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!
As a business advisor, I know that business owners and senior level managers understand how critical their customers are to the success of their business, which is why ensuring you are providing superior customer service needs to be at the top of the list.
Whether you have a 5-person team or a 100-person team, how you answer the phone, how quickly you respond to their questions, how you address their concerns and whether you give them the ability to escalate their issue can mean the difference between gaining a loyal customer and losing one.
In a world that is dealing with more online purchases, online chats, 1-800 numbers, and less and less face-to-face communication, it is now more important than ever that you have a solid customer service process.
I’ve outlined below a few key steps to help you create a solid customer service process for your business and ensure your customers have a positive customer service experiences, which inspires them to be loyal to your business.
- Empower Your Employees
The more empowered your employees are to handle certain types of issues; the less involvement is required on your part. Empowerment can be accomplished through:
- Training: Provide training for the decision makers and the front line staff. Employees should receive the training necessary for them to resolve issues, such as conflict-resolution skills.
- Clear and expanded roles: It’s important that your employees have a clear understanding of their roles, and what falls within their capacity. They need to know what is okay to approve and what is not. For example, they can offer a free month of services up to $50.
- Have A Clear Process Of Escalation
Think about your processes. Create a process so that a call or complaint can be escalated to a decision-maker. As customers ourselves, we have often asked the question: Can I speak to someone in charge? It’s a question that arises when customers feel unsatisfied with the frontline’s attempt to resolve their issue. As a customer, you feel relevant and appreciated when your call is handled by a decision-maker. That is at the heart of great customer service. The reason this is so important is that often, frontline staff are constrained in making any decisions without approval. The decision-maker is more experienced and can use judgment in resolving the issue.
- Make sure it is timely: The sooner a call or complaint can be escalated, the sooner it can be resolved, and the sooner the customer is satisfied.
- Make sure it is smooth: The customer should be able to be transferred to your decision-maker without having to go through unnecessary steps.
- Measure and Adjust
This is a step that I find even businesses with a strong customer service orientation sometimes overlook. In order to get a firm and tangible understanding of how your customer service is handling your customers, you’ll need to have:
- Follow-up: Create a follow-up process. E.g. After a customer has interacted with your customer service team, an email is sent to them, or a phone call is made to the customer to confirm that they were satisfied.
- Document: Documenting your escalated accounts will help you not only perfect your process, but it will also make for a great source of training in the future. You should be able to look at the number of incidents on a spreadsheet to see how the team is performing.
Do you have a good customer service process? What does good customer service mean for your business?
When it comes to seeing continued success in your business, you must keep growing, changing and making improvements. Many of these changes are slow and could require years to see the results of your work, such as a long-term financial or marketing strategy. There are some things you can start implementing today, however, that can improve your business and allow you to take a proactive approach to problems that may be obstacles to your success.
Take charge of your bookkeeping: Oftentimes, a lack of organization in your finances can become a root cause of a cash flow and budgeting issues. Finances can sometimes overwhelm a business-owner, especially for a smaller operation. When you fully own your bookkeeping and are intimately familiar with your budget, you can make decisions based on a full understanding of your financial situation. When working with your outside help, make sure you are constantly in the loop and up to date on everything they’re doing.
Make customer service your main priority: When was the last point of contact with your clients? Did you reach out with a phone-call or email? When was the last time you called a client just to check in? When you make customer service your main priority, your clients feel valued and want to continue working with you. They will share their experiences and this indirectly improves the value of your business. If something goes wrong – a communication error, less than amazing service, etc.- make it right by offering a discount or a free service, and an apology.
Avoid customer service mishaps by streamlining processes and having clear instructions: Oftentimes, customer service issues arise when instructions and processes are unclear, such as payment requirements, service details or deadlines. Ensure that you make your expectations and processes clear on the front end (in writing, on your website, in a contract) so that you do not have to remedy a situation with a confused and disgruntled customer later.
Have a plan for unforeseen circumstances: Spend some time taking inventory of the activities and materials that are vital to your business (even something as simple as Internet, databases, telephone, etc.) and then devising a plan of action to address any obstacles to continuing business as usual. This can save you time and money if and when a “disaster” strikes your business. Check out this blog post to learn how to create a Business Resumption Plan for your business.
Increase employee engagement: Your employees can become your biggest assets as brand advocates. Encourage them to be involved the business as much as possible, either by referring to them for their opinion, recognizing jobs well done, and encouraging a positive, social environment. When your employees believe in your message, this comes across to your potential clients. A happy employee is a productive one!
As you can see with this list of suggestions, you do not have to wait years or break the bank to see improvements in your business. What other tactics can you think of that can improve your business now? I look forward to your thoughts below.
We’ve all heard the expression “the customer is always right”. For SMB owners, I’d modify this to read, “give customers what they want on their own terms.” In other words, focus your business on satisfying customer needs.
One of the best examples of customer service can be found on the retail level, a restaurant for example. Imagine you owned and operated a local coffee shop. Which feature do you think would give you the best advantage in the competition for customers?
- The best prices?
- The best location?
- The best coffee?
The answer is simple; none of the above matters if you don’t have any customers. Sure you’ll always have the regulars, but after time even they will leave when they realize they can get what you are offering down the street at another café where they offer free Wi-Fi and have a loyalty program, for example.
Do your policies serve only your interests or those of your customers? In the case of the coffee shop, do the costs of not offering free Wi-Fi outweigh the actual cost of paying for it? When it comes to satisfying your customer – absolutely! What about your policies on business hours or additional fees? Are your solutions based on ways to boost margins or on offering a competitive advantage?
Many small businesses are not focused on what’s most important to the customer. They sell what they have, rather than what the customer is buying.
To help grow your business, you’ll need to ask your current customers several questions to find out what’s important to them, why they keep coming back, and how you can improve your service. When you complete a project, ask your customer for immediate feedback. Ask them if you did a good job and what one thing could you improve on to make it a better experience.
When you directly engage your customer in your process improvement, not only does it leave your customer with a positive feeling, but it also helps you improve your service offering to meet the needs of your customer. The result is a win-win for you both.
Many successful business owners know that the best salesman is their customer. If you treat them right, they’ll walk out the door and sell for you.
Do you feel good customer service is over rated or is it a key to your success? Do you have good customer service policies at your office? Please let me know what you think in your comments below.