What’s more beneficial to a business than acquiring a new customer? The answer is simple: retaining existing customers and building a loyal relationship with them. Acquiring a new customer costs, on average, five times as much as retaining an existing one. Inspiring customer loyalty is not only effective in reducing the costs, but is equally effective in generating positive word of mouth thus, helping the business grow significantly. Also, research shows that increasing a business’s rate of retaining its customers by 5% increases profits by 25% to 95%.
Keeping this in mind, we now know that customer retention is the key to long-term success of the business. The question then is – how do we create a customer retention strategy to ensure that current customers are engaged and satisfied? In this article, we’ll outline five strategies to help your business retain its customers and keep your business growing.
Understand Your Customers
Having a comprehensive understanding of your customers is one of the best ways to foster customer loyalty. It is crucial to know how and why they choose you. Knowing this will not only help you build relationships and rapport with your customers, but will also help you increase your sales and profitability.
There are several strategies that you can employ to understand your customers. For example, customer profiling and market research can greatly assist you in understanding your customers to better meet their needs and wants. Additionally, communicating with your customers and asking them questions will also help you understand your customers. From this, you can build strong relationships and your business will find it easy to retain its customers.
Focus on Customer Service
Good customer service paves the way to customer retention. Notwithstanding the size of your business, good customer service should be at the heart of your business model. Simply, if you wish to retain customers, it is important that they’re happy with the service they receive. Customers always want (and need) to be treated right. To ensure the return of existing customers you must focus on providing excellent service. This goes beyond just fulfilling your legal obligations to them. Then, it is crucial to develop policies and procedures that encourage a customer focused culture. Moreover, all the employees must be trained to deliver good customer service from greeting and serving customers to resolving their issues.
Explore our Why is Customer Service Important guide for more information on the significance of customer service.
Develop Customer Loyalty Programs
Retention becomes easier when businesses implement customer loyalty programs. Some of the ways to implement loyalty programs include:
- rewarding customers with free or discounted products when they purchase from you
- sending out discount and coupons for existing customers
- offering benefits to customers that introduce new customers to your business
- providing benefits when they choose to sign up to your VIP programs
Offering such incentives will encourage customers to be loyal to your business. Moreover, these programs can also assist in measuring important retention metrics like program engagement, repeat customer rate and purchase frequency.
When customers sign up for loyalty programs you must take reasonable steps to protect the personal information that they provide. Refer to our document on privacy policy to ensure that your business is in compliance with privacy laws.
Get Customer Feedback
Customer feedback assists in improving customer retention. Asking for feedback about customer’s experience or product quality demonstrates that you are committed to improve ways in which your business operates. Furthermore, it also allows you to directly communicate with your customers and make sure that they are happy with your services. A happy customer is a retained customer. Hence, by requesting feedbacks regularly, you can make improvement to your business to ensure that all customers are happy and satisfied.
Facilitate a Culture of Innovation
Your ability to keep loyal customers depends on your ability to adapt to the ever-changing expectations and desires of the customers. While this can be challenging, creating a culture that values and implements innovative ideas will help you succeed. Subsequently, the goal is to anticipate the needs of the customers and come up with innovative ideas to make doing business with you as seamless as possible. Thus, innovation will help create a unique experience for the customers consequently, making it more likely for customers to come back and experience it again. Implementing new ideas entails its own risks, if you are unsure about it, feel free to contact one of our business lawyers for advice.
The process of retaining customers can be challenging, however, following these steps will definitely help you keep your customers loyal to you.
