Businesses are always looking for cost-effective ways to grow and increase profits.
The good news is that even in tough economic times, when marketing budgets are limited, there are still ways you can keep your business moving forward.
The easiest way to grow your customer base (and profits) is to stop losing your existing customers.
And the easiest way to stop losing your customers is to keep them happy.
The average business loses around 20% of its customers each year. Imagine the difference it would make to your bottom line if you were able to slow that loss and retain many of those customers!
Here are a few facts and figures that demonstrate why it’s important to keep your customers happy and what difference it can make to your profits:
- Acquiring new customers can cost as much as five times more than satisfying and retaining current customers.1
- A 2% increase in customer retention has the same effect as decreasing costs by 10%.1
- Depending on the industry, increasing your customer retention rate by 5% can increase business profits by 25% to 125%.1
- 80% of your future profits will come from just 20% of your existing customers.1
- Customer profitability tends to increase over the life of a retained customer.1
- You are four times more likely to close business with an existing customer than you are with a new prospect.2
In summary, it makes good business sense to keep your customers happy. And here are some guidelines to help you accomplish that:
1. Build a customer database
Collect information about your customers: what products and services they’re interested in, what their buying and spending habits are, what contact they’ve had with you, whether they’ve had any problems or complaints, whether they’ve referred any new customers to you, and any other information relevant to your business. The more you know about your customers, the more effective your communication with them will be and the easier it is for you to identify different customer segments and to see who your most important customers are.
2. Keep in touch
If you don’t do so already, start sending regular email newsletters to your customers. Give people information that is relevant and interesting to them, and tell them about special offers and promotions. Consider sending targeted newsletters to different customer segments and to your key customers, which can help to build relationships (customers appreciate that you know who they are and what they’re interested in).
3. Offer customers multiple communication channels
Think beyond just answering your phone and responding to emails, and consider expanding into areas like social media and blogging. A good idea is to run a poll on your website (or in a newsletter) and ask your customers which communication channels they prefer, so that you can ensure you’re focussing your efforts in the right places.
4. Target your most valuable customers
The 80-20 rule states that 80% of your business comes from 20% of your customers. It makes sense to specifically target promotions and special offers to customers who are likely to generate the best returns. The more of your marketing budget you put towards promotions with higher ROI, the larger the return will be. That doesn’t mean you should ignore the other 80% of your customers though! Provide great value and service to ALL customers, while concentrating marketing dollars where they’ll do the most good.
5. Recognise customer loyalty
Thank customers for choosing you over your competitors and for referring their friends and colleagues to you. There are many ways you can do this, ranging from a personal thank-you phone call or message (more affordable for smaller businesses), right through to finder’s fee or a fully-blown loyalty program with rewards and cash prizes.
6. Provide EXCELLENT customer service
Develop a company culture where everyone sees customer service as a priority. Listen to what your customers have to say, and then talk. Make customers feel that they’re receiving individual attention, and not that you’re just following a script. Ensure that your Customer Support team are properly trained and can provide assistance to customers quickly and effectively. First impressions are VERY important, with customers often making their decision whether to buy from your company within the first few seconds. Make sure that every contact customers have with your business is a positive experience.
7. Treat customer complaints as a gift
Most customers who are unhappy don’t complain: they simply walk away. When someone takes the time and effort to complain, they’re giving you the chance to fix things. Tell them that you take these issues seriously, get them to explain the problem and ask them how you can fix things. Resolve issues as quickly as possible. If you’re able to do this well, you can often turn the customer around so that they become a strong advocate for your business.
In summary, you should treat your customers in the way they want to be treated. And never stop “tweaking” your customer retention program!
- “Leading on the Edge of Chaos” Author Emmet C Murphy and Mark A Murphy.
- “Customer Winback” Author Jill Griffin, Michael W. Lowenstein.