In business, you’re always on the lookout for new customers. Whether driving home from work, watching the game at night or in the middle of a conference call, identifying ways to bring in new customers is a vital element in your company’s growth. However, what often becomes lost in the quest for more customers are the current, loyal clients you’ve amassed over the years. Customers who continually come back to your company are the backbone of the business, so when one decides to leave, it takes a considerable amount of money and time to replace them. This is exactly why you need to market your business to not only locate new customers but to retain your current ones.
The Cost of Replacing Customers
If you have worked in a storefront before, you’ll know that it’s always nice to see similar faces coming in to shop, eat or order a service. Over time, professional connects begin to develop which may even blend into personal friendships. They may ask about your family while you ask how their son in college is doing. Having these smiling faces coming into the store is great because you not only establish a deeper connection with the customer, but you both develop a symbiotic relationship, with your business relying on their money and the customer relying on your provided service. Consequently, if this customer decides to head elsewhere for the same services you offer, it isn’t just a loss of this established connection, but a loss of routine income for the business (Invespcro, 2017).
The value of customer retention equates with how much it costs to locate a viable replacement for the lost customer. It takes five times the money to attract a new customer into the fold over what it costs to maintain a current customer. Most companies build marketing campaigns around customer acquisition, including through the company website, email marketing, social media, direct mail and other Internet based marketing services and methods. As most of the content is tailored towards new customers, existing clients may begin to feel mistreated, which is what leads to a formerly loyal customer leaving the business in search of another service provider.
Beyond the benefit of an existing customer returning to your internet or physical storefront, they are also more likely to purchase additional goods from you. When a current customer stops by and looks over products, they are 60 to 70 percent likely to make a purchase. On the other hand, a prospective customer is anywhere from five to 20 percent likely to make a purchase. In addition to this, existing customers are 50 percent more likely to try a new product, on top of spending 31 percent more than a new customer.
Not only does retaining your current customers prove beneficial as it is steady income for the business, but they become more likely to make additional purchases and spend more money during these commerce visits. Probably the most telling number of all is if your company increased customer retention by just five percent, you would see an increase in profits by anywhere from 25 to 95 percent. All of this points to the importance of customer retention and going what you can to keep your current customers happy (Invespcro, 2017).
Know Your VIP Customers
Over time, you’ll develop a handful of very important customers. These are customers who shop with you regularly. Whether you have a storefront where you see them walk in every day or you notice the similar address every time you send goods out, these individuals shop with you because they like what you offer and because of your customer service. To ensure they keep coming back, you need to both identify them as VIP and understand their shopping habits.
Have you noticed a large number of grocery store chains have established “club” accounts? Basically, you sign up for free, receive a card and receive the advertised discounts. Essentially, you are forced to sign up for the “club” if you want the reduced price. It doesn’t cost you anything, so why not? These club accounts do more than grant you access to reduced prices though. It helps inform the store what you purchase when you purchase it and how long it’s been since your last purchase. When a pattern is identified, the store becomes more likely to send special offers for items already purchased, but offers for products based on buying history. If a customer goes an extended period without a purchase, the company may send them additional discounts in hopes of bringing them back. This strategy could greatly benefit your company.
There are a few ways you can implement this “club” system. One way is to offer club cards or numbers for returning customers to use. You can also track their purchases based on credit card information, although this isn’t as helpful as many customers will change the card they use based on the purchase they make. There are CRM programs out there that can help you monitor these kinds of purchases. However you decide to implement it, doing so is a must as you’ll obtain more shopping information on your customers, which allows you to provide better discounts and offer special services to bringing customers back. (Super Office, 2017).
As you progress with your marketing approach, you’ll discover the importance of personalization. To best attract prospective customers, you need to connect with them. There is no better way to do this than through marketing personalization, but this doesn’t just end with going after new leads. It should continue with your current lineup of customers. The only difference here is you provide the personalization after they make a purchase.
In order to cultivate a professional relationship and turn a one-time customer into a customer for life, you need to demonstrate your appreciation for their business. Even if they only spend a few dollars through your online store, this demonstration of appreciation will increase the chance of the customer returning and, potentially, making larger purchases.
Personalizing a follow-up post purchase is the best way to go about doing this. Sending an email is a start and, depending on your business model and the kind of company you run, may be all that is needed. You can also send out a card in the mail. A mailed letter of appreciation has a greater chance of being opened than an email, and the little extra effort speaks volumes about your company’s attention to detail. Add in a personalized card during the holidays and these small tokens of thanks may be enough to not only turn a one-time customer into a permanent customer, but to help retain your current customers for years to come. According to market research conducted by Econsultancy (2014), 68 percent of customers leave a company because they believe the business no longer cares about them. A personalized card prevents this from happening (Super Office, 2017).
Quality and Speed
There is a good chance a customer can purchase a similar product or service from another provider, so how can you stand out from the pack (especially if other companies are attempting to lure your current customers away)? Quality and speed are two of the most important attributes you can have as a business. Quality is vital not only for your product, but also for the level of your customer service, response to emails and your ability to help the customer when they need your assistance. Every aspect of your business needs to maintain a high level of quality, regardless of if you are a brick and mortar facility or an online e-commerce business.
Speed is the next attribute you need to demonstrate. When a customer buys a product, they want it as soon as possible. To ensure a speedy experience, you need to do what you can to make ordering a product quick and easy. When a customer fills out online shipping and payment information, you can suggest creating an account with your business to help speed up buying items in the future. You also need to provide speedy delivery. Get the product out and sent to your chosen delivery provider as soon as possible and provide updates. This way, your customer can see how fast you fulfilled their order while also tracking the package, reducing their need to contact you regarding the location of their purchase (Help Scout, 2016).
Customer retention is a significantly underutilized aspect of your marketing department. While seeking out and locating new clients is necessary, if you want to grow the corporate brand, establishing loyal customers is more beneficial to your company in the long run. Once established, those loyal customers will hopefully then tell their friends about your business and recommend your services. By devoting a portion of your marketing time and budget to increase customer retention, you’ll maintain a happy client base, while the rest of your marketing connects with new prospective clients.
What has been your biggest challenge when increasing customer retention? How did you overcome that obstacle?