You might have heard that it's more economical to make a current customer repeat the purchase than to find new customers. This is certainly the best advice for all the small businesses out there.
The loss of one customer is equivalent to seven times the resources spend to convert a person into a customer. Thereby, it is evident to imply an effective retention strategy to improve your customer retention rate.
Customers are the most valuable asset for any business. Especially in a high-risk industry such as CBD, where it takes years to build trust and confidence, it's even more critical to retain customers than to strive to build a new consumer base.
When was the last time you searched about strategies to maintain the retention rate of your CBD business? If not recently, then this is the right time to learn about retention rate, key metrics, and strategies for long-term consumer retention.
Thus, this article will be your ultimate guide to designing an effective strategy while focusing on what matters in the process!
What Is the Retention Rate?
The percentage of the customers who keep on coming back for repeat purchases is termed the retention rate of your brand. The goal of the retention strategy is to ensure that customers make repeated purchases from the brand.
Thus, the retention rate can tell you if the clients are satisfied with the product, quality, and overall service of the brand than switching over to the other competitors for their purchase.
Why Is Maintaining CBD Customer Retention Important?
As discussed above, customer retention is the brand's ability to keep the customers hooked to their products for a certain period.
Thus, retention and focusing on the brand's success are vital for stabilizing your business in the long run. Apart from success, securing retention rate facilitates in the following impeccable ways!
- Cost-effective
Acquiring new customers is more costly than keeping existing customers for repeated purchases. Since your existing customers are aware of the products, services, and values of the brand, thus, you can save up a lot on marketing and advertising your brand.
- Facilitate Loyalty
Customer retention is more likely to pave the way to success than striving for new customers. Since the already existing consumer base trust and like your products.
Having that said, the existing consumer base can easily pay more to stock up on their favorite products, unlike new customers who are easy to be attracted by other competitors.
- Return on Investment
Undoubtedly, establishing a CBD business takes more than just money. Thereby, the chances of selling to existing customers are 70% more than selling to someone who's a new user of CBD.
Thus, it's highly worthwhile to direct your efforts towards maintaining retention rate and getting a return on investment rather than investing even more to find a new consumer base.
- Referrals
This is what many brands tend to ignore! However, the most effective way to advertise your brand is via reviews or word of mouth.
Having that said, existing customers are your top resources for referrals as they are more likely to refer your brand to their friends and family.
Since they are a trusted source, they are very likely to increase your customer rate and ultimately facilitate increasing your sales as well.
- Improved profit
Longtime customers are more likely to try other products than what they usually purchase. Thus, maintaining a retention rate is equivalent to higher customer satisfaction.
In other words, a higher retention rate increases customer satisfaction and generates profit across multiple product lines.
How to Calculate the Retention Rate for Your Business?
I know what you might be thinking! Before we move towards strategies for customer retention, you must know how to calculate the retention rate for your CBD business.
Well, you might have a feeling about retention rate, but accuracy sets in when you take emotional evaluation out of it.
Therefore, one of the best ways to objectively measure the retention rate is as follows:
Retention Rate = ({CE-CN}/CS) X 100
I know it might be difficult for you to understand, let’s break it down for better clarity, where;
- CE stands for the sum of customers when a period ends.
- CS stands for the sum of customers when a period begins
- CN stands for the number of new customers your brand acquires during a period.
Remember, nobody likes losing a customer, thus this formula can help you in keeping track of where your CBD business is headed and what is that you need to do to set it towards success.
Key metrics that matter!
Before we move ahead, let me tell you, that key metrics are the key indicators that allow you to keep a track of the overall growth and performance of a business.
Similarly, retention key metrics help you identify tools to both, build and ultimately improve your CBD customer retention strategy.
- Customer rate
Repeat customer rate is defined as the percentage of customers who are willing to repurchase from your brand. Measuring customer rate is an integral part of the retention strategy.
It helps you in analyzing how well effective is your retention strategy in maintaining the retention rate of your brand. The higher this metric, the more effective will be the retention strategy.
I know what you might be thinking! How to manually measure the repeat customer rate is what concerns us all. All you need to do is divide the following two pieces of information.
- Total customers with more than one purchase
- Total number of unique customers
- Purchase frequency rate
Purchase frequency shows how frequently customers are coming back to shop from your brand. This metric is especially important when you want to know how much customers are contributing to generating an annual revenue
This domain can be objectively measured by dividing the total number of orders placed by the number of unique customers.
- Long term Customer value
This is the final element in planning a retention strategy. The customer value can tell you how much revenue each customer is providing to your brand.
The core aim of the retention strategy is to increase lifetime customer value as it contributes to the overall success of your business.
This metric can be calculated by multiplying purchase frequency by the average amount each customer spends on a one-time purchase.
