There is a world of information out there about the latest marketing trends. Social media advertising to target your ideal customer. Teaming up with influencers to broaden your reach. However, one of the most effective ways to grow your business is by leveraging your existing customer base. If you want to learn more about effective customer retention techniques and how they can benefit your business, read on.
Create a Customer Loyalty Program
While you definitely want to reduce churn, the percentage of customers you lose, it's also important to focus on those customers who will stay with you through thick and thin by offering incentives to shop more often. Consider creating a customer loyalty program that rewards your customers. Three times as many sales come from just the most loyal 10% of your customers and 40% of sales come from an even smaller percentage of customers, because your loyal customers spend more with you. So keep them coming back.
Here are some things to keep in mind when creating a loyalty program. Make sure your customers have more than one opportunity to enroll. Offer it at the register or online checkout but also when they first arrive at your site and through sales email. More than three-quarters of your loyal customers will enroll, so make it easy for them.
If you have a point system, make the points worth something. A great example of what not to do is Sephora's reward system. Their points are often redeemed for samples that most businesses would give for free, while higher-tiered rewards are often of such limited quantities that almost no customers can get them even if they have saved up points. A poorly designed loyalty program can cost more customers than it retains so make sure you are offering a variety of rewards that all have a true value to the customer and appear attainable.
Educate Your Customers
Before you have those loyal customers that buy over and over you have to create them. One of the easiest ways to create brand loyalty is through education. Maybe you think your product is self-explanatory, but often customers disagree. If they buy your product it is likely that most will figure out how to use it, but there's a chance that some won't, and you'll never see them again. Instead of assuming they will get it, take the time to show customers how your product works and why.
Try incorporating demonstrations or offering an immediate 15-minute session to go over the product as soon as it is purchased. Your sales team can explain features as well as ways they've discovered to use the product that you might not have thought of before. Sometimes features have a purpose that customers will mistake for flaws, like safety delays. Taking the time to deal with each customer as an individual builds trust with your brand but it will also reduce complaints. By reducing the number of questions on basic understanding of a product, your customer service team can pass on the benefit of more time to other customers, giving your team more time to focus on truly complex issues. Even if your business is primarily online, leverage the power of YouTube to create educational content to which you can direct your customers. Empowered customers feel that your business is working to make their lives better.
Try using your social media platforms for education as well. By demonstrating product usage or holding Q and A sessions online you are adding value to your existing customers and potentially finding new customers learning about your products for the first time. It allows you to entice new and old customers without spending a dime in advertising.
Ask for and Respond to Feedback
The only way to know how your customers feel about your products is through feedback. Using small business apps that allow you to listen to traffic on social media is an important way not only to learn what people are saying but to engage with them quickly and create a significant interaction. On the other hand, instead of waiting for input, one of the easiest ways to get feedback is to ask for it. Your business should have a process in place to get feedback from customers. After a purchase is made make sure you've got a customer's email address so you can ask for a review. Make the review system quick and easy to use. It should involve no more than a click or two and take no longer than a couple of minutes. Direct customers to include the name of the product in their review and you can even ask them to reflect on specific features of your service and product.
No matter the feedback and whether it is on your website or a social media platform you need to respond in a timely manner. Thank customers for positive reviews. If you receive a negative review, see if you can establish the customer's pain point and try to resolve the issue, even if it means sending the customer to a competitor for a better fit. The customer will remember your helpfulness and integrity, making them more likely to try your business again.
With loyal customers also consider getting feedback through surveys or focus groups. Feedback shouldn't be just a way to create interactions but also a way to improve service and product offerings. Whoever records feedback should be in a position to take it to the appropriate design or service team and speak on behalf of the customer, making her requests and issues known, getting a response from the internal team and then taking it back to the customer. Of course, this cycle isn't necessarily quick, but by closing the feedback loop, a customer knows that their issues have been considered, making them feel like a part of the company.
Why Customer Retention Is Important
Creating customer loyalty is the best investment for your marketing team. As noted above, repeat customers are just more profitable to the bottom line. They spend more on each purchase and keep coming back month after month and year after year. According to management consulting firm Bain & Company, a business not only won't make a significant profit off a new customer but it will actually lose money because of the marketing costs associated with getting that first sale. Only by turning that customer into a repeat shopper will a business receive the value of customer shopping. Consider this amazing statistic: if you can turn 5% more of your shoppers into repeat customers your profit will go up nearly 100%.
It's not just that these loyal customers place bigger orders for more products based on the trust they feel for you. That trust means that they are more likely to recommend your business to their friends. It means that you get to spend less money on advertising trying to reach new consumers when you already have a great, steady customer base.
Most small businesses direct the majority of their marketing budget toward acquiring new customers, and if your business is new, all your customers are too. From that first sale though you should be focusing on creating excitement around your shop for existing customers, where you are likely to reap the greatest benefit for your investment.