To an entrepreneur, nothing is as exciting as acquiring new customers. But while customer acquisition is important, the key to long term business success is having the ability to retain your customers.
Studies show that loyal customers spend 67 per cent more on products and services than new customers. And even though loyal customers might only make up 20 per cent of your audience, they provide up to 80 per cent of your business revenue.Why you need loyal customers
Simply put, without happy customers who are loyal to your brand, your business won’t survive for long. Focusing your efforts on constantly acquiring new customers isn’t the answer. Bear in mind that new customer acquisition is often more expensive than retaining your existing ones. It is estimated that new customers cost as much as five times more to convert than existing customers.
The old bucket metaphor perfectly explains the importance of customer loyalty. Think of your business as a bucket. Customers flow into the bucket and fill it up. A successful business should have a full bucket of customers at all times. Now imagine that the bucket has a hole, leaking out valuable customers.
You might decide to work at filling up the bucket faster. But a smarter decision would be to patch the hole – which is improving your customer retention. Studies show that as little as a 5 per cent increase in customer retention increases business revenue by 25 to 95 per cent.
Loyal customers also become your business’ unpaid ambassadors. They are likely to recommend your products to other people in their network. The referred customers are also likely to become loyal to your business, as they already have a positive opinion. Studies show that the lifetime value of new referral customers is 16 per cent higher than non-referral customers.
With that in mind, it is important for every business to implement customer retention strategies. Here are a few tips to help your business earn customer loyalty:
1. Be memorable
If you don’t have a strong, unique brand, how do you expect customers to remember you? To be memorable, you have to separate yourself from the competitors.
The first step is to define your company values and mission. Ensure that your values and mission are aligned with the values of your target audience. Company values can include integrity, boldness, creativity, honesty, accountability, customer experience and so on. Incorporate your company values into your brand’s visual assets such as the logo, brand colours, newsletters and so on.
Also come up with a brand voice to communicate to your target demographic. Be consistent in using your brand voice to communicate to your existing and potential customers whether on social media, emails, or adverts.
2. Create high-quality products
No matter how much time and money you invest in creating an appealing brand, if customers don’t like your products, they’re unlikely to keep coming back. In one US survey, 55.3 per cent of internet users cited high-quality products as the most important deciding factor on whether to be loyal to a brand or not. In the same survey, 51.3 per cent of internet users said that low-quality products are the primary reason to drop a brand.
Do everything you can to have the best-quality product possible. Even if your product is cheaper than that of your competitors, it doesn’t mean that you should sacrifice on quality. To a majority of customers, quality is more important than price when it comes to purchasing decisions.
Put yourself in your customer’s shoes. What kind of product or service do they desire? This will help you in developing or sourcing a product that meets their needs at a price they can afford. If you develop your own product, perform market testing prior to launching. This will help you identify any flaws that you need to fix to meet consumer needs and expectations.
3. Focus on customer service
Most customer complaints are centred on bad customer service. Positive customer service experiences are so powerful that they inspire 50 per cent of customers to increase their purchasing power with a brand. In fact, according to a 2011 Customer Experience Impact report, 86 per cent of customers are willing to pay up to 25 per cent more to get better customer experience. Additionally, 77 per cent of customers are likely to recommend a brand to a friend if they had a positive customer service experience.
What does this mean? Any business that doesn’t prioritise customer service is likely to have poor customer retention. No one wants to spend money in a business where they’re not appreciated – not in today’s competitive business world. A 2016 Microsoft State of Global Customer Service Report found that 60 per cent of consumers stopped doing business with a brand due to poor customer service.
To improve your customer service, you can start by asking your customers for feedback. This will help you to better understand their needs, experiences and pain points. You can get feedback via phone surveys, social media questionnaires, website live chat and so on. Additionally, strengthen your customer service team by hiring trained professionals with the right skills.
4. Provide convenience
Today’s consumers are all about convenience. Convenience is a factor of time and effort. This means customers want to be able to buy your products or services in the easiest and fastest way possible. Modern technology has changed the marketplace so that people never have to leave the comfort of their couches to get the products and services they desire. A 2007 study found that convenience was the most important deciding factor for online shoppers.
To remain competitive and earn customer loyalty, you have to make the purchasing process as easy as possible for your customers. Convenience can mean making it easy to purchase online, making sure that items have prices clearly indicated, accepting credit card and mobile money payments and providing live chat support. You can also make the in-store experience more convenient for customers by having a central location accepting different modes of payment.
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