No one likes to lose a customer. At the same time I’ve lost count of the number of business owners who tell me one day how much their customers love them, and come back the next week to bemoan the fact that they’ve just lost another loyal customer.
Customer retention is vital for your business. It costs approximately five times as much to attract a new customer as it does to keep your existing customers. In addition, if you are looking to sell your business or looking for investors to provide capital for your business customer retention and lifetime customer value are among the two most important numbers that increase the value of your business.
Retaining customers starts with how you begin your relationship with them …
When asked, most people said the reason they left a business or service provider was because they felt unappreciated or un-cared for. I think most of us can identify with that. Whether it is in business, social, or other circles if we feel irrelevant or unnecessary we start to look around at other options. It’s one of those basic human drives we all experience – to feel needed and to serve others.
When you think about it in this context, it’s easier to see why some customers leave us and what we can do to make that less common. Of course, there will always be customers who are just not a good fit for you and the sooner both parties recognise that the better for both of you.
Here are five key areas to focus on at the start of your relationship that will ensure that both you and your customer have a long and productive relationship:-
- Build a relationship
Very few businesses are exclusively transactional. Service businesses are really not transactional at all they are about relationship and value.
Right from the start you need to build a relationship with your customers and in many cases that will have started while they are still prospects the best way to build a relationship is through communication. That could be phone calls, emails, direct mail… It could be automated or personal or a combination. The exact format depends on your business.
Either way communication is vital and it is your responsibility to initiate such communication and to make sure that it leads your new customer to understand you better and to appreciate you more.
Automated introductory email sequences are great for this … as long as they are engaging and value-based. I’ve found that when you introduce every prospect to your business in this way they feel at home as soon as you plug them into your regular sequence, especially if your regular emails provide value (N.B. Entertainment is also value!) as well as sales. - Resell them on the value of your service
Even though a customer has already bought your product or service (by definition a customer is someone who has bought from you) you still need to remind them of the value you offer. Everyone has second thoughts. It’s better to acknowledge this reality to yourself and to gently remind your prospects why they made the decision they did.
Stick letters, videos, or phone calls are ideal, but you can also use email to check that everything is going well and that their expectations are being met. - Provide direction so they don’t get lost, overwhelmed, or confused
This is especially important if you are providing some kind of course or training but you’d be surprised how much difference it makes when people are buying a simple service. Manage your customers expectations well at this stage and you will continue to build trust and confidence so that they feel especially comfortable. - Inspire them
They bought your product or service for a reason. They invested their money to get a result. Remind them of that vision, help them to see outcomes, and inspire them to believe that they can achieve it.
The outcome you offered them may be a simpler route and a faster way of doing a task they are already doing; or it may be learning something; or it could be simply knowing that you are taking care of their accounting or other aspect. - Motivate them to action and make it easy to succeed
Most purchases involve your customer actually doing something. Maybe it requires them to fill out a questionnaire, or make an appointment or complete some task. Whatever that first action consists of, motivate your clients to complete it as quickly as possible and make sure that it is relatively simple. If the task is time-consuming or requires great effort then encourage them and help them along the way.One of the first things my new clients need to do is complete a questionnaire. This can be quite overwhelming because some of the questions are things the business owner has not considered before. I ask them to tackle as many of the questions as possible and then schedule a face-to-face meeting or a phone interview to complete the rest of it. This gives them a deadline as well as the confidence that I am there to help them.
When we start by building a relationship with our customers and actually treating them with the respect and care they deserve, and we consistently build that relationship over time then the only reason they will leave us is because they have found a business that delivers a better product or service.
That puts customer retention largely within our control.
