Have you heard of Pareto’s Principle? It states that firms obtain 80 percent of their business from 20 percent of their clients, proving that retaining these repeat customers is crucial to your enterprise’s success.
In the long run, you can significantly improve your customer base by focusing more on retaining your current customers than spending your marketing budget funds on desperately trying to attract new ones. In fact, a recent Bain Co. study states that a 10 percent increase in customer retention is equal to a 30% increase in company value.
But how do you make this happen? Undoubtedly it is easier than it sounds. Otherwise, every firm would be excelling in this arena (and believe me that is not the case!).
The Death of Brand Loyalty
One of the biggest challenges for businesses today is how to improve customer loyalty in the era of no-brand loyalty, a time when customers are more informed, more impatient and more empowered to switch brands easily. And with the proliferation of new products and services from all over the world, it makes sense for buyers to keep their options open and to constantly seek the best deals.
If there is one thing the continuously increasing authority of online reviews shows, it’s that customers today are always evaluating the brands they buy and intend to buy. They’re always on the lookout for newer, better experiences. They want every purchase cycle to be an experience worth posting and sharing. And while they’re willing to spend to meet their standards, they also need to be thoroughly informed about the products and services they’re interested in before making a move.
The successful brands today are aware of these customer preferences and behaviors. They realize that in order to retain their existing customers, they need to meet rising customer expectations on quality, price, speed and service, and to bank on delivering memorable customer experiences.
With these new realities in mind, businesses can drive growth by retaining customers, through the following tactics:
- Championing a relationships-first approach
- Extracting value from customer feedback
- Establishing authentic purpose
- Providing more personalized attention and service to customers
So, just for you, here are five tips to increase your profitability by retaining customers.
1. Always think of relationships.
If you only remember one of these tips, let it be this one. From the get-go of your business trajectory, be thinking of relationships and achieving your customers’ expectations. How you do it will be different depending on your industry, but think of it in terms of delivering faster or more than promised.
A real-world example would be to respond at lightning speed to questions and comments whether by email or social media. Exceeding expectations when it comes to communication and commitment will go far in retaining customers.
Additionally, make sure you are reaching out to your customers regularly and provide them with value and information that will educate and empower them about your niche. Blogging and social media are other powerful tools that allow you to disperse your knowledge and passion with both prospective customers and repeat customers and also leads into the second tip…
2. Ask the customers.
We all know the old saying, “the customer knows best,” but in this day in age, the depth of that statement should be more dramatic. As in, customers should be included in all (or most) decisions. Asking customers what they think about a potential company decision helps to keep them feeling as though they are in the loop and also ensures that you are always considering what is best for them.
If you are planning on making any changes in your operations or strategy, it will be a lot more successful if endorsed and celebrated in advance by your customers. Plus you won’t have to go back to square one if they disagree! Send out a survey or utilize your blog and social media following, and ask your customers what they think and what you can improve on.
3. Establish unique values.
Having an authentic purpose and establishing unique values is key to creating sustainable business growth. Your company must be able to readily and succinctly answer the question “Why do you do what you do?”. In the early days of your business, your team (even if it is just you) must invest the time to brainstorm on the matter. The resulting agreed-upon answer will drive you towards figuring out and settling upon your firm’s authentic purpose.
From this point, your authentic purpose will be the marker from which you can proceed through recruitment, customer management and product development and sales.
But regarding customers, by pinpointing your authentic purpose, you are then able to succinctly share with the world these unique values for which you stand. This, in turn, ensures that you are attracting and retaining customers who also feel strongly about these particular values. Make it your mission to truly understand your potential customers’ priorities and then fully communicate your values that match.
4. Don’t solely focus on sales.
Sales are paramount, unmistakably. But if you are trying to build a relationship that lasts beyond the initial deal, then you also need to think beyond it. Get personal! Don’t just see it as a transaction, instead go out of your way to try to know each person or client better. In a consultative style of selling, you should offer advice, let them know about complementary products and provide tips for maximizing the value of their purchases.
When they trust that you are thinking more about what you can do for them, rather than what they can do for you, then they will ask for help openly, and a meaningful relationship can transpire.
At the end of the day, customers relish attention. Even just small tokens of appreciation (emails with customized offers, thank-you notes to returning guests and personalized greetings on special occasions) can make you stand out from the competition and win over the hearts and minds of your clients. These small things go a long way in retaining customers.
Stuart Harris is the Creative Director at Yellow, a Dubai branding agency, digital partner and advertising company working with progressive businesses to build bold, meaningful brands.