We hate to sound like a broken record, but we can't say it enough—developing loyal customers is the most important thing you can do for your business. In recent columns we’ve talked about the hidden costs of attrition and the factors that can cause your customers to leave. But what can you do to make your customers stick around for the long haul? Here are five steps we recommended to increase customer retention:
1. Improve customer "stimulation." Discounting, promotions and active sales efforts can deepen existing customer relationships and entice them to purchase more of your products. In addition, increasing investments in education, training and marketing your products to individuals at a customer site can increase usage, further deepening the relationship.
2. "Red flag" high-risk customers and act quickly to retain them. Build a process in the organization to actively monitor customers for the early warning signs of attrition – e.g., decreased usage or an increase in customer service calls. Develop specific campaign strategies to retain the most attractive ones.
3. Address key sources of customer dissatisfaction. Improving the accuracy and clarity of your billing processes can go a long way toward minimizing customer angst. Increasing the power of the service organization and the sales team to address customer complaints promptly and offer retention-oriented promotions are other ways to appease dissatisfied customers.
4. Resist downward pricing pressure among existing customers. Slow your discounting as much as possible to improve margins while minimizing attrition.
5. Focus customer investment in low-attrition segments. Reorient your field sales incentives to reward acquisitions of customers in key segments that exhibit the most "stickiness." Within six months of acquisition, customers typically exhibit behaviors that clearly indicate how valuable they will be as ongoing customers. Use those signs to proactively focus on retaining the most attractive customers, long before they might consider leaving.
Building these steps into your operations will help you to significantly improve customer retention metrics and create significant value for your business.