Customer retention must be a focus for all businesses. With rising customer acquisition costs businesses need to be proactive in retaining clients.
Studies have consistently found that acquiring new customers can cost as much as five to seven times more than simply retaining existing customers. The fact that customer profitability tends to increase over the life of a retained customer is added incentive for businesses to allocate more resources to retaining clients.
Below are five customer retention strategies I recommend my clients implement.
Set customer expectations
The first step to building better customer retention is to set client expectations early.
By setting expectations early and slightly below what you can provide, you can eliminate uncertainty as to the level of service you need to offer to ensure your clients are happy. This clear vision enables your company to build KPIs around specific expectations and ensure you are always over delivering.
Build trust through relationships
There is an old saying goes, “you do business with people you trust”. Trust is essential in business, and building relationships with clients will develop further that trust.
A study by the African Journal of Business Management found that as trust increases, commitment tends to grow. The study then recommends building trust through shared values.
So what are shared values?
Cultivating shared values means taking an interest in your clients and their business. I recommend you do some research on their business, understand how you play a role in their day to day activities, and use this information to strengthen your relationship. A good way to start is by asking one simple question the next time you have a quarterly review meeting: “What differentiates you from competitors?” Once they answer, remember that and make a note to do some extra research and find ways that you can assist them with strengthening that point of differentiation through the services you provide. Give them a follow-up call the next week and let them know what you came up with. This demonstrates you have a shared value and are genuinely interested in their business.
Build KPI’s around customer service
A great way to improve customer retention is to improve customer service. 68% of your customers leave because they are dissatisfied with the service. One of my clients faced similar numbers. The company set out to address the problems right at the source and
implemented customer service KPIs built around their contractual agreement. This way, all employee’s performance was measured and incentivised based on their level of service, which was closely tied to the customer’s goals.
Build relationships online
Your clients are online, so start building relationships with them while they are in front of their computer screens. With the rise of social media, connecting with your clients through these mediums makes sense. I would focus my efforts on building social profiles on LinkedIn, Twitter, and Facebook. The majority of your clients will have active profiles on at least one of these Web sites.
To get started, I remember taking the following three actions:
Go above and beyond
Going the extra mile for your customers is an easy way to build strong relationships. If you are a service business, you have many opportunities to ‘wow’ your customers.
By doing this, you can build long-term loyalty. If your clients know you are prepared to go above and beyond, they will stick with you when competitors start knocking on their door.
Here are a couple of ways you can go that extra mile for your clients: