So why, you might ask, is customer retention so important? The answer goes straight to the bottom line.
I recently attended a presentation which graphically illustrated the cost to a company of losing customers. Take two businesses, one that keeps 90% of its customers each year, the other 80%. If both add new customers at the rate of 20%, the first will have an annual 10% net growth in customers, the other none.
Put another way, over seven years the first company will double its customer base while the second will stand still.
Reducing attrition saves on the wasted time, effort and expense in building an initial customer relationship which is then left unattended, and the customer perhaps even abandoned when a problem occurs. That’s why Marketing Wizdom, which mentors aspiring entrepreneurs, says: “The easiest way to grow your business is not to lose your customers.” That’s advice I quoted in the last blog post, but it bears repeating, because it’s so crucial.
Someone who makes a first purchase is susceptible to “buyer’s remorse”. That means you have to allay their fears and show they made the right decision by buying your product or service in the first place.
Bringing back the lost sheep, who are defined by the Marketing Wizdom team as the 25-60% of dormant customers who will be receptive to the right offer made in the right way, is an easier way to increase revenue than chasing new business. It’s the way to create loyalty to your brand.
Staying in touch with customers through a programme of letters, phone calls, special offers and events, with a personal touch tailored to the individual, shows that they are both valued and important.
William A Beachy of Go Media drives home that point in a blog for Huffington Post taken from his book Drawn to Business: ‘Just stay in touch. It’s so simple. Don’t pester, don’t annoy, just make sure you stay on your customer’s mind.’
But service is still more important, he adds in a note of caution. ‘Nothing will replace good service. No amount of holiday cards, phone calls, discounts or anything else will make up for poor service.’
If you keep the customer satisfied by pursuing excellent service, they will tell others and drive new business in your direction. This demands dedication to customer satisfaction by everyone working for your company, delivering on time what you promised, with no buck passing.
Going beyond the call of duty with extraordinary service can be worth a fortune in repeat business. But, Beachy advises, resist the urge to over-promise. ‘Under-promise. Over-deliver. If you think delivering what you promise makes a good impression, just wait till you see how your customers respond when you give them a little bit more.
I am pleased to see that courtesy is seen by Marketing Wizdom as essential to customer retention, and that includes speaking to colleagues politely and pleasantly, treating staff as well as you would want them to treat customers. If your team feels worthwhile and important, they will feel motivated to provide the best service.
Richard Branson has suggested that aggression and ruthlessness can be counter-productive. ‘Always remember that you love what you do and your role is to persuade others to love your business, too, and, therefore, to want to work with you.’
The Virgin founder adds: ‘People tend to come back and do more business if they feel they have done well with you.’
The integrity of your product or service is vital. To quote Marketing Wizdom: “Long term success and customer retention belongs to those who do not take ethical shortcuts.’
Beachy’s suggestion that you be an adviser, not just an order taker, is another side of the same coin. It takes more work, he admits, so that you don’t sell them services they don’t need. ‘You have to get to know them, understand their business and know which services you can provide that make sense for them.’
At S J Collections, we’re not just there for when things go wrong. We can advise you on effective ways to build and maintain your business.