Customer Retention 101: What You Should Know

Customer retention plays a key role in the overall success of a retail store or business. Once you make that initial first sale with a customer, you need to go the extra mile to encourage future transactions with them. Relying strictly on one-time-purchase customers isn't a sustainable business strategy, and it will ultimate allow your competitors to weed you out of the market. So, how you keep customers coming back to your store for future purchases?

Why Customers Leave

The first step towards improving customer retention in a retail store or business is to understand why they leave. Unfortunately, determining the answer to this question isn't always an easy task. Each and every business is unique, so there are different elements that affect customer retention. However, we've compiled a list of some of the most common reasons why customers leave a retail establishment listed below:

• Poor customer service
• Dissatisfied with the product and/or service
• Lower prices offered by a competing store
• Bad location
• Bad store hours
• Strict or non-existent return policy

Note: the single most common reason why customers leave a retail store is poor customer service. Employees with unfriendly or aggressive attitudes can send shoppers packing in the other direction. This is a serious issue that all retail businesses need to address, as it can send an otherwise profitable business spiraling into the red zone.

It's easy to overlook the importance of customer service in a retail store when you're busy counting inventory, placing new orders, creating layouts, etc. However, allowing your store to suffer from poor customer service will negatively impact its customer retention. The bottom line is that shoppers want a friendly, welcoming environment, and if they aren't receiving it from your store, they'll head towards one of your competitors.

Keep Customers Coming Back With a Loyalty Program

Loyalty programs are becoming more and more commonplace in today's retail industry. These programs 'reward' customers for their 'loyalty' -- hence the name. An example of a popular loyalty program is the Kroger Plus card, which offers steep discounts on both grocery items and gas.

Implementing a loyalty program in your retail store will encourage customers to come back to your business for future purchases. Each time a customer makes a purchase, they'll feel like they are getting something extra for being a member of your loyalty rewards program.