Customers are the lifeblood of any business, without customers, you don’t have a business. No business wants to lose a single customer ever. Because losing a customer means losing the sale and adding costs to acquire a new customer. No doubt that adding new customers every day is also important for the business. But, keeping the old ones is also equally important. That means the customer retention is very important for every business.
But many small businesses are so focused on bringing in new customers that they forget about the ones they already have. This is a terrible mistake to do. Rather the businesses should have a strategy in place to acquire new customers. Also, they should have strategies for retaining their existing customers.
Why Customer Retention is Important?
Customer retention is very important for building a thriving business. There are a few simple things which the business owners should keep in mind. And if they keep their operations accordingly they would certainly be able to improve their customer retention rate.
Up Sell & Cross Sell
Every marketer makes their marketing strategies around attracting new customers through offers, discounts, freebies, etc. But it is equally important to serve the existing customers as well with the same gusto. So, whether it is a direct advertising or a digital advertising plan, do not forget your existing customers.
It has been proved already that creating a sales and marketing funnel specifically for existing customers is not the only key to growing your business, but it’s also often a better investment of your time and resources. According to the Forrester Research report, it usually costs five times as much to acquire a new customer as it does to retain an existing customer.
So, if you spend more of your marketing money on existing customers, you will see more return on investment. Plus you will make your brand more trustworthy and create a loyal customer base for your business.
So the bottom line is to have your strategies in place for customer retention while you are trying hard to acquire new customers.
Understand Your Customer’s Expectations
With the last three clients I worked with, I found that customer retention actually depends on customer satisfaction. And that satisfaction is not based on the products or services you are selling to them. But it is based on what level of satisfaction they are getting out of your product or service. So, you need to set your customer’s expectations right from the very beginning.
For instance, this client of mine who runs a taxi service from Delhi to Uttarakhand, Himachal and Jammu had the problem that his customers were not happy with him. He has no repeat business and has a very bad online reputation because of the bad reviews from his past customers.
We reworked on his entire website and made it mandatory for every customer to read those 15 points which make them understand what the service includes before they book the taxi.
Also, the sales team was trained accordingly to set the customer’s expectations right. In four months he started getting repeat business as well as referral customers.
He improved his online reputation and grew his business by almost double in 8½ months.
Do Not Ignore the Complaints
It is a common mistake which the business owners and their sales team make is to avoid having a conversation with the customers regarding their expectations. Often customers come with very unrealistic expectations and to close their sale they lie to them and in the end customer becomes unhappy because the company couldn’t meet their expectations.
So, it is better to set your customer expectations right and they should have a realistic picture of what they are buying, including the cost of their purchase, what it includes, what they can expect as a result, and any return or refund policy you may have in place.
If all these components are understood and understood from the beginning of the purchase, customers are much more likely to be satisfied at the end, whatever the end is.
Offer to Improve
Customers want a solution to their problems. If for any reason a customer isn’t satisfied with their purchase or experience, the best thing you can do to retain their loyalty is to communicate with them and take responsibility and assure them of improvement in your product or service.
If you offer your customers to make the mistakes right. And if you do that enthusiastically you can turn even a bad experience of a customer-pleasant. And also you can turn that furious customer into a loyal customer.
A Real Life Example
One of my client who makes oil paintings had delivered a painting which had scratches and the frame was broken. The customer was very furious. He simply said that he will fix it and send her the painting again in a week’s time.
After a week when she received her painting again, she was very happy. And after that, she referred to many of her friends to get their paintings done from this client of mine. Also, she wrote a positive review on his facebook page.
He got 17 orders in a month’s time through referrals from that one customer. And 31 total orders in 15 months time. Isn’t that great!
In fact, offering to improve, and making your customers a part of that process, can increase loyalty even in satisfied customers.
Post that we introduced a customer feedback system. His team started sending emails to the customers after deliveries to ask whether they are happy with the work, and how can we improve our services. Doing this gave us very meaningful insights into various things which made the process much better.
Personal Attention
This personal attention not only makes clients feel valued and respected, but it can also help you anticipate and avoid future problems.
If it is not possible for you to interact one on one with every customer, you can still offer improvements. An email survey, either sent to everyone at certain points in the year or to each customer after a purchase, gives customers the opportunity to offer feedback and you the opportunity to make improvements.
Once you’ve made those improvements, don’t keep them quiet – let customers know exactly what you’ve done and how that will improve their experience in the future.
When they know you take their feedback seriously, they are more likely to give you repeat business. Even they refer to their friends and family, and that is free marketing for you.
Communicate and Connect
Regular, personal communication is the key to creating a feeling of personal connection. It convinces and motivates the customers to stay loyal to a small business.
Communicate regularly with your customers through a newsletter or email list, keeping them informed of changes, developments, and special offers. If you are a local business with local customers, start participating in the local events. This is will help you create strong, personal relationships with them.
If you are working at a distance or selling your products through eCommerce, it’s still possible to create a feeling of personal connection with your customers.
Even well written personalized emails can create emotional engagement with the customers that tells them that you care for them.
I advised my client who makes the oil paintings to send personal thank-you notes to his customers and this made his loyal customers feel that he is loyal to them in return. Now, he gets orders even from overseas through a referral from these customers.
You can also create real connections by responding directly to emails and comments on social media. Posting content that shows the people behind the business also is an excellent way of engagement.
By communicating directly with your customers, you encourage their engagement, which in turn makes them feel invested in your business. Through communication, a relationship is created, which often leads to a more loyal, long-lasting relationship.
Summing Up
So, these are a few of the customer retention strategies for small businesses. Obviously, there are several other ways to retain them, but, the best way is to understand their expectations and making every possible effort to meet their expectations, and communicate with them regularly.
