Maximize Your Customer Retention
Many businesses focus the majority of their efforts marketing and searching for new clients or customers. While this is a necessity to promote growth, you also can’t forget about your current customer base. If you don’t cater to customers who already purchase from you, they may leave and shop somewhere else.
The Stats:
- Acquiring new customers can cost five times more than satisfying and retaining current customers
- A 2% increase in customer retention has the same effect on profits as cutting costs by 10%
- The average company loses 10% of its customers each year
- A 5% reduction in customer defection rate can increase profits by 25-125%, depending on the industry
- The customer profitability rate tends to increase over the life of a retained customer
Customers leave for many reasons such as they don’t like your product, they move, your competition lures them away or their friends influence them to try something else. But the overwhelmingly number one reason customers leave (~70%!) is that they feel there is an attitude of indifference by the business towards them. They feel like the business does not care whether or not they shop, eat, etc. at their establishment. Where would this attitude come from and what can you do to make sure all your customers feel like they are important to your success?
Think about the last time you went in to pick up a pizza or go shopping for clothes. Did they greet you as soon as you came in? Were they friendly to you the entire time you were there? Did they say goodbye and thanks when you left? Even if you didn’t buy anything? If they didn’t do any of those things, or even if they only did half of those, chances are it left a bad taste in your mouth.
For lunch once a week or so, I go get a sub at Jimmy John’s. As soon as you walk in the door, all the employees in the store (about 5) shout out hello to you no matter what they are doing at the time. They are all friendly, seem to care about you, and look like they are having a good time. When you leave, they all shout out “have a nice day.” It’s simple and it doesn’t cost Jimmy John’s a dime but it makes customers feel like they are important.
On the flip side of that, I was in Boston a couple months ago and went to get a sub for dinner at a local chain nearby the hotel. Now, granted it was near closing time, but when we walked in the shop, a girl behind the counter who was the one making subs, moaned and rolled her eyes at the thought that she now had to make two more subs before she could start to clean up and go home. It didn’t make us feel needed or important as customers and I personally wouldn’t visit that sub shop or chain again.
KNOW YOUR CUSTOMERS
What else can you do to increase customer retention and make your customers feel important besides putting a friendly smile on your face? How often do you communicate with them? Do you even know who your customers are? Do you keep a database of addresses, email lists, phone numbers? If so great! If not, what are you waiting for? It’s easy to have a stack of cards at the counter so customers can join your email list, or make sure your POS system tracks customers and lets you export their data so you can send them cards. The Moto Message text message marketing platform lets you build a list of your customers cell phone numbers so you can communicate offers or events immediately. What ever you use to track them, just make sure that you are doing it and that all your employees are on board.
What other techniques do you use to keep your customers coming in? Let us know.
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Bobby Kory6:58 am on August 12th, 2010
So true. For example I love eating at the local place near our office. The employees there are always willing to help and after you finished eating they always ask you if you liked the dish. There is a friendly environment that makes you feel like home. That’s why I choose to lunch there.