It costs 7x more to obtain a new customer than to retain an existing one
Customer Retention can increase the lifetime value of your customer base and can help to balance out any costs you invest in customer acquisition.
Customer retention, or focusing on your most valuable customers, can dramatically impact profit.
Studies by Bain & Company, along with Earl Sasser of the Harvard Business School, have measured that even a 5 percent increase in customer retention can lead to an increase in profits somewhere between 25 and 95 percent.
But customer retention and focusing on your most valuable customers has the ability to impact business growth even further:
Current customers are often more agreeable to try more of your products if they have had a good experience, this could be as high as 50% of your existing customer base.
They spend more money compared to new customers which creates an opportunity for future cross-selling opportunities.
As an existing ‘loyal’ customer they are more approachable and more willing to hear about new offers and products.
The probability of selling to existing customers is at least 3x higher than to new prospects as they are ‘locked in’ so to speak.
If you can focus on this rich source of revenue opportunity, then business growth can be achieved quicker than a focus on new prospects.
Existing and loyal customers should become advocates and evangelists for your company or brand, recommending products or services to their network and across social media channels.
Their customer experience should inspire new customers to want to engage with the business.
The ability to build trust and foster ongoing relationships with your customers will go a long way towards ensuring future business success.
Here are 5 tips for building loyalty, customer retention and creating more valuable customers :
Create Customer Expectations
When customers know what they can expect from your business it builds trust and expectations.
If they are disappointed in their customer experience or product performance it could have a more lasting impact than any previous levels of satisfaction.
If customers have a bad experience, they will often share that experience with friends and colleagues and become more open to competitor advances.
Ensure that your customers are always satisfied, as loyal customers spend more and are more open to purchasing more of your products.
Communication to Retain Customers
One of the simplest, but most effective, ways to build personal relationships with your customers is by providing consistent, relevant communication tailored to your customer experience with your business.
This communication makes customers feel valued, appreciated and understood.
Generic communication is fine occasionally but the majority should be tailored based on your customers purchasing and servicing experience.
Don’t send irrelevant messages and offers that have no bearing on your customer’s previous purchasing habits but try to create a real experience and value exchange.
By acknowledging your relationship with them and keeping them informed, it gives them a reason to want to continue doing business with you.
Feedback and VIP Experience
Ongoing customer feedback is important to help retain customers because it gives your business important insight into your service offering, product performance and path to purchase journey.
It also allows to measure expected customer service V actual customer service performance, whether that is how the business deals with customer complaints to staff performance indicators.
This analysis should be undertaken at a customer level, over a period of time, against a specific product or member of staff etc.
To show customers that their feedback really matters to your business to can go one step further by offering customers VIP Experiences or Random Acts of Kindness.
This can include Free Products, testing of new products, Invitation to product launches, attendance at focus groups or allowing customers to become ambassadors for the business.
Go The Extra Mile
Being seen to offer exceptional customer service and business performance is a great way to build customer relationships as customers see the business puts real value in who they are and the business they give.
Out of Hours Service, exceptional employee performance, VIP experiences or gifts, a piece of communication or even delivery from the Managing Director are ways to go that extra mile.
Ensure the right employee training is in place, connect with customers instantly and provide support if the business becomes aware of a negative customer experience but always go above and beyond to help build that customer loyalty.
Build Your Online Presence
Building an online presence is standard procedure for all businesses but to ensure your business is building tangible relationships with customers it is essential that investment is made in content.
A presence on Facebook and google+ is required but for many businesses it is the platforms of Instagram, Twitter and LinkedIn where they have the opportunity to show off their personality, build customers relationships as well as creating and curating great content.
Creative content whether through video, filters, special effects and photography allow businesses to build their networks, connections and followers.
Tracking mechanisms allow the business owner, or their chosen agency, to see the value of their content and engagement.
About The Author
Mark Pettit helps successful entrepreneurs create a vision of their ideal future and then build a plan and path to create it. By having this clarity, his clients are able to expand their freedom and multiply their revenue and growth.
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