Many entrepreneurs work diligently to grow their startups and focus on getting new customers. Unfortunately, many also forget to effectively address the need to retain the customers they already have.
According to a recent study, it’s around 50 percent easier to sell to existing customers than brand new ones. While it seems more exciting to focus on customer addition, putting current customers on the backburner could be a recipe for disaster.
There are some shopping list items startups should hold off buying, and some moves that aren’t smart for startups to make, and overlooking your current customers to gain new ones is a big one. Prioritize your customers each and every day.
Take a look at these top five customer retention tips for every entrepreneur.
1. Realize the value of customer retention
Customer retention plays a major role in helping a business grow a bottom line – even a 5 percent increase in customer retention can boost a business’s profitability by 75 percent. It’s proven that attracting new customers actually costs your company more than retaining existing ones. So, while customer acquisition is important, customer retention should always outweigh it.
Don’t pour your entire marketing budget into advertising and public relations. Numbers show that it’s smartest to turn your attention to the customers who are already within your grasp and generate more business out of them.
2. Implement an effective customer retention program
Most entrepreneurs feel that great service and products or an excellent customer experience are enough to make your customers stick around. While this can be the case short term, remember that customers don’t owe you the loyalty to do this; it’s something you have to earn.
An effective customer retention program gives entrepreneurs the ability to identify, track and promote the customers who are likely to become your long-term, loyal sources of revenue. Take the time to implement an effective customer retention program – for businesses that depend on product sales, these programs are invaluable.
3. Make sure you read your customers correctly
Misunderstanding the way customers think is a way to nix retention quickly. It’s not a problem that only startups fall victim to – it’s one of many mistakes small businesses make while trying to grow.
Avoid misunderstanding your customers wants and needs and focus on customer behavior instead of predicted behavior of a demographic. Remember to have patience: Customer retention can take time to bear fruit. It isn’t an instant payoff, which is why marketers don’t always have customer retention top of mind. The results aren’t always immediately seen and aren’t simple to measure, but if you listen to your customers, they will stick around.
4. Engage your customers on social media
You can build retention by socializing with your customers — if you do it right, that is. The key is to turn down the company presence and provide a forum where your customers can connect with others – they’ll actually build the traffic for you.
As you earn more fans, stay engaged with them. Make sure you pay attention so you know what is being said about your company – and comment immediately on the positives and the negatives. Identify the customers who are the most loyal, and send out personalized emails thanking them, complete with coupon codes to make them feel more appreciated.
Your social media savvy customers can become your most influential brand advocates or the opposite – a nightmare.
5. Run relevant promotions
Another pretty powerful statistic: 80 percent of your future revenue will come from 20 percent of your current customers. Promotions can act as a really effective way to retain customers by keeping them engaged with your brand. You have to run relevant promotions that reward your customers, make them glad they do business with you, and encourage them to keep on doing what they have been doing.
The loyalty programs that were mentioned are a great way to reward repeat business. Don’t stop there – think of other personal things you can do for your customers, such as sending funny birthday eCards or small promotional presents, and always keep in contact around the holiday season. Make it a point to express your appreciation regularly and you can increase customer retention at the same time.
There is no one secret or very best way to retain customers. However, startups that play an active part in communicating with customers to keep them engaged are on their way to achieving greater customer loyalty. Work hard to meet customer needs and expectations, too. Make sure your products are good and that you prioritize customer service. A mixture of these strategies should result in high customer retention.
Whatever you do, don’t ignore your current customers — the revenue sources you are searching for are sitting right under your nose.
Now over to you: What customer retention tips have worked effectively for your small business?