According to Invesp, it can cost five times more to acquire a new customer than to keep an existing one. Many businesses spend most of their marketing dollars on finding new customers instead of nurturing the ones they already have. It is like filling a bucket with a hole in the bottom. Your acquisition has to work harder because your business is losing customers.
We asked 9 experts from The Alternative Board to share their tips on how business owners and leaders can improve their customer retention
1. Use technology to help improve your relationship with your customer
Maintain a CRM (client relationship management database) and initiate personal check-ins with clients who have not engaged, purchased, or opened your recent newsletters. The list will hopefully be short enough, and the history detailed enough, that your message will feel very personalized.
2. Using a Net Promoter Score to help convert brand detractors to brand promoters
Our optical business, both testing of eyes and dispensing spectacles, is in the largest shopping center in the country. It is very competitive with two other global players and high rent for retail space.
We outsourced the calculation of our Net Promoter Score. The most potent feedback question in the survey is: "Why did you give it that score?". All top insights are shared and discussed with the team regularly. Also, the company notice board always has our score and insights for the month.
We have learned to change our language to make it more simple and how to engage and develop trusted relationships.
Every score of six or under is sent by text to the Managing Director, who responds by phone to the patient or customer the same day. We know who to keep and work on to turn around and who to let go. 80% of brand detractors are turned into brand promoters after a quick intervention. Needless to say, there are very few calls that go to the Managing Director after 4 years of consistent implementation.
3. Take a closer look at your Customer Experience
Customer retention is all about the customer experience. If you want raving fans that stay with you and refer others to you, it is essential to add value. If your customer has an issue, acknowledge it, deal with it proactively and make sure they are happy at the end. Additionally, any time you can be doing things to help them or their experience is good. For example, easily found information on your website, blog posts, or podcasts. Also, do not forget the personal touch – a phone call, email, or even a handwritten note if and when appropriate
4. Secret Shop Your Experience
According to a worldwide survey conducted by The Economist, the top three elements of ideal customer service are; fast response to inquiries or complaints, simple purchasing processes, and the ability to track orders in real-time.
The truth is, you may be losing loyalty every time a customer transacts with you if you do not have these three areas buttoned up tight in your business. Ask unbiased friends or colleagues to secret shop your business and go through the customer experience and report back to you.
If response time to inquiries or complaints is your number one issue, some simple improvements could be;
- Develop a Frequently Asked Questions or FAQs for your website.
- Educate your team on how to deal with the most common complaints and standardize scripts for common inquiries.
- Take a close look at the user experience on any online shopping carts and consider adding a chat button on your website.
- Look at your "average response time" on your Facebook company page.
After you make some improvements and your customer experience is "frictionless," ask your original "secret shoppers" to audit your new processes for further feedback. Auditing and reviewing your customer experience should be a regular occurrence in your business and result in keeping customers, old and new, happy and loyal for longer.
5. Start thinking of your customers as partners
The loyalty of profitable customers should be one of the main goals of all companies. One of the ways to achieve this is by going from customer to partner. In some cases, especially in the sale of projects and services, it is achieved by changing the transactional relationship for a shared risk relationship (skin in the game), in which a significant part of your income depends on the success or even incremental success from your customer
6. Become Your Clients' Partner Instead of Their Supplier
A few years back, an entrepreneurial business owner contacted me because he needed help building his business. He wanted to penetrate a market dominated by large national companies. He identified a significant part of the market that was not targeted by the larger players because it was not "cost-effective" to serve. The issue was the customer consumption was small, but the equipment capital cost high.
The business owner identified the capital cost hurdle that needed to make the business work. We worked together to identify what features were necessary and which features were nice to have. We achieved a design that worked and met the capital cost hurdle.
The result is that his business took off, and he would only buy our equipment – he trusted us and came to us for all his needs. We were "Partners".
7. Communicate, Communicate, Communicate
The one variable that your business can and should control is communication with customers. Nobody likes surprises. When you think about your customer interactions; who is the one who initiates the dialogue; is it you or your customer? If it is your customer, you will quickly become the one reacting and trying to reassure them that they will be satisfied. However, if you are the one to initiate updates and are proactive with initiating updates before your customer asks, your customer's confidence that you are working for them will be significantly higher. This is critical when you have delivery issues.
Proactive dialogue (I recommend telephone discussions or face to face vs. email) concerning problems and what you are doing to solve those problems may not make your customer happy. Still, your proactive communication can be a catalyst to increase their trust in your ability to deliver. Think about your buying habits. Which do you like better; getting updates without asking or having to chase your vendor to find out what is happening?
Byron Roth - Owner - The Alternative Board Bethlehem, PA
8. Attitude of Gratitude
Customer appreciation, and the intentional effort you put into it, is seen by your customers as a direct reflection of the value you place on them. It's the part of the "customer experience" that can truly separate you from the competition.
When you consider that most surveys show that 68% of customers leave you because they "perceive" you are indifferent to them, it's easy to see that improving your appreciation significantly improves retention, which improves longevity. This has to be from the top down, it must be sincere and consistent.
I recently worked with the owner of a popular fast-food franchise known for their positive customer experience. He shared with me their three pillars of customer appreciation – Make eye contact, use customers' first names, tell them "it's my pleasure" to serve you. This is a simple but powerful example and it works because it is part of the culture, and it is sincere.
Another client that owns multiple print and pack stores recently implemented a program that encourages his customer service staff to send out at least three handwritten thank-you notes per week. In addition, the program empowers them to reward two customers of their choice, per month, with a $20 gift card. They are only required to share their story as to why those chose the recipient. It's hard to tell who has been the most impacted; the customers or the staff.
Some other things you could consider would be to host an event, celebrate "customer anniversaries", send a branded gift to new clients, or create a formal Loyalty Program. No matter what you choose, the simple truth is you can't say "thank you" and "we appreciate you" too much.
Lee Freeman - Owner, TAB Florence-Myrtle Beach
9. Ask the questions we are afraid to ask
Business is about relationships and value. If you are not delivering value and you don't have a strong relationship they will tell you bluntly. If the relationship is strong but the value is no longer there your customer may not tell you but they will stop doing business with you.
As humans we don't enjoy negative feedback so we don't ask the risky questions. But if you want to keep your customers longer you need to give your customers permission to critique you and your work so that you can continue to build the relationship and deliver value that is important to them at their stage of life.
Daniel Wong - Owner of The Alternative Board Brisbane Inner North