According to Bain & Company, it costs seven times more to attract new customers than it does to keep them.
That's why customer retention is so important for your small business, and why we put together this resource for you with customer retention tips to supercharge your small business.
I think most small business owners know from experience that it is significantly more expensive to attract new customers. Despite that, many don't put a whole lot of thought into customer retention. Many small businesses are much more focused on the sales side, but I think it is equally if not more important to focus on customer retention.
I'm not a huge Groupon fan, but I've bought several deals in the past and noticed something very interesting. The deals I got worked great, but none of the businesses did anything to capture my information so they could engage me to become a long term customer. Huge oversite! These businesses made very little money or even lost money with the Groupon and did not capture any information to actually make money by having me as a long term customer.
Spending money to attract new customers and not having a plan in place to retain those customers is like driving halfway to your destination and stopping.
My goal with this article is to give you some easy customer retention tips that will allow you to take actionable steps to improve your customer retention and your business.
First, let's make sure we are on the same page. What is customer retention? It is the activities and actions an organization takes to keep customers from leaving.
The lifetime value (LTV) of a customer is a key metric when measuring the success of your customer retention. Lifetime value is simply how much a customer spends with you while they are a customer.
How do you increase LTV? Improving customer retention is a huge way to increase LTV. I'm going to make it super easy for you. All of your customer retention efforts should focus on one thing, keep customers happy.
Happy customers have no reason to leave.
Let's look at some easy ways you can supercharge your customer retention today.
If you want to know whether you are keeping customers happy you need to collect some data. Surveying your customers can be an easy way to do this. Here's the problem most companies run into with surveys...they make them to long and detailed. Asking a customer to take even 5 minutes to complete a survey is a huge ask.
I like Groove's approach to this. They ask two simple questions.
- How likely are you to recommend us to a friend or colleague? (Rating is from 0-10 with 0 being Not at all likely and 10 being Extremely likely)
- What is the most important reason for your score?
This is brilliant if you think about it. Super easy for the customer to complete while still giving them excellent data. It tells them how many of their customers are promoters (those who respond with a 9 or 10), passives (7 or 8) and detractors (0 to 6). The second question tells them why and gives them clear direction on what they need to focus on to increase customer happiness.
What Does Your New Customer Onboarding Look Like?
What is the experience of a new customer coming into your business? Do you have steps and procedures in place to ensure a consistently awesome experience?
Make sure your customer onboarding is rock solid and there are consistent touch points with the customer to keep them informed and ensure they are happy. This will vary depending on the type of business you have, but first impressions are lasting ones.
Great customer service is no longer a differentiator. Customers expect it. So how can you go above and beyond? I'll give you a perfect example I experienced several months ago.
I went into a quick serve restaurant to meet with a business colleague. It was mid afternoon, so all I really wanted was something to drink. I ordered my tea and started to pull out my wallet when the woman helping me said, "Don't worry about it. This one is on the house today." What? I was completely caught off guard (in a great way). I couldn't stop talking about it for days. It's amazing the impact such a small gesture can have on a customer.
What can you do to surprise and delight customers in your business?
Make It Easy For Customers
Customers want you to make their lives easier, not harder. What is your customer experience like? Are there roadblocks and speed bumps customers need to navigate?
Talk to your customers and find out where you are making it difficult for them, then eliminate the roadblocks. Making it easy for customers makes them happy.
How Is Your Customer Service?
Let's face it, none of us are perfect. When we're not, customer service plays a huge role in keeping customers happy. Don't be one of those companies that make it incredibly difficult to get support.
A customer should easily be able to find your support options, choose one, and get the support they need promptly. There is nothing more frustrating than to experience a problem with a product or service and have horrible customer support on top of it. This is a sure way to lose customers.
When it comes to customer service keep the following acronym in mind, CARES .
- Communication: set expectations and clearly communicate your business process.
- Accountability: when problems arise take responsibility for fixing them.
- Responsiveness: nobody likes to wait, solve problems as quickly as possible.
- Empathy: acknowledge how the customer feels and how the problem is impacting them.
- Solution: make sure you provide a solution or an answer to their question.
I wish I could say I came up with this acronym, but it's from Bruce Tempkin.
Figure Out Why Customers Are Leaving You
Do you have any idea why customers stop doing business with you? If the answer is NO, you need to find out.
This will accomplish two important things for you.
- You'll learn where your business is falling short so you can take the necessary steps to fix it.
- You may have the opportunity to earn the customer back. Once you understand why they left, you can come up with some options to potentially earn their business back.
Here's an example I know we can all relate to. Think about your experience canceling cable TV service. The typical experience looks something like this:
- You call to cancel.
- They ask you why and you tell them.
- You get transferred to the loyalty department.
- The loyalty department offers you an incentive to stay.
- You decide to stay or leave.
No matter what you decide, the cable company has gathered some very useful information and in some cases, they've managed to save a customer.
I hope this article has provided you with at least a few customer retention tips you can implement in your business today. Customer retention is so important. If you invest some time in it I know you will see significant rewards in the form of increased profits.
Did you find this helpful? Feel free to comment below and share.
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