Also Read: How to Start a CBD Home Business Online
10 Ways to Maintain Retention Rate for CBD Business
Have I been able to convince you that retention matters greatly when it comes to CBD business? If yes, then you might be looking for potential tactics to design a perfect retention strategy for your brand.
Well, you heard it right! Here are 12 simple yet effective strategies to maintain customer retention rates for your CBD business. Keep reading ahead to know about them!
1. Deliver Customer support
One of the key tricks to retaining customers is to make them feel valued. Formulating an active customer support strategy can help provide your customer with the right level of care and support.
Giving access to live chat or help desk available on the website can give an outlet for consumer complaint resolution.
Regardless of the medium, efficient customer support channels can help them get desired information from whatever site they come from, such as social media, websites, etc.
2. Send targeted Emails
Email campaigns are vital to staying in touch with customers.
This not only helps them feel appreciated but also makes them want to repurchase. Emails are a powerful way to foster good relationships both, before and after the purchase.
Thus, sending targeted emails, such as sending thank you emails after the purchase can help you follow up with customers.
3. Offer subscription Discounts
Discounts are one of the prominent tricks to help a one-time consumer make another purchase. Sending promotional discounts or unique discount codes can be an effective way to convert consumers who haven't purchased in a long time.
An important way to help them reconnect is to send discount vouchers or personalized discount codes to the customer.
4. Collect feedbacks
Feedbacks are the customer's way of expression. It's equivalent to freedom of speech which makes them feel like their voice matters and they are involved in the progress of the brand.
Rather than just feeling like a random one-time shopper, collecting feedback via surveys or emails can foster loyalty. Thus, it makes them return to the place where they feel valued.
5. Fast Delivery and returns
Late deliveries and no returns are a big turn-off for customers. Especially when it comes to CBD, people abandon their shopping carts due to the long duration of the wait.
Above that, returns are the first step that makes consumers trust your brand. Thus, facilitating customers with fast shipping and return (with certain conditions applied) can all contribute to retaining them as potential customers.
6. Reward loyal customers
Brand loyalty programs work by providing certain rewards for making recurrent purchases. This doesn't only work as an effective retention strategy but is also a tip to boost sales of your brand as well.
Pro tip: Don't ever take a loyal customer for granted. Always reward them for their love and support. You may consider sending bonus gifts, vouchers, and discount coupons on recommending you to their social circle as well.
7. Personalize the experience
All thanks to artificial intelligence which has taken us all by surprise. Not long ago, it wasn't even possible to get a hint of what the client needed.
However, with a modern POS system, you can now use customer insights for recommendations. In other words, you can recommend a combination of products or customers' favorites based on their purchase history.
You can display the recommendation with their name or intricate details which can make them experience personalized shopping unlike any other CBD brand out there.
8. Deliver what your promise
Customer service is an excellent determinant of any brand. Moreover, it is one of the excellent ways to earn clients' trust and retain them to your brand.
As discussed above, an important part of developing the relationship with the customer is to treat them well. Thus, always deliver what your promise.
This isn't linked to products alone rather delivery time, discount rate, exchange policy, etc, all need to be what you can deliver.
Many people think of boasting as an important part of marketing but it can be a huge turn-off if you fail to deliver those promises. Thus, the retention strategy works along best with customer satisfaction.
Also Read: The Ultimate Guide to Marketing Your CBD Website
9. Educate the client
As personal relationships are built on trust and transparency, similarly, customer relationship is built on educating the client about CBD.
The least talked about the trick in retention strategy is educating the clients about the products, possible side effects, numerous advantages, and whatnot.
Keeping them aware of everything in between turns out to be useful for them to trust your brand. Thus, this type of marketing skill can help them turn into a long-term customer of your brand.
10. Implement unique selling strategies
When it comes to selling strategies, cross-selling and up-selling are the most common terms we come across. Let's understand these today!
Cross-selling deals with pairing up related products so that every consumer checks out with something extra in their cart. However, upselling simply means providing the upgraded version of the original product.
While these may sound difficult to implement, they can be as simple as modifying the packaging of the original product, so that consumers add new purchases to their cart as well.
In order for this to maintain retention, you need to be really strategic in marketing your products.
Looking for help?
Well, our team at CBD boxes has been helping many brands in stepping up their retention strategy. When everything ceases to stop, you can always experiment with packaging.
Getting in touch with expert designers can not only give your brand new pop of color but also foster the up-selling strategy to maintain the retention rate in the highly competitive CBD market.
Conclusion
There are many ways to foster your retention strategy but know that not everything works within the CBD industry.
My plenty of research has helped me combine some of the most effective strategies which are aimed at improving the brand's image and retention rates as well. Try these out for yourself now!
