When thinking about how to market your small business, do most of your efforts typically go toward securing new customers? How often, if ever, do you focus on maintaining your existing customer base? If not already a priority, small business owners should strongly consider putting an emphasis on customer retention. Here’s why…
What is customer retention and why is it important?
Customer retention is a metric used to determine the number of customers that stay with you for a period of time. This metric can impact how you structure your marketing strategy as you evaluate what can be done to ensure your customers remain loyal to your brand.
Here are just a few of the reasons why small business owners should focus on customer retention:
- A repeat customer is less expensive than a new customer! It can cost up to 5x more to acquire a new customer than to keep a current customer.
- Repeat customers spend more and generate larger transactions. Customers who build a trusted relationship with a business and feel valued will keep coming back and spending more.
- Free “word of mouth” marketing. Repeat customers value your products and services, but also what your business stands for and how your business makes them feel. They will tell their friends and family about your business if you continue to go above and beyond to meet their needs.
Now that you know why customer retention is so important, let’s look at some ways you can improve customer retention.
Customer retention tactics
Retaining loyal customers is just as important as acquiring new ones. Just because you’ve successfully converted a customer once, doesn’t mean they are guaranteed to keep coming back for more. To retain customers effectively, you must work to give them a reason to stay loyal and satisfied with your business. Here are some great tactics you can use to improve retention:
Make your customer feel unique. Personalization is now a must for achieving a positive customer experience. Making a customer feel valued and unique to your small business shows you are willing to go the extra mile to support them. You can start by being more intentional with personalization. For example, learn and use customer’s names, offer custom solutions, or create a VIP experience for your best customers.
Strive to build trust and community. Building trust between a customer and a business takes time. Just because a customer purchases something does not mean they trust you. That comes with more time and effort to be more transparent with your customers. Trust will follow with a reliable product, but also with a business that shows its company values through action. By creating an intentional and genuine relationship with your customers you will build a loyal and trusted community that benefits both you and your customers.
Be open to customer feedback. Customer feedback is key to understanding ways you can improve your customer experience and keep them coming back. It is always nice to get positive feedback, but it is important to prioritize negative feedback. People who have poor experiences or are left unsatisfied, will be more likely to end their journey with your business. Therefore, you need to have a system that works for your small business. It can be a combination of review forms on your website, surveys through email, reaching out to customers directly for interviews or even comments on your social media platform. The key is to address the customer within a certain time, on whatever system of feedback you choose to provide, and relay that feedback to the proper employees/ team members.
Implement reward programs. An easy way to reward customer loyalty and existing relationships is to offer regular incentives for them to return to your business. When implementing a reward program, you need to make sure it is easy to understand and accessible. One example is creating a points system that has benchmarks for customers to hit so they are motivated to participate and easily see what they get out of the deal. This will keep them coming back to purchase from your business. You can also take it one step further and create rewards for your top percentage of customers that gives them a little extra incentive to continue being a top visitor to your business.
Put emphasis on providing great customer service. Customer service really makes or breaks a customer’s experience. As a small business you have created a product or service that aims to solve a problem. When you and your employees do not also help to make your customer’s life easier, it can affect their opinion of your brand. Reflect on your customer service capabilities and determine if the number or feedback submission form is easy to find, if the responses helpful, and if the time to contact a representative is convenient? Strong small business customer service is imperative because it leaves the customer with positive thoughts about your business and they will be more likely to return.
You should never stop trying to impress your best customers. Focusing on ways to constantly improve your customer retention will create a loyal community, promote a positive reputation for your business, and boost your sales!