The 6 Ways Businesses can increase Customer Retention
Updated: Jun 21, 2022
Did you know that a 2% increase in customer retention has the same effect as decreasing costs by 10%? And did you know that increasing customer retention by just 5% can increase your profitability by up to 75%?
Repeat customers make up the backbone of any given business. As unexciting as it might sound, repeat customers are the ones keeping you afloat.
The more customers a business can keep long-term, the more likely it is to survive and grow. Acquiring new business is always a good thing. But maintaining repeat customers is what's going to keep your business around for the next 5, 10 or 20 years. Fortunately, it's also around 5 times cheaper to keep, and maintain, existing customers than it is to acquire new ones.
How can you keep your customers coming back again and again and again? Here are 6 things your digital business can implement right now to ensure higher rates of customer retention. And the great news is that most of them won't cost you a cent:
1. Utmost Customer Care
Maintenance is all about care. When you're a small or medium sized business, you can't afford not to have great customer service. Take the time to show your clients that you care for them. Send them a small gift on their birthday, or give out a hand-written note to first time clients thanking them for choosing you. It doesn't need a whole lot of imagination, and little effort goes a very, very long way.
2. Maintain Relationships
Schedule a call with them once a month to ask them about any new problems or difficulties they have that you could provide solutions to. This is not about upselling irrelevant packages or services — that is an almost guaranteed way to lose customers. Pay attention to their problems and get back to them with real solutions that would actually benefit them. This is how you grow in value.
3. Focus on the clients that serve you best.
Ever had a client that communicates fairly often but has only bought your product once and shows no real interest in doing it again? Don't be afraid to cut these types of clients off to free up space for new, better ones. Focus your attention and time on the clients that serve you best. Word-of-mouth and referrals from long-term clients are worth their weight in gold.
4. Don't be afraid to nurture.
Clients that have left your company, or are no longer your clients, are still people. You can still nurture and maintain relationships with them. They might not be a customer anymore, but nurturing increases the chances of them referring you to someone who needs your services. You don't have to check up as often with clients that left as you do with your existing clients. Once every three to six months should be about right — you want to water the relationship, not drown it.
5. Take responsibility for mistakes.
Mistakes are normal and everyone makes one at some point or another. When you do end up making a mistake avoid blaming others and take responsibility for what happened. Taking responsibility gains trust and respect from your customers that will carry on through the entire relationship. They might, understandably, be displeased with you for a little while, but taking responsibility ensures the relationship grows back stronger.
6. Set expectations upfront.
It's your business. You know what you can, and cannot do. By setting expectations upfront you avoid any complications further down the line. It's better to tell a client that you can't do what they're asking at the beginning of the relationship as opposed to telling them no after a few years together.
Setting manageable expectations gives you more quality control over your services. This lets you manage your business better and service your clients better. It's a win-win for everyone involved.
Of course, there are a lot more ways you can optimize your business to increase customer retention. But these 6 are broad enough for businesses of any size to form a rock-solid foundation. Some require a little more effort than others, but the returns you gain from investing in your clients are unbeatable. And, if worst comes to worst and you can't keep that one client, at least you'll have parted ways in good spirits.
Improving customer retention and building customer loyalty doesn’t happen overnight. It will take time and effort to grow your relationship with your customers and earn their trust.
Exceptional end-to-end customer experiences are the best way to earn customer trust. Provide great service and make customers’ lives easier, and they’ll likely turn into advocates for your brand.