example. You can use Dropbox for free with a limited amount of storage, but if you want more you have to pay a little extra.
Another example of a retention strategy can be seen with software packages. Companies previously would sell software to users and then offer upgrades for a small fee.
However a much more common practice now is to charge a larger one off cost and provide free multiple upgrades- this strategy is used by leading businesses such as Apple.
4. Where To Start
If your starting a retention strategy from scratch, we believe the first thing you should do is go to your customers and ask them why they are leaving.
Find out your customers’ pain points then work your retention strategy around those pains and problems.
At The Sharp End presented by the Khemeia Network and Khemeia Consulting – where we believe innovation is the key to business growth.