We all know that employee retention is incredibly important for the success of your business. One of the biggest reasons it’s so important is the fact that it costs much less to invest in keeping your best employees than it costs to constantly have to hire and train new ones.
The same can definitely be said about customer retention. Getting existing customers to continue to buy from you is a lot cheaper than the cost of acquiring new ones. That’s one of the main reasons why customer retention is equally important as employee retention, if not more so. Investing time and money into creating loyal customers who won’t defect is well worth it.
Loyal customers are more than just people who you can rely on to keep spending money with your company. They can become brand ambassadors who direct new business your way. According to this study, consumer reviews and word of mouth are still the most powerful forms of marketing. Up to 92 percent of consumers trust peer reviews more than they trust marketing.
So if you don’t have a concrete customer retention plan in place, you need to start working on one. Here’s why.
Customer Retention Makes More “Cents”
One of the greatest myths about making more money for your business is that you need to invest more in customer acquisition. In reality, the quickest and most effective way to increase revenue is through customer retention.
Why? Because it’s much cheaper. According to this infographic, it’s five times more expensive to gain new customers than it is to keep your old ones spending with you. When you are selling to your existing customers, you are selling to someone with whom you already have an established relationship. That means you don’t have to attract them to your product or service, educate them about it and convert them by convincing them that they absolutely need it.
This study by Bain & Company claims that you are never going to break even when selling to one-time customers. That’s because it’s going to probably cost a lot more to convert them compared to the money they are going to spend on that one purchase that they make from you, which means that you’re business is essentially losing money most of the time when trying to sell to new customers.
The study also notes that you have a 60-70 percent chance of converting an existing customer into a repeat one, while your chances of converting a new lead are usually in between five and 20 percent.
If you’re doing your job well, then they already trust you and like what you do. It’s kind of like upselling. You’ve already closed a sale, now you have to try and bundle some other products or services into the mix to make more money from it.
When you’re selling to someone who has already engaged with your brand, it’s much easier to convince them that they need to continue making purchases from you. Customer retention is a process that is imperative to building a business model that provides you with sustainable growth.
The aforementioned study from Bain & Company states that increasing customer retention by five percent can lead to an increase in profits of in between 25 and 95 percent. All these statistics confirm the paramount importance of establishing a serious customer retention program for your business.
Improving Customer Retention
We have established that customer retention strategies are a must for any business that wants to establish sustainable growth and long-term revenue stability. What’s most important is being able to properly allot the right amount of resources towards this goal and knowing where to invest in order to see the best results.
Here are some crucial customer retention techniques that you should be looking to improve on across the board.
Take Pride in Customer Service
If there’s anything that’s going to really hurt your customer retention efforts, it’s providing subpar customer service. According to this study, 68 percent of customers leave because of poor customer service. If your customers feel as if you don’t care about them, they are going to leave.
More than anything, customer retention is all about building trust and powerful relationships. When it comes to providing good customer service and taking pride in the way you take care of your customers, you need to take a proactive approach to solving their problems.
You’d be shocked to learn how many businesses today are not equipped to meet the demands of providing good customer service and responding in a polite, proper and timely manner to customer complaints and issues.
In today’s digital and social space, having someone answering phones in the back room is not enough. You need to engage your customers across all channels, including social media.
You need to put as much effort, if not more, into your customer service than you do in your marketing strategies. Because what’s the point of acquiring customers if you’re not going to nurture your relationship with them and turn them into repeat customers?
Taking pride in customer service means answering all inquiries in a timely and polite manner and, above all, making sure that you don’t abandon the communication until the customer is completely satisfied with the effort you have put into solving their problem.
Remember, repeat customers are your greatest allies when it comes to getting new customers on board and proper customer service can act as an incredible marketing asset by turning customers into brand ambassadors.
Build Lasting Relationships
Being able to earn the trust of your customers is paramount if you want to improve customer retention. The best way to do that is to demonstrate your expertise in your field on a regular basis. If customers buy into the idea that you are a leader in your industry and that you know what you are talking about, they are more likely to stick around.
Being able to demonstrate your expertise helps you gain their trust and loyalty. Of course, providing good customer service is a great way to establish and demonstrate your expertise. Another good way is to continually engage them and make your presence felt on social media. Taking to Facebook, Twitter, LinkedIn and other social channels to constantly share knowledge and insight with your clients can do wonders for your credibility.
Social media also provides you with a great channel for not only proving your worth, but for establishing personal relationships with customers. Getting personal and making the entire customer facing experience personal is the best way to engage your customers and keep them engaged. It’s all about establishing a rapport with them and showing your customers that you see them as real people, not nameless statistics.
If you’re a restaurant owner, for example, make sure that your staff know all of your regular customers by name. Establish relationship with them and get to know them on a personal level. If you’re a software company that doesn’t have a chance to meet people face to face, at least make sure that the emails you are sending out address them by their names.
According to an Experian study, personalized emails bring up to six times more business than generic ones. It might seem insignificant to you, but customer retention is all about the little things that make a big difference in the minds of your customers.
Go Above and Beyond
One of the best ways to keep your customers happy and coming back is by providing more than is necessary. Going that extra mile to show them that you care is what really helps build long-term loyalty. You need to not only pay attention to their current needs and address them rapidly, you need to be able to anticipate future needs and make sure that you are giving them more than they bargained for.
If you have addressed an issue and solved it, make sure that you are following up to see that it stays solved and always ask if there is anything else that you can do. Go one step further than you need to and try to make a habit of always trying to not just meet expectations, but exceed them.
Don’t forget to always ask for feedback and to listen closely to what your customers are saying. By listening to your customers, you are getting insights into your business on issues and potential problems that you might not see from your vantage point. Being able to listen to your customers allows you to get a more accurate picture of your business and the services that you provide.
Make sure that the feedback loop is always open and do everything you can to not only fix problems, but anticipate new ones and react to them before your customer even has a chance to encounter them.
Nothing says “we appreciate you” better than providing incentives for your most loyal patrons. It’s not just about free stuff and discounts, there are many other types of rewards that you can offer to your most loyal customers.
Of course, you can give them discounts and prizes to show them that you care, but you can also do things like provide them with exclusive offers or make sure that they are the first people who are getting a chance to try your new services or products.
It’s all about showing that you truly appreciate them. Show your best customers how much their loyalty means to you and they will respond not only by staying with you, but by continually recommending your business to others.
Customer retention always boils down to creating powerful relationships and in the end, all of your strategies need to focus on finding ways to make sure that your customers believe you, trust you and have no reason to look anywhere else when it comes to the products and service that you provide for them.