Managing your customer retention may be the most important factor in growing your business. A Harvard Business study found that increasing retention rates by 5% can lead to increased profits by 25%-95%. With so many outlets for customers to give their feedback, both good and bad, giving customers an exceptional experience will lead to growing sales. This is all well and good, but what are the factors that can increase your customer retention rate? Here’s six of them.
1.Brand loyalty starts with shared values
It’s more likely than not that you have a direct competitor that provides essentially the same product as you. Sure there can be minor differences, but in most cases it is rare that a business exists in a monopolistic market. The key factor in retaining your core customers is to build strong connections. Not every customer is going to want a direct relationship with your business, but of those that do 64% site that shared values is the primary reason for they’re loyalty.
Maintaining your value structure can be as simple as supporting small businesses or being invested in an employee volunteer program. Simply by conveying that you stand for something other than making money can be the deciding factor between you and a competitor. Feeling unconvinced? Ask yourself, if 2 coffee shops of the same quality and price were competing, but while one focused on giving proceeds to charity while the other did not which location would you choose? Most likely it would be the shop that stands for something.
2. Focus on attracting the type of customers you want
There is such a thing as a bad customer, and as a business owner you have likely came across one. By targeting and advertising to the type of customer you want to work with and molding some of your business practices to please them, you can retain those customer that will help and not hurt your business.
Targeting ideal customers is a balancing act. You do not want to put your business in too small of a niche, but too broad of marketing efforts can be a costly mistake and a waste of resources. In online advertising use key words that convey your ideal customer, and when in selling in person make sure to ask the right questions. For instance, if selling an SAAS product make sure the customer is computer savvy enough to use and appreciate the product.
3. Build a personal relationship with each customer
As important as values are to customer, having a personal connection to the customer can be a factor in retaining the customer for the long haul. There’s a saying that goes “People don’t invest in things, people invest in people”. The same goes for customer retention. As we’re already covered, more businesses will have a direct competitor. an easy way to up the switching cost is to know your customer well. Whether in the selling, converting, or customer service stage invest in your customers to get to know them.
Let’s return to the coffee shop scenario. When getting your morning coffee, are you more likely to stick to the shop that the worker knows your order and asks about your day or switch to a new business that you are unfamiliar with? Even after one or two bad experiences the connection to the employees and ease of familiarity will keep a customer loyal.
4. Bring back the “lost sheep”
This goes back simple economics; customer retention is cheaper than new customer acquisition. In fact, according to marketingwizdom 25%-60% of lost or dormant customers will be receptive to your attempts to earn back their business if you approach them right away with an enticing offer.
It’s importing to find the reason this customer left, and to make sure you can meet their expectations. Ask the right questions as to why they left, and keep them informed on company updates that may solve the problem and keep your business in mind.
5. Set realistic customer expectations
Simple. Don’t oversell what you can’t deliver. Overselling the product can lead to distress and mistrust of the company from the beginning, which is an easy way to induce churn. Sugar coating weaknesses in your product can be an easy way to gain immediate sales, but cost the business profits in the long run. Make sure you educate the customer on the value of your product, make sure it aligns with their needs, and close the sale with a strong assurance that you can deliver.
6.Frequently survey customers for feedback
96% of dissatisfied customers won’t complain. Instead they will simply walk away, and spread experience with others. Frequently surveying customers is one of the most effective ways of strengthening your relationship with your customer. Asking current customers for feedback, and actually listening, can do more than improve your retention rate; it can make you a better business. Customer complaints give you an opportunity to solve the problem and show that you care about your product and your customer service. A great company to not only gather customer feedback, but to increase your customer recommendations is SurveyLocal (my completely unbiased opinion).
Don’t sweat the small stuff
Remember, you’re not going to be able to save every customer. There will be times you cannot solve a problem, or even times you have to fire a customer. But customer retention management can and will increase your profits if done with care.