5 Ways to Increase Customer Retention
What makes a business successful? Is it a sound sales strategy, a great product / service, effective marketing, or a dedicated workforce? I would argue that while all these factors are essential, no business can be truly successful without a loyal customer base.
I mention this because many companies primarily focus their sales strategy on gaining new customers and forget to include strategies to retain customers long term. A strong plan that combines both strategies allows a company to, gain new customers, retain their current customers, and generate revenue from both.
Why is Customer Retention Crucial?
It is crucial to retain your customers because they are your sounding board for feedback on your customer service, provide insights into possible product expansion, provide additional sales, and provide referrals to help you attract new customers. From a number’s perspective.
The average value of losing a customer globally is $243.00;
It costs 6 to 7 times more for a company to obtain a new customer versus retaining an existing one;
The success rate of selling a product to an existing client is 60-70%, while the sales success rate to new customers is only 5-20% according to Marketing Metrics;
Defacto Research found that 55% of existing customers will pay more if it guarantees them better service;
A 5% increase in customer retention can help increase sales profit by 25-95% as per research by Frederick Reichheld of Bain & Company.
1. Happy Employees = Happy Customers
The number one most important strategy to keep customers is to have employees that are happy with their job, the company, and feel valued. Think about it, why would you expect an unsatisfied employee to put their heart and soul into pleasing and retaining your customers.
Your sales and service teams are the face of your business, so make sure to treat them with respect and keep their morale high. You can do this by recognizing them for their hard work, engaging them in activities, and give incentives. Happy employees go the extra mile to satisfy customers, thereby contributing to customer retention.
Remember, one bad customer experience can cause a ripple effect due to online reviews and social media causing you to lose both existing and potential customers.
2. Maintain Strong Personal Relationships
We all know the importance of building a relationship during the sales process, and it should also be part of your customer retention strategy. The stronger the relationship is, the more likely your customers are to discuss their concerns with you. Providing a heads up to the possible concerns of other customers and time to resolve the issue. Customers that do not feel there is a continued relationship have no resistance to switching providers.
Spend time getting to know your customers personally. What are their interests outside of work? Do they like to travel? If so, where? Do they enjoy sports, musical performances, or gardening? Ask about their family and importance dates (Birthdays, anniversaries, graduations) and be open to sharing about yourself and your family.
Have non-product/service conversations in ‘non-work’ situations. Meet up for lunch or if they own a restaurant eat at there on off-peak hours. The goal is to put in the effort to show them that you care about them as a person and not just a buyer.
3. Recognize Your Loyal Customers
While it is important to please all of your customers, the most loyal ones deserve special treatment. Data analysis can tell which of your customers bring you the most revenue (i.e., your top 20% of customers that make up 80% of your revenue).
Whether you call them valuable customers or loyal customers, they should be treated like VIPs. Send them thank-you notes, birthday cards, or cards on the anniversary of their original contract signing to increase their loyalty. If you have giveaways, use them to reward the loyal customers first and then for acquiring customers.
You can also use social media to show appreciation to your valuable customers and recognize them in a post with their name. The customers who stick with you deserve to be recognized and it is what they expect.
4. Personalize Their Experience
Effective communication is another key to developing a long-term relationship. Research found that personalization based on a customers’ buying patterns and purchase history, is a great way to increase your customer retention. You can gain this information from your CRM software and It allows you to better time individual sales and make suggestion on additional products or services.
Also, think about personalizing how you communicate with your customers by providing communication options. Some people may only want to be contacted via email, while others may prefer text messages. Just remember to gain their permission, explain why you are changing how you communicate, and how it benefits their needs before making the change.
Personalized communication makes it easier for you to tailor your follow-up strategies as you have a better understanding of the customer’s needs and timing.
5. Look for the Early Signs of Customer Attrition
If you wait for the customer to leave before acting, you are too late. Instead be proactive and look for signs that your customer may be switching to a competitor.
Two major red flags that your customers may be preparing to leave are:
They are slow to reply to your calls and emails;
They changed their normal purchasing patterns and product usage.
If either of these happen quickly try to find out where things possibly went wrong. Think about your recent conversations and focus on any service/product issues that they may have mentioned. What feedback did they provide about their last purchase? Did everything go as planned or where there delays? How did you resolve the issues and was the customer satisfied with the outcome? This Information is crucial as it helps you to identify any past mistakes and create a plan to address them.
Also, ask your team for feedback or have a team brainstorming session. Find out if they have had a similar reaction from their clients and if so, how they saved the customer relationship.
After you have a plan to resolve the potential issues, similar to how you prepare for overcoming objections in a sales presentation, reach out to your customer and let them know that you are concerned about their relationship.
Customer acquisition is important for the growth and sustainability of a business. However, it is equally important to value and retain your existing customers. When customers feel neglected, it is easy for them to part ways and find a “new partner”. To keep this from happening keep your employees happy, continue to build a strong relationship after the sale, recognize and reward your top customers, be flexible in your communication, and look for “red flags”. Your added efforts will keep your customer happy and retain them for the long term.