Did you know that retaining your current customers is cheaper than acquiring new ones? It’s true. Depending on your industry, it can cost anywhere from five to 25 times more to acquire a customer than to retain one. And according to a study done by Frederick Reichheld of Bain & Company, even increasing your customer retention rate by 5% can increase your profits by 25 to 95%.
That’s a pretty compelling conclusion, one that might leave you asking, “How can I retain more customers?” Below are eight different customer retention strategies that can help you keep your current customers coming back for more.
1. To Retain Customers, Build Relationships
People do business with people, not faceless companies. It’s important to remember that your customers want to interact with you on a personal level. This doesn’t mean you need to know their shoe size, but it does mean that you should spend time understanding what your customers want.
A study by the Journal of Applied Social Psychology found that waiters could increase their tips by 23% by delivering a second set mints to their tables. The mints aren’t magical; they simply imply a personalized experience and an effort to build a rapport with the customer.
2. Ask for—and Respond—to Feedback
You won’t know if your customers are happy enough to return if you don’t ask. Track customer satisfaction through online surveys, in-store comment cards or by encouraging social media reviews.
However, simply getting the feedback isn’t enough; you have to take action on it. This is especially important if you receive negative reviews. Respond to these reviews, reach out to customers directly if you can and take steps to rectify the situation. These deeds will not go unnoticed by customers.
3. Offer Incentives and Coupons to Repeat Customers
The amount of offers meant to encourage repeat business available in today’s retail world proves one thing: they work. Consider building a similar program for your customers so that it encourages them to keep coming back. If a customer needs to buy an item that he or she can get at any number of locations, how does the customer choose? Price is often the main factor, so offering a coupon will go a long way to securing the sale.
Loyalty programs have also come a long way. With the proliferation of smartphones, keeping track of offers and loyalty cards has become much easier. Consider implementing offers that take affect once a customer has spent a certain dollar amount in your location.
For example, spend $100 and get a $10 coupon. The implementation of a loyalty program can be time-consuming, however, so only consider it if you’re committed to making it worthwhile for your customers.
4. Establish a Communications Calendar
One way to retain customers is to keep your store and products top of mind by communicating with customers on a regular basis. Collecting email addresses and starting an email newsletter is a great way to get your name and logo in a customer’s inbox. Be careful, however, about the type of information you send. Too many emails without any real benefit will lead to a high unsubscribe rate.
Barnes and Noble offers a great example of how communication can go sour. Their membership program, which has an annual fee and offers 10% off almost everything in the store, is fairly popular among their frequent shoppers.
Their email communication, however, leaves something to be desired. They are fairly stingy with additional coupons or offers for their members, and send emails announcing new products or books that don’t necessarily apply to the member. For example, sending a young adult book recommendation to a 60-year-old woman. She might be interested, but chances are, she’s not.
An example of stellar communications from a retailer is Kohl’s. They almost always offer some type of discount in their email communications that works both online and in-store. While the windows on these savings are usually short (i.e. less than a week), they are normally significant enough to work as an incentive to make an immediate purchase.
By determining the type of communication you want to have with customers as well as the frequency, you can develop a calendar that targets special promotional offers, capitalizes on busy times of the year and augments your sales when it might get a little slow.
5. Retain Customers by Saying “Thank You”
This may seem like a no-brainer, but it’s worth mentioning. A sincere thank you, whether accompanied by a gift or savings offer, can go a long way toward making an impression on your customers. By reminding them that you appreciate their business, they are much more likely to return.
6. Make Sure Customers Can Reach You
If a customer encounters a problem with your product, how easy is it to reach you? And what type of response can he or she expect? Make sure that your employees understand how to respond to concerns, complaints or returns if they are tasked with answering the phones or processing returns in-store.
Consider creating and closely monitoring an email inbox for customer correspondence and/or having a feedback form on your website. Remember, above all else, to follow this rule when soliciting feedback: pay attention to it and respond. Asking for feedback and not responding to it damages your image far more than not asking at all.
7. Watch Your Language
It may seem trivial, but the difference between saying “Thank you for telling us” and “We really appreciate you letting us know,” can be significant. Consider adding the following phrases into your customer service vocabulary:
- I don’t know, but I’ll find out for you.
- I’d be frustrated, too.
- I’d be happy to help you with this.
- I’ll send you an update by [specific date and time].
- Is there anything else I can help you with?
8. Do What Works for You
Customer retention initiatives don’t always bear immediate fruit. Depending on your customer, your product and your sales cycle, some customer retention policies may work and others may not. It’s okay to admit that something you’ve implemented isn’t bringing you the results you expected and to move on.
With that in mind, however, try not to be impatient. It may take six months to a year to really determine if a promotion works. In the interim, keep doing the “little things,” like offering outstanding products and great customer service.
If you’re serious about customer retention, always strive to keep the customer happy. It’s a sales adage as old as the profession itself and for good reason. Happy customers lead to sales which leads you and your business to success.