Shared with consent of our partner Survey Local….
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 come 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 customers 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 a 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 the
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’ve 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 with our partner SurveyLocal (my completely unbiased opinion). Both our companies, Dominate Local and Marketburst, use this service along with SEO and social media to create a complete approach to managing your reputation.
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.
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