Customer Retention Strategies For the New Year
January 5, 2017
Instead of spending the majority of your time and budget focusing on getting new customers, shift gears and consider the customers you’ve had since opening your business or anyone who has visited your store for that matter. In a study by Bain & Company, it was found that it is seven times more expensive to chase after new customers than it is to foster an already existing relationship. Customer retention of just 5% annually can contribute to an additional 125% gain in profit. So, it costs less to appeal to the people who already give you business — whom you should be showing appreciation for at every opportunity — than to those who aren’t contributing to the growth of your business. And according to the well-known Pareto principle: 80% of your sales stem from 20% of your customers, so t would be wise to really focus on that 20%. After all, happy customers results in positive word-of-mouth — which is one of the best forms of advertising, especially from an ROI perspective. Below are a few ways you can prioritize the customers you already have.
MEASURE CUSTOMER VALUE
Track, measure, and monitor customer value, especially customer lifetime value. Use your customer database to measure sales by each individual, rather than merely considering the number of customers as a whole. Customer lifetime value quantifies the value of customers based on recency, frequency, and monetary value of their purchases. The higher their lifetime value, the more you ought to invest in customer retention efforts with them. It should go without saying, however, that there should be a standard level of superior customer service that every customer is treated with regardless of his lifetime value. The customer lifetime value is a way for businesses to justify the incentives they give to certain clients, although the ROI from additional services or gifts will still prove to be profitable.
Emails and postcards are low-cost ways to maintain relationships with customers. An automated CRM system is a great method of keeping track of contacts and their information, so you can automatically send messages for birthdays and during the holidays. You can also remind your clients of upcoming sales, or drop them a simple thank-you note and a coupon to encourage repeat business. And remember, only send emails to the customers who have agreed to receive them by opting into your email list.
FOCUS ON CUSTOMER SERVICE
Customer service should always be your top priority in business. The days of companies telling customers that they know what’s best for them are long gone. Any business relying heavily on the Pareto principle mentioned earlier should stand by the value of going beyond minimum satisfaction to earn customer retention and instill this to its staff. Another important point, according to billionaire entrepreneur, Sir Richard Branson, is that customer service begins when you take care of your own employees. Happy employees lead to happy customers, whereas indifferent or grumpy employees will lead to many unsatisfied customers. Branson also preaches the importance of giving employees the freedom to make key decisions, as well as following up with customers promptly after resolving issues to ensure there are no loose ends.
TREAT COMPLAINTS AS OPPORTUNITIES
Complaints should be viewed as opportunities to engage with customers, not as annoyances. Put yourself in the customer’s shoes, be quick with your response, and keep a polite composure. The main goal when dealing with a grievance is for the customer to reaffirm his decision to shop at your store and to leave with the satisfaction that comes from good customer service. Use the opportunity to resolve the problem fully and to thank your patron with additional services.
DON’T FORGET SOCIAL MEDIA
Social media is a great method for companies to interact with customers quickly without the need to be overly formal. Being personable helps consumers view a company for its values and efforts, not as a business trying to make a profit. Companies often find that the relaxed environment of most social media platforms allows them to use humor as a way to relate and attract attention from their audience. Something else to keep in mind (especially for smaller companies), is that it’s better to use a few social media sites well than to use all of them poorly — so do some research and find the best places to reach your target market.
For more marketing tips in the new year be sure to check our blog. If you need any other insights, please feel free to call your local South Florida Full Service Marketing Agency, our expert team is always happy to help.