In the last installment of our ongoing discussion of The Seven Principles of Modern Marketing, we discussed the importance of retaining existing customers both for development of a strong reputation and for a healthy bottom line. When it is seven times more expensive to obtain a new customer than it is to retain an existing one, it’s clear that high customer retention makes for a healthy balance sheet.
One of the best ways to retain customers is by doing what we call “going old school.” Simply put, caring is more important than ever. Customers today have an abundance of choices, and when all other factors are equal, they’ll go where they receive truly outstanding service. But what makes customer service really memorable? How do you build long-term relationships that foster customer loyalty? It starts with your staff.
First and foremost, train your team to put the customer first. Create a customer-centric culture by consistently empowering your staff to go the extra mile for customers, and develop policies and procedures to back that up. Get employees in the habit of sending thank-you notes, emailing customers on their birthdays, and verbally thanking each and every customer to remind your patrons that they are valued parts of your business’ family.
Consider developing “win-back” strategies. For example, Gary Vaynerchuck of Wine Library TV retains 40% of his unsubscribers by having his staff reach out with a personal phone call to each of them. Not only is this an effective method of customer retention, it also enables you to find out why people are discontinuing their use of your product or service, which is useful information for any business.
We can’t go back to the days of having five attendants servicing every car that rolls through the gas station, but we can still offer that 1950s-era, smile-and-handshake, first-name-basis customer service that lets people know they’re more than a number. They’re valued individuals. They’re your customers. And treating them as such is exactly how you keep them.
What type of “win-back” strategies do you use? Share your ideas here! We always want to hear from you.
Over the last several weeks, we’ve discussed the first three of The Seven Principles of Modern Marketing: Paid, Owned, and Earned media; building, maintaining, and investing in the strongest possible team; and finding a balance between short- and long-term marketing needs. These concepts are synergistic, each important in its own right, but together, forming a cohesive whole marketing strategy that is greater than the sum of its parts. Another key element to add to the mix: customer retention. By retaining existing customers, you conserve logistical and financial resources that can be better invested in other areas of your marketing while developing a positive reputation and reaping higher profits.
Retention Versus Prospecting
By focusing a significant portion of your efforts on client retention as opposed to prospecting for new customers, your marketing dollars will work harder and go farther. It’s that simple. Consider this:
• It is seven times more expensive to get a new customer than it is to retain an existing one.
• Increasing customer retention by 5% can improve profits by 25 to 27%.
• 80% of future profits will come from just 20% of your existing customers.
• Repeat customers will typically spend 33% more than new customers.
The question then becomes, “How do we retain customers?” First and foremost, people want good service and great quality. Sell products and services of value and stand behind them. Keep customers happy by remembering to under-promise and over-deliver; an early delivery, waived fee, or perceived bonus item or service will go a long way. Be honest in your business dealings, and customers will become clients for life.
In addition to helping you retain existing customers, showing your customers some love is actually a very effective way to bring in new customers. For instance, 93% of customers feel that a company’s reputation for fairness is important. Given that, if your existing customers are happy with you, they’ll recommend your service when asked. They may even leave positive online reviews or social media comments, all of which boosts your reputation as a fair, decent company.
On the flip side, when your service is lacking, it will cost you more than a single unhappy customer. On average, a dissatisfied customer will tell 11 people about his or her experience. That doesn’t begin to take into account the damage done, particularly for small, local businesses, when an unhappy customer posts, “I was ripped off by ABC Widget Company!!” on his or her Facebook wall. So remember: Love Thy Customer. It’s better for your bottom line.