I work with many business owners who are very often so focused on customer acquisition that they forget about how important and cost-effective customer retention is. According to the Harvard Business Review, acquiring a new customer is anywhere from five to 25 times more expensive than retaining an existing one. Research by Frederick Reichheld of Bain & Company shows that increasing customer retention rates by 5% increases profits by 25% to 95%.
One strategic business approach that I often recommend is to go deeper with the clients you have rather than invest the time to attain new ones. I’ve outlined below several tips to help you improve your customer retention rate:
Are your customers leaving you? If you want to improve your customer retention rate, you need to be aware of how many customers are leaving (the churn rate) and determine what is causing them to leave. Ask yourself what as a company you are doing that is causing your customers to leave.
Customers don’t buy from companies; they buy from people. 60% of all customers stop dealing with a company because of what they perceive as indifference on the part of salespeople (Peppers and Rogers Group). Have your salespeople become complacent? Are you making an effort to make your customers feel valued or do you take them for granted? Are you rewarding your loyal customers for their business?
Listen to your customers. Talk to your customers – after all, they chose you. Invest the time to ask them how they feel about your products/services. Understand what they are looking for and what their plans are for the future. Personal relationships are powerful and inspire loyalty. The customer experience is key to your success.
It’s not all about price. Companies are often totally focused on being the lowest cost provider. While being competitively priced is very important, there will always be someone who can come in at a lower price. Price alone won’t keep your customers; delivering the best value will. Value is a combination of price, trust, customer service, delivery, relationships and support.
Has your company lived up to expectations? It’s one thing to win the business; it’s another thing to keep it. Make sure your brand has delivered on its promise and your product/service meet or exceed expectations. Take a look at creating a great customer experience. Managing customer expectations is an important part of customer retention. Set realistic expectations. It’s better to under-promise and over-deliver.
Communicate! Communicate! Communicate! Communicating with your customers will keep you top of mind. Remember, there is always going to be someone lurking in the wings to swoop in and steal your business. Find out how often and by what channels your customers want to receive information. Always address your customers’ concerns immediately. If you make a mistake, own it and fix it. Your customers will appreciate your honesty and your efforts.
Do you prize deliverables over results? Every deliverable must be able to show a measurable result that will positively impact your customers’ business and help them achieve their goals and objectives.
Bonus Tip: Conduct an exit interview. There is no company in the world that retains 100% of their customers, no matter how good they are. If one of your customers is leaving, take it as an opportunity to improve. Conduct an exit interview to learn why they’re leaving. This information is extremely valuable and can help you to make changes in order to avoid a similar situation in the future.
Are your customers leaving you? Want more advice on customer retention, or general advice from other business owners like you? Find out if a TAB Board is right for you!
Employee turnover can be challenging, and for many business owners, an ongoing issue. As difficult as it is to terminate an employee, we often forget how difficult it can be to find ways as a business owner to retain good employees.
Business owners know they must offer competitive compensation packages, benefits, incentives, and bonuses in order to attract strong performers. Retaining them will require some creativity. Here are some suggestions you can use in your business to keep one of your greatest assets from leaving:
Today, particularly with millennials, there is a need and desire to have a sense of being part of a community. Make your office an open and inviting one. Make sure you host regular meetings, ask for input, share good stories, applaud good work and allow them to work collaboratively. Give them a sense of belonging and nurture that with open communication
Share Your Plan
Make sure your employees understand the big picture, and the purpose they serve in your business. Set aside time to set goals and expectations with them. If your employees understand your plan and know where their future is headed in this position, chances are they will be motivated to stay and reach the goals you’ve set. By doing this, you are showing them opportunity and giving them a role to play in creating the future of your business.
Recognize & Reward
To recognize and reward your employees does not mean doing so just once a year at their annual review. It means continually recognizing achievements by calling them out in a team meeting, sending them a personal letter or card or taking them out for lunch. If you know that employee is a huge concert-goer, make a point to buy them tickets to a concert they’d like to attend. Communicate your gratitude and never let hard work go unnoticed.
A flexible work schedule, and creating a ‘fun factor’ could also prove a beneficial incentive for your employees. Every workplace is different, so discuss with your team some ideas of what they would like to have as a fun factor and then you can decide which idea is feasible and appropriate for your business.
Do you have any other tips for employee retention you would like to share? How important have you found a sense of community to be in your office?