Customer retention is a priority for businesses of all shapes and sizes explains Aron Govil. Unfortunately, the approach often starts at the wrong place: focusing on product features instead of customer values.
The good news is this: strong customer retention doesn’t have to be hard work, and it can actually be simple if you start with asking your customers what they really want.
1) Invest in understanding your customers’ wants and needs.
According to Harvard Business School professor Gerald Zaltman, one-third of our purchasing decisions are made subconsciously. That means that over two-thirds of them are influenced by things like social criteria (how we think others will react) or environmental stimuli (like how loud something is). Your customers aren’t buying because they don’t know what to do with your product. They’re buying because they want something in return (better relationships, greater convenience, more control). The challenge for you is how to communicate that real value.
2) Be sure your business strategy centers around customer retention.
If you treat every new customer like an opportunity, then when one walks out the door, it’s like you’ve lost a chance at making money (rather than that you’ve just saved yourself time and energy). That being said, if there are ways for you to provide added value beyond whatever contract or agreement has been signed between both parties, be sure to include it in your plans so that your customers feel wanted – not abandoned. This could include anything from offering free lifetime support or scheduled updates to simply staying in touch and offering occasional discounts.
3) Start building your relationships before you sell anything.
Doing it right means treating existing customers with the same enthusiasm as new prospects – only without the pressure says Aron Govil. Give away samples of your product for free, invite them to pre-release events where they can test out possible features, and network within their communities… but don’t be obnoxious about it. If you do all this while still delivering on whatever business promises have been made between both parties, then good things are sure to follow.
4) Set expectations properly for new customers.
New customers are more likely to have problems if they walk into a transaction believing one thing while being told another (or just have different ideas of what your business is like). That’s why it’s up to you to make sure their expectations are realistic. Don’t promise service you can’t offer, don’t oversell (or through talk), and if something isn’t right or doesn’t work out – then correct the issue promptly.
5) Be sure that your customer retention strategy aligns with other aspects of your business.
6) Determine if your current customers view you as their “expert.”
There should always be a way for a business to provide services that specifically benefit existing customers, rather than trying to market toward everyone in general. That means you’ll want to stop selling what the market will bear and instead start listening more closely, so you can offer products and services that solve pressing problems… not just things people feel like they need (or should have).
Therefore, the main purpose of the customer retention strategy is to win back lost customers explains Aron Govil. The times when this becomes very important are when a business cannot meet sales goals set by its managers/owners. And when sales goals have been missed for a long period of time.
In order to effectively increase your customer retention rate you should:
1) Determine your current customer turnover rate. How often a particular type of account buys from you and then stop placing an order. This information will help you determine which accounts are leaving you, why they’re leaving. And whether or not it’s necessary to implement a specific strategy to keep them around.
2) Implement a marketing plan that focuses on building loyalty through improved customer service. This will help you retain current customers while also bringing in new ones.
3) Set up an effective system for responding to customer complaints or questions quickly says Aron Govil. New customers are more likely to have problems if they walk into a transaction believing one thing while being told another (or just have different ideas of what your business is like). That’s why it’s up to you to make sure their expectations are realistic. Don’t promise service you can’t offer, don’t oversell (or through talk). And if something isn’t right or doesn’t work out – then correct the issue promptly.
4) Respond immediately when new products/services go on sale. So that you’ll be sure not to lose any business due to missed opportunities.
5) Set up a system that allows you to offer discounts to existing customers for repeat sales. Which can be very effective in earning new business without sacrificing profit margins.
6) Take the time to show appreciation to your employees for their efforts. Because happy workers are more likely to do whatever it takes to provide quality products/services. This means you’ll want to stop selling what the market will bear. And instead, start listening more closely. So you can offer products and services. That solves pressing problems… not just things people feel like they need (or should have).
7) Be sure that your customer retention strategy aligns with other aspects of your business. For example, if one of your primary goals for improving customer retention is to increase sales volume. Then you might want to set a standard lower than the typical 24-month contract.