Customer Retention Strategies
The way to grow a healthy business is to optimise the customer experience and implement customer retention strategies to keep your hard won customer base. You would also be consistently adding to that base. Good businesses value their customers and go to great lengths to build systems to ensure they stay for as long as possible.
It’s short term thinking to merely chase more sales. I know that sounds counter intuitive, but more sales does not grow your business, long term, if a large percentage of those customers leave you for other competitors. If you are losing 30 percent of your customers annually and your competitor is only losing 10 percent, who has to hustle more to keep their head above water?
Make sure you understand what the Lifetime Value of a Customer (LVC) is. If a customer buys on average once a month and each transaction averages out to $50 that equals $600 per year. Check to see how long, on average, they remain a customer. Say it’s three years.
So, each new customer has a LVC of $1800. Knowing this drives home the importance of retaining customers for the longest time possible. If you improved your retention of those customers from 3 to 5 years, their LVC is now $3,000. Imagine two different business with 200 customers using these figures. One will realize $360,000 (3 years retention) while the other (5 years retention) brings in $600,000 on the same customers.
Reduce Buyers Remorse
The critical time for commencing your customer retention efforts is immediately after the first sale. This is a time period when your customer experience can reassure the customer that they have made a great decision to buy from you. We have all experience an how some businesses become indifferent to our needs and wants post transaction.
The moment there is a problem and your ring the “support line” you are treated entirely differently than when you were being courted for the sale. Long response times, arguments over refunds or repairs and, in some cases, outright rudeness are not uncommon practices. This is your chance to shine and delight your customer by setting the standard for how they can expect to be treated in future. Show you care and your efforts will be rewarded with your customers singing your praises.
You could send a “thank you” note or “welcome aboard” pack immediately upon the sale, then a few days/week later an email asking if they require any help or support.
Successful businesses build a relationship with their customers. For them it’s not about the one off sale. Their focus is firmly on a long term relationship that is built on respect and a deep knowledge of the customers issues and needs. Many business owners think that they will be bothering their customers by keeping in touch. This thinking can be perceived by customers as indifference! If you are building any relationship, communication is the main tool to employ.
Now, when I say communication I do not mean mercilessly promoting your business and flooding the customers inbox and ‘phone with offers and sales flyers. The ratio of value added communication to promotion should be 80 percent value to 20 percent sales offer. This communication should be scheduled and flow consistently.
- Send a newsletter
- Make a special Offer
- Invite them to an event
- Make a phone call
- Conduct surveys
- Email links to an article/video
Look At Complaints Differently
The vast majority of customers will not give you any indication that they are unhappy. They will just leave. They may feel that having ignored them and showing that you don’t care, complaining to you would be a waste of time. Over 60 percent of customers that switch to a competitor cite their current providers indifference as the number one reason. Now, remember that “perception is reality”.
Think of a complaint as an opportunity to not only rectify a misunderstanding, but to also adjust your business processes to prevent it happening again. A very high percentage of customers will forgive and, in fact, be impressed by your quick and thoughtful resolution of their issue. If a problem is addressed within 24 hours they will not only stay with you, they will tell others about your excellent service.
If you let them leave they will tell many of their friends about your lack of service. Make sure you have a complaints resolution process developed as part of your customer retention strategies, that is followed by your staff. That complaining customer is like the “canary in the coalmine”. Your focus should always be on improving the customer experience. Sometimes that means being ready to admit that you made a mistake.
Mine The “Hidden Gold”
One huge benefit of implementing customer retention strategies is the back end sales potential. There is much less effort and time taken to sell to an existing customer than hunting down another new customer. A good offer to your database may yield a 20 percent acceptance. Imagine if you had a database of 100 active customers at 20 percent conversion to your offer. That equates to 20 transactions, and all it may take is an email, which is low cost and quick.
Business a little slow this month? An irresistible offer to your loyal customers may be just what they need to purchase from you. Compare that scenario with finding and converting the same amount of potential customers to sales. Another benefit to focusing on what you currently have in database assets is the potential to bring lapsed customers back on board.
You will need to reach out and make contact (this is keeping in touch). This could be in the form of an email acknowledging you would like to reignite the relationship and offering a special incentive to bring them back to you. Again, the effort required to bring back a lapsed customer is less and the cost negligible as opposed to winning new business.
Another aspect of retaining customers is the potential for referral business, testimonials and the asset value of a large and growing customer base.
Hire People Who Love Customer Service
Your staff are the face of your business and selecting those that love dealing with customers (if they are customer facing) is critical. You need to invest in training and support for your staff to enable them to delight your customers and enjoy their role. Aim to over deliver when it comes to customer service. Extraordinary service delivery will create loyal, raving fans out of your customers.
Empower your staff to make decisions at the coal face rather than having to defer to a higher up. This shortens response times and transaction times as well as improving customer experience and conversions. Try to deliver the type of service you would like to experience and your business will standout from the pack!