15.02 – Keep ’em Coming Back
Businesses invest significant time and money in winning customers but often neglect the importance of retaining them. This oversight can be likened to pouring water into a bucket with a big hole at the bottom. No matter how fast the water flows in, it will flow out just as quickly. This section will delve into why customer retention is crucial and how to improve it.
Realising Why Retaining Customers Matters
Studies and common sense reveal several key reasons why retaining customers is vital:
- Cost Efficiency: Acquiring new customers is more expensive than retaining existing ones. Market research, prospecting, and sales efforts can cost between three and seven times more than maintaining current customers.
- Long-term Profit Allocation: The longer you retain a customer, the more you can spread the acquisition costs over several years, increasing annual profit per customer.
- Lower Service Costs: Regular customers cost less to serve than new ones. For example, insurance renewal policies cost significantly less than new policies.
- Willingness to Pay Premiums: Long-term customers are often willing to pay more for reliable service and are less likely to switch to competitors.
Avoiding the loss of customers is crucial. Dissatisfied customers tend to share their negative experiences widely, and former customers are prime targets for competitors. Monitoring customer satisfaction through sites like Trustpilot and Review Tool can help you stay ahead.
Working To Retain Customers
Use these five rules to ensure customer retention and improve profit growth:
- Make Customer Care a Goal: Reward employees not just for acquiring customers but for retaining them.
- Understand Why Customers Leave: Follow up with departing customers through surveys or visits to understand their reasons and learn how to improve.
- Research Competitors: Regularly buy from competitors or stay close to those who do to gauge their service levels.
- Learn from Internal Best Practices: Identify parts of your organization that excel in customer care and use their methods to train others.
- Empower Employees: Train staff and give them the authority to make decisions that enhance customer satisfaction.
Monitoring Complaints
Statistics show that 98% of complaints are never made. Just because you’re not hearing complaints doesn’t mean customers are satisfied. Set up systems to encourage customer feedback through surveys, follow-up calls, or dedicated website sections.
Effective complaint handling can convert dissatisfied customers into loyal ones. Providing prompt and effective solutions can lead to repeat business and positive word-of-mouth.
Setting Customer Service Standards
Customer service encompasses all activities supporting a customer’s purchase, from awareness to ownership and beyond. Effective customer service influences repeat business and recommendations.
Key elements of a robust customer service plan include:
- Initial Contact: Ensure staff handle inquiries competently and leave potential customers confident in your ability to meet their needs.
- Information Flow: Keep customers informed about their orders at every step to show they matter.
- Delivery: Ensure timely and convenient delivery of products or services.
- After-Sales Support: Provide comprehensive support through maintenance, repairs, help-lines, and clear return policies.
- Problem Solving: Train staff to recognize and address customer crises promptly and effectively.
Rewarding Loyalty
Loyalty enhances profitability because retaining customers is cheaper than acquiring new ones, and loyal customers tend to place larger orders and are less price-sensitive.
While loyalty cards have not always delivered as promised, understanding what drives loyalty—convenience, price, range, customer service, and quality—can help. Customer service and quality should focus on getting things right the first time and exceeding expectations.
Effective strategies for maintaining customer loyalty include:
- Care and Help-Lines: Freephone services can encourage customers to seek advice and support.
- Customer Engagement: Keep in touch with customers through newsletters, surveys, and special offers to maintain their interest and loyalty.
Implementing these strategies can significantly enhance customer retention, leading to sustained profitability and business growth.
