The Power of Customer Retention

“In this age of the customer, the only sustainable competitive advantage is knowledge and engagement with customers.” – Forrester

Companies that appreciate the power of customer retention know it to be the most cost effective and lucrative policy and one that is extremely crucial in today’s cut-throat business scenario. It is a known fact that almost 80% of a company’s business comes from only 20% of their customers and that is probably the reason that most strategies and launches are designed to attract more customers. The strange part is that when a company does attract new customers, they offer these ‘newbies’ a host of privileges, discounts and freebies while their current and possibly loyal customers continue to pay full price without any of these ‘privileges’. This is an absolutely sure-shot method of pushing the current customers away to receive ‘better service and offers’ elsewhere.

Why companies would not focus on customer retention despite it being more cost-effective and even lucrative than gaining new customers. Till the recent years, the focus was never on customer retention since customers naturally stayed with the same vendor and companies to buy what they needed. There was a personal connection, strong relationships, the options were not as many and hence it never occurred to customers to switch providers. As an example – my parents bought the home supplies from the same store for years and the shop owner knew them and my siblings well and vice versa.

This scenario hardly exists now. Stores have become larger, business has increased and the number of companies has increased too – leaving no time for businesses to really know their customers and customers would leave and take their business elsewhere at the slightest hint of disrespect. Customer loyalty has diminished and it getting exceedingly harder to achieve customer retention. With the kind of customer base that each company has, it has become harder for companies to ask customers why they left.

All is not lost though – there is a large number of cutting edge technology and software that are helping companies understand customers better leading to improved results in customer retention. The customer data base keeps track of customers – their buying patterns, history, personal information, needs and preferences. This information helps companies to provide better and improved levels of service, value and offerings. Keeping track of information on customers that is important to them, will increase your value and help you establish personal relationships with customers increasing your customer retention rate and customer referrals. However, the value of any such campaign must be recognized by the customer. If they can see value in being part of your database, only then will your customer retention programs be successful. Steer clear of bombarding your customer’s inbox with junk or information that will not be useful for them. Personalize the message based on the customer’s profile for it to have value for them.

– Share your customers values – be a partner in their initiatives. Ensure that your brand is associated with initiatives that are sustainable and give something back. Customers truly care about companies who stand for something. For example – being a ‘green’ company that cares for the environment and promotes eco-friendly methods.

– Use your customer statistics to not only attract new customers but also for customer retention. Provide information on your company website and social media sites to let people know how many customers you have – statements like “see what our other 30,000 customers think about us” add weight and social standing to your company’s endeavours and also serves as a great customer retention tool by making customers take note.

– Address the emotional needs and inner self-image of the customers. Make your promotions and products resemble and reflect the customer in some way. Address your campaigns in a way that they match the emotions, goals and desires of the existing customers – this is easier to do than to discover the needs of potential customers. When your current customers can perceive that the offerings address their individual demands, they are more like to remain with you.

– Customer retention is a factor of using the phrases and words that encourage customers to buy more and ignore some minor service lapses. Instant, fresh, be the first to know, free, discounted – just some words that keep customers excited and attached to your company.

– Show them realistically that your company is working with them and is committed to reducing their issues and things that bother them. Adjust the offerings and price points such that they match the customers pocket and frame of mind. Allow them the flexibility to buy at their convenience and even make returns easier.

– If you expect customer retention, loyalty and regular business it then goes without saying that customers would first expect that you go over and above what is expected and reduce their effort as much as possible. Mutuality and trade-offs are the name of the game. To improve customer retention, your company would need to make the first few moves before the customers can trust you enough.

– Customer retention tools and practices do not necessarily have to be costly. Small tokens and gestures too can go a long way in creating a feeling of reciprocity and mutual understanding between companies and customers.

– Surprise your customers whenever possible with some great offers. Unexpected gestures go a long way in pleasing customers and create a stronger impression of your commitment towards retaining them.

– This particular method can never be overemphasized – make it and keep it personal. Personalized and individual attention pleases everyone and makes people enjoy those experiences a lot more. The same applies to customers – they crave attention and deserve it too and companies that can consistently deliver this kind of service will find it easier keep customers.

– Support your customers unconditionally whether the problem stems from your company or not. Display dedication and a passion for customer service by treating with importance and priority those things that are important for the customer.

– Set low expectations early in the relationship. This means under-promise and over-deliver as this takes in to consideration any uncertainty that arises in a service world. Customers are delighted when you provide a level of service that is way above what they anticipated. The truth is that customers remember negative experiences and so even if you have delivered frequently in the past, they will remember the once that you were unable to. Worse still they will quote that instance if they decide to walk away.

– Become the expert in your line of business. The more creativity and innovation you display the more the customers will trust you. Customer retention is based on the kind of service your company can provide. Becoming a trusted friend and advisor for your customers will not only keep them with you but will also make them brand advocates and keep them profitable and loyal.

Whatever you do, remember that the business world is already too complicated and fierce. As a company then, ensure that your dealings are transparent and keep it simple and easy for your customers to do business with you. Sending handwritten thank you notes, creating pleasant interactions, having knowledgeable and courteous staff – all contribute towards customer retention and satisfaction. Simplicity, honesty and genuine interest will always dominate the mind of the customer irrespective of how successful the customer is or how big your company becomes. Instil in all employees and create a culture that is service oriented and customer focussed. Explain the importance of such a mindset to all staff and show them the advantages of keeping customers happy. Reward and recognize all those employees who truly display customer focus and take corrective action on those who do not. Encourage all employees to build and maintain ongoing and meaningful relationships with customers irrespective of the team or department they are in. This personalized differentiation is a vital tool in today’s highly competitive and cold market scenario.

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