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Do you have a customer retention strategy? Does it work?
One of the most frustrating parts about growing your business is not just finding clients, but retaining them.
According to the award-winning book Marketing Metrics, the probability of selling to a prospective customer is only around 5–20%, while it goes up to 60–70% for existing customers. What’s more, a 5% increase in customer retention can boost profits between 25–95%.
And yet, according to SEMrush, only 18% of businesses focus on customer retention. By focusing on customer retention rate, you have the opportunity shoot past your competition in terms of profits.
Table of Contents
Introduction to Customer Retention Management
There’s nothing quite like the buzz of acquiring a new client.
However, many companies overlook the loyal clients they already have and end up neglecting their customer retention strategy – if they have one. This doesn’t just result in a loss of sales; it’s far more expensive to gain a new customer than retain an old one, so your strategy could actually be less expensive than it is now.
But customer retention isn’t important only because it’s cost effective. It’s also a brilliant branding move, since happy customers can become willing brand ambassadors and refer your business to others. (Remember that restaurant you couldn’t stop raving about to your friends?)
To build and maintain strong customer relationships, you must keep them engaged and happy. Here are the top 7 ways you can increase customer retention.
7 Keys to a Strong Customer Retention Strategy
Needless to say, customer retention strategies will only work if you are already delivering excellent value and hiring and retaining the best talent. Great customer service won’t work if your products or services are sub-par.
So, in addition to working with high-quality vendors, you can manage the workflow of your company. (If you want to optimize this, go for workflow management software, too). This will help you deliver your services on time and keep everything within budget.
1. Make Each Customer Feel Special
People will always remember how you made them feel.
Did you ever respond to a customer by saying, “That’s not my job?” Or tell her that something she was frustrated about was in the fine print (which was hidden somewhere elusive in the website specifically so that people wouldn’t be able to find it) and you couldn’t do anything about it?
Congratulations, that customer probably went and told all her friends to avoid your business like the plague. And her friends likely told their friends. You see where this is going.
The takeaway?
You should always make your customers feel important, valued and appreciated.
Focus on that positive feeling that your service or product provides to your customers.
People crave connection. Hence, you should develop a customer environment that gives them a sense of belonging or being wanted. It is best if you personalize the experience.
Try customizing offers based on analytics instead of general demographics or your personal assumptions.
Recognize customers by name – especially if you are interacting face to face in a store or similar environment.
Show appreciation to loyal customers with special offers, sneak previews, or coupons.
As an example, a simple, inexpensive way to show customers that you are invested in them is to send them a hand-written thank you note after you meet them. Why does this work?
Because no one does it anymore.
By sending a hand-written note, you stand out as a business that goes above and beyond for their customers. And as the stats show: customer service is truly king.
2. Work on a Common Cause
Customers will gravitate towards businesses that share a common cause.
Find out what your target audience cares about, and get involved in that. Is it donating to soup kitchens? Volunteering at dog shelters? Preventing violence against women? Participating in such activities in a way that is compatible with your business.
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3. Follow Up With Your Existing Customers
High-touch is a key element of retention marketing.
It is far easier to get referrals from existing happy customers than to find new ones. The only thing odd about personalized follow-ups is how few businesses invest in it.
Focus on your existing happy customers. In addition to the thank you card we talked about earlier, you can send your business card, ask them to sign up for your email list, and connect on LinkedIn.
Send alerts to customers about rewards programs, promotions, product updates and other content you think they’ll be interested in.
Reach out via email to customers you haven’t heard from in a while.
These efforts may not result in immediate sales, but they will go a long way in solidifying your brand as a cut above the rest.
4. Get Real
When your clients are running into problems, make sure they have quick and easy access to help from a real person (not just a chat bot), either by phone or in person.
A whopping 75% of customers believe that it takes too long to contact a live agent over the phone or online chat. So if you’re thinking of redirecting already frustrated customers to an FAQ page and squirreling contact details away where most customers won’t find them – don’t.
5. Understand Client Expectations
Often, client satisfaction depends on client expectations. Don’t avoid initiating conversations with clients about what they are expecting from you. These can be difficult conversations, but they are necessary to retaining customers.
You will gain a clear understanding of what they want.
You will be able to address expectations that are unrealistic, unclear, or do not match what they are trying to communicate.
Clients should have a realistic idea of what they are purchasing, including scope, costs, results, and any refund or return policies.
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6. Make the Most of Customer Feedback
Asking for customer feedback is one of the best ways to understand and retain clients.
For example, if you just delivered a product to your customer send them an email asking for feedback: rating the product quality, the timeliness of the delivery, what aspects of your service you can improve, and so on.
If the customer finds the product and service good, you can ask them for a review.
And if there’s a problem, start looking for solutions. The sooner and more permanently you can fix it, the better. The solution can differ on a case-by-case basis.
For example, was the customer annoyed because a gift they ordered a month in advance for their father’s birthday arrived after the celebrations were over? In this case, you’ll want to fix whatever is going wrong in your shipping department.
A less simple case is if a customer is unhappy with the product itself. In addition to offering a refund or replacement, you may want to find a better vendor who can provide you the quality control you need.
If you determine that it is appropriate, reach out to the customer again and inform them of the changes you’ve made so that they will not have a similar bad experience again. Remember to thank them for helping you to improve your business. If it is viable, offer them a small discount or token of your gratitude.
Lastly, always thank your customers for their feedback, whether positive or negative. Your customer will appreciate feeling heard.
7. Exit Gracefully
You’re going to lose customers sometimes.
This will never be easy. However, if the result is unavoidable, you should always end the business relationship on a good note. If you guilt trip your customer or give them a poor experience, they may leave you a bad review online and never come back.
Conclusion
What do you think? Is there a major point you would add to this list? Let us know in the comments!
We hope this article has given you an insight into increasing customer retention.
With a successful customer retetntion strategy, all those happy repeat customers will be a boon for your profits – and a headache for your accounting department.
Luckily, NextGen Accounting offers bank reconciliation services, credit card reconciliation services, and consulting services. Our management team has decades of experience and includes former executives of Barclays Bank, Bank of America, and ICBC.
Ready to ease the burden of your accounting department with consulting and reconciliation services? Contact us today!