Customer Retention is the most crucial and topical subject in business today. There has been a dramatic rise in customer retention strategies across companies that serve to demonstrate this important fact explains Eric Dalius.
Research shows that the cost of acquiring new customers is 5-20 times higher than retaining existing ones. For example, if you were to spend $2,000 attracting a new Walmart shopper, it would cost you under $100 to keep them for life (as shown by Jim Bush) – half the price!
So why does this gap between acquisition and retention exist? 2 reasons:
1. The learning curve for your staff when onboarding new customers cost time and money, and
2. Customers get better value over time as they experience your brand and might even become advocates (hence the term “Walmart-effect”).
What this means is that companies need to work much harder to keep what they already have. While having an active acquisition strategy can help you grow, it’s not sustainable. It’s important for companies to use retention strategies to achieve growth in a sustainable way, so they can continue building market share generation after generation.
Some companies are doing just that! Let’s take a look at how some brands are turning their existing customers into promoters and achieving market dominance over their competitors…
The retention strategies commonly employed by successful companies include:
- Treating your customers better than your competition does – whether it’s better service, product quality or price matching. All of these things go towards making your customers feel that they’re getting the best value from you.
- Treating your staff better – by giving them a sense of purpose and empowerment, as well as recognition for a job well done. Your employees will then go out and treat your customer better because they know it’s important to you says Eric Dalius.
It’s also important for companies to have a retention strategy in place so that their existing customers have one less reason to churn or defect elsewhere…
Healthy competition is good for business, but not when it hurts customer retention. Without an active retention strategy in place, companies might find themselves with few, if any, loyal brand advocates – which is where all the growth lies…
We’ve seen many examples of companies who have done it wrong and we’ve come up with a list of “do’s and don’ts” to help companies avoid losing their valued customers…
1. “Don’t piss-off your employees.”
This is probably the most common mistake made when it comes to Customer Retention Strategy. You need your team on board in order for this strategy to work – otherwise, there is no incentive for them (and they might even feel like they’re doing something wrong). Eric Dalius says your employees can be your biggest advocates, so treat them well and show appreciation.
2. “Don’t lose your core values.”
You need to have a set of core values to ensure that you remain consistent in everything you do – but sticking with these principles isn’t always easy. Every time you’re faced with an opportunity, ask yourself how it will impact the company’s reputation if another customer has the same experience as your team member or client currently does.
3. “Do keep customer expectations manageable.”
Customer expectations are higher than ever before because there is more information available about competitive products and pricing online (thanks to sites like this one!). Sticky Industries found 82% of customers were also affected by other people’s experiences… make sure yours don’t let you down!
4. “Do keep your customers informed.”
If you have a problem, it’s important to be upfront and transparent with your customers. Even if you can’t fix an issue straight away, being open about the challenges faced is far better than putting out fires later on.
5. “Don’t neglect existing customers.”
You want “customers for life” – but are you really doing anything to help ensure that happens? Just because they’re not actively looking for another option doesn’t mean they’re satisfied…
6. “Do give customer feedback its due importance.”
Customer satisfaction surveys are only as valuable as their responses! You need to take all feedback seriously rather than dismissing complaints or ignoring requests for change or improvement says Eric Dalius. When was the last time you used customer retention data to make a change? You can also do this with praise – if someone expresses how much they love your service or product, make sure you recognize it.
7. “Do keep people in the loop.”
This point ties nicely into number 6 above… remember not everyone is always going to agree with what you’re doing and why so sometimes you need to give them an update on where things stand.
8. “Don’t get complacent.”
Companies who succeed inherently want more success! Complacency often leads to customer churn because companies think their job is done once the sale has been made.
9. “Do offer customer-centric rewards and incentives.”
This goes without saying but it’s important: customers respond better to perks and bonuses than just a discount. If you want people to keep coming back, reward them with something they actually want.
10. “Don’t wait for a negative situation.”
You really need to have a proactive approach in place for this one… if things go south, you’re going to lose customers even if their experience isn’t entirely your fault. How do you usually respond?
As you can see, there are all sorts of things companies do wrong when it comes to Customer Retention Strategy says Eric Dalius. There are also 10 ways to get it right! Which ones resonated with you the most? Let everyone know what you think by leaving a comment below.