Syed Balkhi is the co-founder of OptinMonster, a conversion rate optimization software that helps you recover abandoning website visitors and turn them into subscribers and customers. On his blog, he writes about his business experiences and lessons learned along the way.
Nothing is harder than earning new customers. However, you could also argue that few things are as important as retaining existing customers. If you're solely focused on on-boarding and doing very little to satisfy customers once they're in your fold, then you're missing out on opportunities for substantial growth.
The Need for a Customer Retention Strategy
Depending on the study and industry, the cost of acquiring a new customer can cost as much as five to seven times more than retaining an existing customer. Unfortunately, only 40 percent of companies actually have an equal focus on acquisition and retention. Sadly, the majority of businesses spend more time on acquisition and onboarding. This may result in a lot of first-time customers, but it likely means customer retention rates are low.
When there's no active customer retention strategy in place, businesses don't have a clue as to why customers are leaving. According to research:
- 68 percent of customers leave because they're unhappy with the service they receive from the company.
- 14 percent of customers leave because they're unhappy with the actual product they purchased from the company.
- 9 percent of customers leave in order to conduct business with a competitor.
In other words, 9 out of 10 customers leave as a result of one of these three causes. If you can develop a customer retention strategy that ensures customers will be happy with your service, satisfied with the product, and content to choose your value offering over the competition, then you can prevent the majority of your customers from leaving.
Tips for Launching a Customer Retention Strategy
Your business needs a customer retention strategy sooner rather than later. The good news is that--with the proper implementation and execution--you can launch a successful strategy in no-time. Here are some helpful tips to consider:
1. Gather Information From Customers
You can only retain customers if you know what they want. Unfortunately, many businesses rely on assumptions instead of facts. You can't assume you know what your customers want from your business. If you haven't researched or asked, then you really don't know.
By studying your customers and understanding what they like and don't like, you can produce much better results. Study on-site user experiences, repeat purchase behaviors, customer service response rates and other relevant data. You'll learn a lot about how your customers feel about your company. On WPBeginner, we do an annual survey asking users what they'd like us to add in the following year along with giving us feedback on what we can improve. This usually results in us significantly improving our processes as well as launching new features/products.
2. Show Customers Your Appreciation
Customers want to feel appreciated. This will look different for every business, but make sure you're taking care of customers after the sale. This could involve personal follow-up services, discounts and deals, complimentary support, personal greetings or anything in between. You shouldn't overstep your boundaries, but most customers will appreciate genuine expressions of gratitude.
At OptinMonster, we do routine follow-ups which often turn into positive testimonials/case studies. They're great for social proof.
3. Overhaul Customer Service Approach
The classic customer service model involves responding to issues as customers present them. Unfortunately, customers have grown to expect more. What you really need is an anticipatory service. The proactive approach to customer service allows you to eliminate problems before they happen, as opposed to waiting for them to occur.
One example of an anticipatory service is an airline sending out a text to customers warning them that a flight is delayed by two hours. Since nobody likes to arrive at the airport earlier than necessary, this proactive service reduces frustration and shows ownership. When it comes to your organization, be on the lookout for problems you could prevent. And if you can't prevent a certain problem, find a way to reduce the frustration associated with the issue.
4. Rebound from Inevitable Mistakes
Your business will make mistakes--there's no way around it. Sometimes these mistakes are trivial while at other times they can cause serious reverberations. The key to success lies in how you rebound. Do you walk away and pretend like nothing happened? Or, do you take ownership of the issue and go above and beyond the call to resolve the problem and keep the customer satisfied? The latter will cost you more time and effort, but it'll also keep employees and customers more content.
5. Become a Trusted Advisor
You need to realize why your customers come to you. They aren't looking to buy a product or service. They're actually looking to accomplish a goal. Your product or service is merely a tool that allows them to do this. So, instead of focusing your attention on the product, think about the customer's goal and how you can help them.
"You must understand and appreciate exactly what your clients need when they do business with you--even if they are unable to articulate that exact result themselves," says successful business consultant Jay Abraham. "Once you know what final outcome they need, you lead them to that outcome--you become a trusted adviser who protects them. And they have reason to remain your client for a lifetime."
Becoming a trusted advisor requires constant outreach, a commitment to high-touch relationships, and an investment in educational material that can be accessed and shared at any time.
You and your team work hard to gain new customers. Don't waste all that effort. Start investing in making customer retention a top priority for your business.