A good customer retention rate is essential to your small business. The more one-off customers you can convert into long-term patrons, the more profitable your business will be. Research by Invesp found that it costs five times more to acquire a new customer than retain an existing one. Meanwhile, the probability of selling to an existing customer is, on average, 60-70%, versus just 5-20% with a new customer. The data also found that existing customers spend an average of 31% more.
The figures speak for themselves; customer retention is the key to maximising your profits and building a sustainable business. Let’s take a look at five tactics to nurture existing relationships and build a loyal customer base.
1. Know Your Customer
Bill Gates once claimed that “your most unhappy customers are your biggest source of learning.” As usual, he was right; your unhappy customers can tell you exactly where you’re going wrong and ultimately enable you to build a better business.
In fact, every customer is a fantastic source of information. When you get to know your customers and their fears, interests and aspirations you can create a more personalised service and more impactful marketing. You find out what drives and damages your conversion rates and how to create a better customer experience that encourages repeat business.
The old adage rings true: honesty really is the best policy, especially when it comes to customer retention.
It’s important to create realistic expectations for your customers so that you don’t disappoint them. When mistakes or problems occur, it’s best to communicate these issues as soon as possible and create a clear-cut plan to deal with them. Admitting to errors and endeavouring to fix them does a lot more to cultivate customer loyalty than dishonesty and broken promises.
3. Loyalty Schemes
Who among us doesn’t love a good discount or special offer?
Loyalty schemes are a great way to make your customers feel valued and ensure that they keep coming back. Points programs, birthday or anniversary discounts and exclusive sneak peeks of new products all go a long way towards boosting your customer retention rate. It’s important to promote the scheme well so that as many customers as possible take advantage of it.
4. Content Marketing
Marketing isn’t just about attracting new customers; it can also boost your retention rates too.
Your customers may be happy with your products or services but if you fail to grab their attention and deliver value on social media they may be tempted away by the superior marketing of your competitors. It’s important to consistently create great blogs, videos and social media updates to keep your audience engaged and your current customers coming back for more.
5. Invest and Improve
Complacency won’t improve your customer retention. Just because you have a customer now doesn’t mean you will have them forever. You should continually strive to improve your business to ensure that your customers remain loyal.
Investing in staff training, smarter marketing and more efficient systems ensures that your business continues to function at its best and stays ahead of the competition to keep your customers coming back.
Focusing on improving customer retention is enormously helpful in building a sustainable and profitable business. By getting to know your customer, you can improve their experience and ensure that you are serving them to the best of your ability. This allows you to create rewards schemes and marketing strategies to keep your customers loyal, and equips you well to stay ahead of the competition.