7 Steps to increasing customer retention
If you’re trying to build a business, there are three and only three ways to increase revenue.
1.Increase the number of customers
2.Increase the average spend per transaction
3.Increase the number of times a customer buys from you
Of these, the third, turning a new customer into a repeat customer, is the most potent. Why?
Because attracting, entertaining, educating and converting a new customer is time and money intensive. New customers are price sensitive, have to be sold to, and convinced.
Existing customers, if you treat them right, not only become less price sensitive to your products, but become resistant to competitor’s products, evangelising and advocating on your behalf. They are more willing to buy products from back end marketing and promotion than front end efforts, because they already trust you, and processing sales is simpler since accounts are already set up.
7 Steps to increasing customer retention
With that in mind, here are seven simple steps to increasing customer retention rates.
1. Know your numbers
Do you know what your current customer retention rate is? If not, how can you hope to improve on it, or track your progress? While you can use sophisticated analytics and CRM software, at base all you need to know to get started is what percentage of sales come from new and existing customers.
To work that out, divide the total number of sales during the past twelve months by the total number of active customers. Set yourself a target to increase the number of sales per customer by 5 percent over the coming year.
2. Give them a reason
If you simply sell to a customer and never communicate with them again, why would they come back? If you don’t collect contact details as part of the original transaction, at least include a way for customers to subscribe to updates and offers in your product. Let new customers know you want a relationship with them, and make them feel valued.
3. Provide great service
Make existing customers feel valued by giving them the same great service and attention you lavish on new customers. Give an unadvertised bonus, make them feel part of an exclusive club. Some companies make offers available only to new customers. Try going the other way and showing your existing clients they are more important to you.
4. Keep your word
Whether it’s a commitment to outperform a competitor, a price match guarantee or a promise to put your customers’ interests before your own, make sure you live up to your performance standards. Train all your staff to understand the business ethos, not only sales and customer relations staff.
5. Put customers first
Put yourself in your customers shoes, try to see your business from a customers point if view. Don’t just pay lip-service to the idea, think about what your business can do to make your customers’ lives easier or richer. Don’t bombard them with back end sales offers or juts. Instead, surprise them with free gifts, share valuable information with them without asking for anything in return, and tailor your communication to their needs.
That way, when you do send a back end offer, your response rates will be dramatically improved. Loyalty cards have proved to be successful for many business owners especially coffee shops or sandwich bars, its proven that an offer such as“Buy 5 cups of coffee and we’ll give the 6th one for Free! – does work, but you will need to compliment this with more engagement with them, do this right and you can watch customers become friends and advocates.
Communication isn’t sending out coupons, offers and discounts. It isn’t even just sending reminders tailored to your customer’s buying habits and stated interests. It’s listening to your customer feedback and acting on it. Autoresponders are great for personalising and sending out mass email campaigns, but don’t forget to send the occasional personal email from a real person too.
7. Go where your customers go
Don’t neglect offline customers, or those who prefer one communication channel to another. If your customers use Twitter, talk to them there. If they use Facebook or other social networks, make sure you have a presence there and monitor it. Be where your customers are talking about you, and join in the conversation.
Above all, remember to be human as well as professional. You’re dealing with people, not machines.