By Lisa Ryan
Every day we spend our precious time and hard-earned money out in the market, searching for new customers. We advertise, we network, we use social media strategies — all for the purpose of finding ever-elusive hot new prospects and turning them into profitable new customers.
With all this emphasis on attaining new customers, what are we doing to retain our current customers? According to a study conducted by marketing guru Dan Kennedy, here are the reasons that a customer leaves:
- 1 percent die
- 3 percent move away
- 5 percent follow a friend or relative’s advice and switch to their recommended supplier
- 9 percent switch due to a better price or better product
- 14 percent switch due to product or service dissatisfaction.
While the first two may be out of your control, you should be able to do something about the other 28 percent. However, all of the reasons above still only account for a total of 32 percent. So, why do the other 68 percent of customers leave a business? Simply put, they leave because they feel unappreciated, unimportant and taken for granted.
Customer turnover is costing businesses billions of dollars each year. Here are some startling statistics from Emmett C. Murphy and Mark A. Murphy, in their report, “Leading on the Edge of Chaos:”
- Gaining new customers can cost as much as five times more than retaining current customers
- Increasing customer retention by 2 percent has the same effect on profits as cutting costs by 10 percent
- The average company loses 10 percent of its customers each year
- Reducing customer defection by 5 percent can increase profits by 25 percent to 125 percent
- The customer profitability rate tends to increase over the life of a retained customer
Wow, is that a wakeup call or what? Let’s take a look at how you can stop spending so much money trying to attract new clients and instead learn to take care of the customers you already have. Here are 10 strategies that you can begin to implement TODAY in your business:
- Keep in touch regularly and systematically. When your customer places an order, follow up with them to see how satisfied they are with your product and/or service. Invite feedback – both positive and negative. (Chances are you’ll learn more from the negative feedback) Let your customers know that you care about them for the long term and not just for a one-shot deal. Take the time to learn as much as you can about your customers during your follow up calls. A little extra effort can lead to your clients inquiring about other products or services that you offer and you’ll gain new business. Since it’s always easier to sell more to someone you’re already doing business with, think of the lifetime value of each and every one of your customers.
- Educate your customers with valuable, FREE information. Sharing your knowledge via a newsletter, social media updates, special reports and blogs will prove your expertise. Providing value will also set you part from all the others that are merely promoting their products and services in every communication. In BNI (Business Networking International), the philosophy is “Givers Gain.” Be a giver. Pay attention to the issues that are important to your customer and make it a point to find answers for them. You’ll become the go-to person for both information and their business.
- Become a resource. Look for other ways that you can serve your customers, even if it doesn’t mean an immediate return on your efforts. Look for occasions when you can refer business, help out with an event or offer suggestions to improve their business. In your clients’ mind, you’ll be the expert and will thereby be “top of mind” for the next time they are looking for your product or service. As you get to know your customers better, you’ll be able to offer them assistance in a variety of areas. Networking events can play a critical role in meeting the “right people” to refer to other “right people.” Be a conduit and you could become your customer’s hero.
- Write a note of appreciation. When you send a personalized card or note through the mail (not an e-card), you are setting yourself apart, big time. Not only is a card a pleasant diversion from the junk mail and bills that your customers are used to getting on a daily basis, it adds a personal touch to the relationship, which is priceless. Think about it, you are giving your customer tangible evidence that you value them and support them. Chances are that that card is going to be hanging on their bulletin board or displayed on their desk. When someone picks up the card or asks about it, YOUR name is going to get mentioned – in a good way. Great opportunity for referrals!
- Respond to customers promptly when they contact your business. Take care of issues immediately. Ignoring problems doesn’t make them go away, it just makes them bigger and harder to correct. Remember what your mother told you: If you make a mistake, say you’re sorry. Then make things right. Let your customers know that you are committed to a high level of service and that you will do whatever it takes to resolve their issues. Chances are it will take a lot less than you think it will to completely satisfy (and keep) your customer. There is a study that showed that only 17 percent of customers would give a second chance to a company that makes a mistake. However, you greatly improve the chances of repeat business when you go beyond their expectations to solve their problems.
- Pay attention. Listening to what your customer has to say will provide clues that will help you provide a more personal touch. If your customer talks about their brand new grandchild, send a congratulatory card. If he or she has a child heading off to college, jot a note on the calendar and make sure you ask about it next time you talk to them. Find out birthdays and anniversary dates. Send cards for nontraditional occasions. Remember, you may be the only person that has taken the time to send them a card. It may be a cliché, but people don’t care what you know until they know that you care. OK, one more cliché – you have two ears and one mouth. They should be used in that proper proportion.
- Act with integrity. In everything you do, you want your stakeholders and customers to trust you. Developing trust takes time, yet it can be lost in an instant. When you say you are going to do something, do it. When a mistake is made, admit it, and then make it right. Do whatever you can to earn your customer’s unwavering belief in you and your business. Remember, confidence must be earned continuously. People want to do business with and work for trustworthy companies.
- Maintain quality. No matter how good your customer service is, if you’re providing an inferior product or service, your customers are going to leave. Make sure all of your employees are aware of the importance of maintaining quality. Put systems into place to monitor it. If you have any products that are outsourced, rigorously insure that your quality standards are met.
- Reward customers. Institute a customer loyalty program. Give your customers coupons they can use for their next order. Surprise them occasionally with a free gift. Hold a “Customer Appreciation Event.” Look for different and unique ways that you can delight your customers.
- Do good. Establish a relationship with a nonprofit or charity and invite other local businesses to participate. Share what you’re doing in your newsletter and in your social media campaigns. Remind people when they patronize your business that they are contributing to a greater cause.
All of these strategies work, but don’t overwhelm yourself thinking that you have to perform them perfectly right now. It’s important to get started moving your customer relationships forward. Choose one technique that you feel that you are already doing well, then brainstorm some creative ways you can do it even better.
You may want to rank these ideas in order of importance or impact to your bottom line. Implement systems, one key point at a time, until you see progress and then move to the next one. Paying consistent attention to the way you acknowledge your clients will pay off in ways that may surprise you. Go for it!
Employee engagement expert and motivational speaker Lisa Ryan works with organizations to help them keep their top talent and best customers from becoming someone else’s. For more information, connect with her at www.grategy.com or firstname.lastname@example.org