With the cost of acquiring new customers far exceeding the cost of retaining existing ones, businesses need to map out strategies for retaining customers. According to the U.S. Small Business Administration (SBA) and the U.S. Chamber of Commerce, acquiring new customers can cost as much as five to seven times more than simply retaining existing customers.
Aside that customer retention comes at a cheaper price than customer acquisition, customer profitability tends to increase over the life of a retained customer. According to the Harvard Business School, increasing customer retention rates by five percent increases profits by 25 percent to 95 percent.
The above statistics drive home the point that customer retention is not only cheaper, but also more profitable that customer acquisition. And this is enough incentives for businesses to allocate more resources to sharpening their customer retention strategies. To help you increase your own retention rates, I have compiled a list of 10 proven strategies for retaining your customers.
Top 10 Customer Retention Strategies for Small Businesses
1. Stand for something
To succeed in business, you need to stand for something. Not doing this is the quickest way to have your business ignored and dispelled as “just another business.” Research has revealed that customers have a stronger relationship with businesses that offer unique products and services. So, if you want loyal customers, stand for something.
2. Offer quality
The quality of the product or service your business offers is the most important factor that determines whether a customer will ever check back or not. If customers get quality products or services from your business, they will not only become loyal, repeat customers, but they will also tell others about your business.
3. Offer discounts and gifts
Rewarding your loyal customers with bonuses, discounts, and gifts is a smart strategy for keeping them hooked to your business. We all tend to love someone who gives us gifts, right? That explains why a customer will always prefer to buy her goods at a store where she will get a gift card or discount.
4. Quick delivery
If you ask people why they love a particular company and why they would do always do business with them again, quick processing of orders and quick delivery is one of the commonest answers you will get.
People have more-than-countable tasks to handle—from personal to job- or business-related. Each time they enter a shopping mall or grocery, they want to get out of the place as soon as possible. Only few things put customers off more than long queues and slow processing of orders.
5. Publish a newsletter
Each time a new customer patronizes your business, courteously get their contact details (email or physical address), and seek their permission to send them newsletters at regular intervals.
Whether you send newsletters to your customers in print form through “snail mail” or electronically via email, you will achieve the same goal—to inform the customer about new offers and promotions. Even if a customer has totally forgotten about your business after the first deal, a newsletter will remind them of your products/services.
6. Utilize social proof
Numerous studies on consumer motivation have revealed that social proof is one of the most effective strategies for getting people to patronize your business repeatedly. A statement like, “20,000 happy customers are using our services. Join them now.” will have a stronger effect on the customer. As humans, we tend to “go with the crowd.” Anyone who reads a statement like the above will think, “Oh, really? 20,000 customers? Then I have to grab this offer because that number speaks volume.”
7. Extraordinary customer service
This is also one of the commonest reasons why customers remain faithful to businesses. Deliver higher than expected levels of service to your existing customers, and they will tell others how well they were treated when doing business with you. That’s free marketing, you know?
The key facets of extraordinary customer service include dedication to customer satisfaction by each employee, going beyond the call of duty, on-time deliver, error-free delivery process and zero-defect products and services, and skilled employees.
8. Appreciate complaints
Research has revealed that a whopping 96 percent of customers don’t complain after getting an unsatisfactory product or service; they just walk away, and you will never know why. That’s because they don’t know how to complain or they believe complaining won’t change anything. So, a sincere complaint from your customer is a gift that should be greatly appreciated and, most importantly, treated urgently.
9. Offer additional services
First-time customers are more likely to become repeat customers when they get additional products or services related to what they are paying for—especially if the addition will come at no cost. For example, customers will appreciate a laundry service that offers additional home pick-up and delivery service for free than another that requires customers to drop and pick up their clothing at the company’s office.
10. Customer familiarity
As humans, we feel more comfortable approaching those who already know us that meeting strangers. It applies in business, too. Customers will be more willing to patronize your business repeatedly if they know you are already familiar with them.
Try to know your customers by name, address, and other details that matter. And show them that you know them and are familiar with them.