Every day we spend our precious time and hard-earned money in the market looking for new customers. We advertise, we network, we use social media strategies, all for the purpose of finding ever elusive new prospects and converting them into profitable new customers.
With all this emphasis on getting new customers, what are we doing to retain our current customers? According to a study conducted by marketing guru Dan Kennedy, these are the reasons why a customer leaves:
- 1% die
- 3% move
- 5% take the advice of a friend or family member and switch to their recommended carrier
- 9% change due to better price or better product
- 14% change due to dissatisfaction with the product or service.
While the first two may be out of your control, you should be able to do something about the other 28%. However, all of the above reasons only account for a total of 32%. So why do the other 68% of customers leave a business? Simply put, they leave because they feel unappreciated, unimportant, and taken for granted.
Customer churn costs companies billions of dollars each year. Here are some initial statistics from Emmett C. Murphy and Mark A. Murphy, in their report, “Leading on the Edge of Chaos”:
- Winning new customers can cost up to five times more than retaining current customers
- Increasing customer retention by 2% has the same effect on profit as reducing costs by 10%
- The average business loses 10% of its customers each year.
- Reducing customer churn by 5% can increase profits by 25-125%
- Customer rate of return tends to increase over the lifetime of a retained customer
Wow, is that a wake up call or what? Let’s take a look at how you can stop spending so much money trying to attract new customers, and instead learn how to take care of the customers you already have.
Here are 10 Strategies you can start implementing TODAY in your business:
1. Stay in touch regularly and systematically. When your customer places an order, follow up with them to see how satisfied they are with your product and/or service. Invite feedback, both positive and negative. (You will most likely learn more from negative feedback) Let your customers know that you care about them for the long haul and not just a one-time deal. Take the time to learn as much as you can about your customers during your follow-up calls. A little extra effort can get your customers asking about other products or services you offer and you’ll get new business. Since it’s always easier to upsell someone you’re already doing business with, think about the lifetime value of each and every one of your customers.
2. Educate your customers with valuable and FREE information. Sharing your knowledge through a newsletter, social media updates, special reports, and blogs will demonstrate your expertise. Adding value will also set you apart from everyone else who just promotes their products and services in every communication. At BNI (Business Networking International), the philosophy is “Givers Gain”. Be a giver. Pay attention to the issues that are important to your customer and try to find answers to them. You will become the reference person both for information and for your business.
3. Become a resource. Look for other ways that you can serve your customers, even if it doesn’t mean an immediate return on your efforts. Look for times when you can recommend businesses, help with an event, or offer suggestions to improve your business. In the minds of your customers, you will be the expert and therefore “top of mind” the next time they search for your product or service. As you get to know your customers better, you’ll be able to offer support in a variety of areas. Networking events can play a critical role in meeting the “right people” to refer to other “right people.” Let yourself be guided and you could become your client’s hero.
4. Write a thank you note. When you send a personalized card or note in the mail (not an eCard), you’re setting yourself apart in a big way. A card is not only a nice distraction from the spam and bills your customers are used to receiving on a daily basis, but it adds a priceless personal touch to the relationship. Think about it, you are giving your customer tangible evidence that you value and support them. Chances are, that card is hanging on your bulletin board or displayed on your desk. When someone picks up the card or asks about it, YOUR name will be mentioned, in a good way. Great opportunity for referrals!
5. Respond to customers promptly when they contact your business. Take care of issues immediately. Ignoring problems doesn’t make them go away, it just makes them bigger and harder to fix. Remember what your mother told you: if you’re wrong, say you’re sorry. So do things right. Let your customers know that you are committed to a high level of service and will do whatever it takes to resolve their issues. Chances are, it will take much less than you think will completely satisfy (and keep) your customer. There is a study that showed that only 17% of customers would give a second chance to a company that makes a mistake. However, you greatly improve your chances of repeat business when you go beyond your expectations to solve your problems.
6. pay attention. Listening to what your client has to say will give you clues that will help you give it a more personal touch. If your client talks about their new grandchild, send a congratulatory card. If he or she has a child headed off to college, make a note on the calendar and be sure to ask about it the next time you talk to them. Find out birthdays and anniversary dates. Send cards for non-traditional occasions. Remember, you may be the only person who has taken the time to send you a card. It may be a cliché, but people don’t care what you know until they know you care. Ok, one more cliché: you have two ears and one mouth, they must be used in the proper proportion.
7. act with integrity. In everything you do, you want your shareholders and customers to trust you. Building trust takes time, but it can be lost in an instant. When you say you’re going to do something, do it. When a mistake is made, admit it and then correct it. Do everything you can to earn your customer’s overwhelming trust in you and your business. Remember, trust must be continually earned. People want to do business and work for trusted companies.
8. maintain quality. No matter how good your customer service is, if you are providing an inferior product or service, your customers will leave. Make sure all your employees are aware of the importance of maintaining quality. Establish systems to monitor it. If you have outsourced products, rigorously ensure that your quality standards are met.
9. reward customers. Institute a customer loyalty program. Offer your customers coupons that they can use toward their next order. Surprise them from time to time with a free gift. Host a “Customer Appreciation Event.” Find different and unique ways to delight your customers.
10 Make the good. Establish a relationship with a charity or non-profit organization and invite other local businesses to participate. Share what you are doing in your newsletter and in your social media campaigns. Remind people when they patronize your business that they are contributing to a greater cause.
All of these strategies work, but don’t overwhelm yourself by thinking that you have to execute them perfectly right now. It’s important to start moving your customer relationships forward. Pick a technique that you feel you’re already doing well, then brainstorm some creative ways you can do it even better.
You may want to rank these ideas in order of importance or impact on your results. Implement systems, one milestone at a time, until you see progress, and then move on to the next. Paying constant attention to how you recognize your customers will pay off in ways that may surprise you. Go for it!
