5 Ways to Improve Customer Retention With Social Media.

Low-cost tactics to build sustainable relationships.
Reuben Yonatan
August 22, 2017 - 4 min. read

A loyal customer’s true value is essential information for developing a customer loyalty program. Lifetime value (LTV) and customer acquisition costs (CAC) are the two primary factors that determine the effect customer loyalty will have on a company’s bottom line.

LTV is the estimated net profit that will result from a company’s relationship with a customer. This quantity is also known by other names such as customer lifetime value (CLV) and lifetime customer value (LCV). CAC is the cost incurred by the company in convincing a customer to buy a particular product or service. It includes the cost of the product itself as well as the cost of marketing, research, and making the product available to the customer.

The value of a relationship with a customer isn’t well-quantified for many businesses, so marketing research is needed to help estimate the return on investment (ROI) of this relationship. Most businesses focus on generating new leads rather than estimating the value of existing relationships, which makes it difficult to determine if a marketing activity is creating a positive ROI.

This issue is especially relevant for social media marketing, which has a low-barrier to entry and a low cost of customer interactions. Social media can, therefore, be an effective means of increasing loyalty throughout the relationship, and not just in the form of social media customer service.

Specific techniques for improving customer retention with social media include the following:

1. Provide superior social media customer service
The quality of customer service is always a critical factor for retaining customers, but it’s especially important when solving the customer’s problems. The majority of customers who leave a business do so after a bad experience with customer service. Social media provides a unique opportunity for customers to share poor customer experiences with other customers, but it also provides businesses with a way to demonstrate their focus on retaining customers over the long term.

The key to avoiding negative publicity is to provide good customer service in the first place with practices such as offering generous return policies and responding promptly to questions. Social media customer service is the ideal channel for the latter.

However, once a problem with customer service arises on social media, the best strategy is to acknowledge it, apologize for the problem, and resolve it as quickly as possible. It’s also vital that you not shift blame or get defensive in your response.

social media customer service

Social media customer service is a key but by no means the sole contribution of social to customer retention.

2. Leverage endowed progress
Endowed progress is a consumer’s perceived progress towards a goal, which can increase the consumer’s motivation to reach that goal. It can, therefore, result in higher rates of goal attainment compared to customers who don’t receive an endowment. Implementing a loyalty program on social media that leverages endowed progress generally requires you to establish the goal, determine the actions you want to reward, and provide the customer a head start or endowment towards that goal.

The following two loyalty programs illustrate the concept of endowed progress on social media. The first program offers customers a free product after five purchases. The second offers a free product after seven purchases but gives customers a head start towards that goal by initially crediting them for two purchases. Both programs require the customer to make five purchases before receiving the free product, but the second program provides an endowment. The second program will typically yield better customer retention, assuming all other factors are equal.

3. Provide valuable information
One of the best ways of using social media to improve customer retention is to become a resource of useful information. Social media channels are an effective means of disseminating information to customers and prospective customers, especially for the purpose of increasing marketing leverage. A company’s relationships with its customers become stronger when those customers rely on that company to provide them with relevant advice and commentary. A business should also strive to become an established authority on general subjects within its areas of expertise, which will attract prospective customers who are primarily looking for an information resource.

4. Focus on valued customers
Businesses should focus on their most valuable customers to get the best results from their efforts to improve retention on social media. The customers who will yield the highest lifetime value for a business may be those who spend the most money. However, customers who are more consistent with their purchases may be more valuable to a company in the long run. Other types of valuable customers include those who are easy to serve or act as brand ambassadors.

5. Educate your customers
Social media provides an excellent opportunity for a business to educate its customers on its products and services. Customer education is especially helpful for new customers who have just purchased a product. This use of social media can reduce customer frustration and confusion, which can proactively avoid a customer service call or the loss of the customer altogether. Common methods of educating customers include product guides and tutorials, especially videos. Consultation and training services are also an effective means of providing customer support on social media.

Identifying your most valuable customers is often a challenging task, so it’s vital to select the right criteria through a variety of research methods such as demographics and purchase behavior. Once you’ve identified your best customers, you can focus your social media efforts on strengthening your relationships with them. The most effective strategies include offering loyalty programs, providing a consistently high social media customer service and serving as an information resource.

Reuben Yonatan is the founder and CEO of GetVoIP and GetCRM — trusted VoIP and CRM comparison guides that help companies understand and choose a business communication solution for their specific needs. With a 10-year track record in building, growing and strategically shaping operational functionality in all his ventures, Reuben assists SMBs align business strategy with culture and improve overall corporate infrastructure.


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