The advantages of customer education extend to all corners of your business. One of the best examples of this is retention. Accessible, high-quality customer education is the cornerstone of a successful customer retention program.
Giving your customers access to a robust online library of training and product information empowers them to be successful product users. This means they’ve been equipped with the knowledge and training to make smart decisions about the products they use — thus enabling them to access the full potential of the products.
The time it takes the customer to learn enough about the product to reach this point is called time to value (TTV). Shorter TTV is just one example of the benefits of customer education that contribute to better customer retention and development.
Many organizations underestimate the importance of their B2B customer retention strategies. An online customer education platform can offer the features you need to upgrade your customer retention program and reap the benefits of a loyal customer base.
What's Customer Retention?
At the most fundamental level, customer retention is simply a metric that tells you how effectively you’re keeping customers. A high retention rate indicates customers are happy with the service they’ve received and are getting value from the product. A low retention rate means customers aren’t getting value from your product, and they may be turning to competitors for alternative solutions.
You often hear churn mentioned alongside customer retention. These terms are very closely related, but they aren’t actually the same thing. In fact, they’re opposites — retention is a measure of the percentage of customers you’ve kept, while churn is a measure of the percentage of customers you’ve lost. If your retention rate is high, your churn rate is low, and vice versa.
There are other metrics that are related to customer retention, such as:
Repeat Purchase Ratio (RPR)
Customer Lifetime Value (CLV)
Net Promoter Score (NPS)
Days Sales Outstanding (DSO)
Time Between Purchases (TBP)
Metrics like these should inform your customer retention objectives. For example, if you have a low repeat purchase ratio, that would be a clear indication that your customer retention strategy needs to be prioritized and possibly adjusted.
Customer Retention Rate
Customer retention might seem like a complicated metric at first glance. However, you can actually calculate it with a relatively straightforward formula. This formula will help you answer the question “what is customer retention rate?” for your organization.
[(# Customers at End of Period — # Customers Acquired During Period) / # Customers at Start of Period] x 100
If you put your organization’s numbers into this formula, you’ll get a percentage. This is the percentage of customers you retained over the period of time being measured. The higher the percentage the better your customer retention.
Before you begin plugging numbers into the formula, you first need to decide what period of time you’ll be measuring. For this example, let’s say you want to measure your customer retention for the past 12 months.
There are three variables involved in the customer retention calculation. The first step you’ll need to take is to identify these three variables for your chosen period of time (in this case, 12 months).
S: The total number of customers your organization had 12 months ago.
E: The total number of customers your organization has now.
N: The number of new customers your organization acquired during the past 12 months.
Using these three variables, you can then simplify the formula to look like this:
[(E — N) / S] x 100 = customer retention rate
Why's Customer Retention Important?
Now that you understand how to calculate customer retention, the question is: “Why's customer retention important?” The most obvious answer is that customer retention helps you grow your customer base and create revenue. If customers are constantly churning, you’ll struggle to achieve any growth and your bottom line will likely suffer.
However, aside from this main benefit, there are actually many additional reasons to prioritize your customer retention strategy. Here are a few statistics that prove just how important customer retention really is:
Customer retention is clearly a very important aspect of a successful business. You should prioritize it highly if you want to grow your revenue and expand your customer base. Here are five tips for creating highly effective customer loyalty and retention strategy:
Be Transparent with Your Customers
It’s important to keep customers fully informed about the current state of your product. The best way to retain customers isn’t always to try to convince them that your product is perfect — sometimes, the more effective approach is to manage expectations. Don’t offer promises you know the product can’t deliver in reality. Be honest about the product, its capabilities, and your plans for its future. Doing this will retain more customers in the long term than telling them what they want to hear to keep them happy for the short term.
Personalize the Content
One of the most important parts of all good customer retention strategies is making sure the customer feels valued. When customers receive generic communication that isn’t relevant to them in particular, it gives the impression they’re just a number in your company’s system. This isn’t a good way to make customers feel valued.
Instead, you should strive to customize every interaction you have with each customer. When customers feel like you’re speaking to them directly, they’re more likely to feel like their business is appreciated. Customers who feel appreciated are much less likely to churn. Try tailoring your next product update to highlight unique features that each customer would find most useful in their particular role or industry.
Building meaningful relationships with customers can help customer retention significantly. When your customers know you see them as a valuable human relationship, not just a source of profit, they’re more likely to stick with your business for the long haul.
One of the best ways to nurture a relationship with a customer is to keep note of important personal details about them to utilize in communication with them. A basic example of this would be sending a customer an email on their birthday wishing them a happy birthday.
Another great way to build relationships with customers is to offer them perks for being a customer. For example, you could host a webinar or a networking event exclusively for your customers. This is a great way to thank them for their business by connecting them with resources and helping them get involved in discussions about topics that matter to them.
Customer feedback is essential for improving your customer retention strategy. Without knowledge of how your customers really feel about your company, you won’t be able to determine what kinds of changes are needed to improve retention. Make sure your customers are very aware that their feedback is not only welcome but also truly valuable to the organization.
Of course, gathering the feedback is much easier than actually implementing the changes. It’s important to act promptly on the feedback you receive to maximize its benefits to your retention rate. The best customer retention strategies tap into a continuous stream of customer feedback to aid decision-making.
Offer Customer Education Program
Customer education is at the root of customer retention. While it may not be your first guess that better customer education is the secret to improving customer retention, the evidence is clearly there. By educating your customers, you give them the keys to unlock the full value of your products. This leads to happier customers who are satisfied with their products and their relationships with your business.
It should be apparent that all this is very good for customer retention. Providing your customers with adequate online education is one of the best steps you can take if you want to increase your chances of retaining their business.
If you want to upgrade your customer education, the best place to start is by finding the best tools for online customer training. Northpass is an online learning platform designed to make it easy to create, deliver and manage digital learning content for your customers. Using a learning management system is one of the best ways to improve customer education and boost your retention rate.