How
To Keep Your Customers Coming Back - Understanding Customer
Retention
A customer retention strategy is important for any business. Consider these key points..
Why do some businesses offer points, stamps or every
tenth coffee for free?
These businesses understand that a customer retention program is a fantastic
way to ensure that customers keep coming back. The most recognized customer
retention programs are those loyalty programs used by retailers, but this
same principal can be applied to any business that wishes to maintain a
loyal customer base.
Ask yourself these simple questions.
• Does your business have a comprehensive retention strategy?
• Are you devoting a portion of your marketing budget to keeping current
customers?
If you answered no, then you are jeopardizing the long-term success of your
business.
Remember it is costs less to keep your current customers then it does to
acquire new ones. That doesn’t mean that you should quit spending on
marketing attempts to acquire new customers, but you should invest some of
your marketing budget on retention strategies. Consider the 80/20 rule which
states 80% of your business income comes from just 20% of your customers. A
good Customer Retention program will work to convert those occasional
customers into “loyal customers” who spend more money on a more frequent
basis.
Customer retention doesn’t just happen. Poor customer service can undermine
even the best retention strategy. For a customer retention program to be
truly successful, the business must look at their total operation to ensure
every aspect of their business is aimed at keeping the customers they
already have. Is the accounting department too abrasive when collecting
overdue accounts? Is the receptionist chewing gum when answering the phone?
Every contact with your customer has to be positive for any retention
program to work. Depending on the type of business you operate, there are
several possibilities in the type of customer retention program could
develop:
Frequent contact
You can develop a program that provides regular, scheduled contact with
customer or prospect (a drip campaign). For example, develop a (opt-in)
newsletter campaign, letter campaign or important reminder campaign (oil
change, domain renewal etc). This is an excellent approach for many service
industries or for sales professionals such as real estate agents or car
sales people or any other industries where there is a significant lapse in
time between new purchases. You can keep your business name fresh in your
clients mind so that they call you instinctively when it is time for the
next purchase.
Rewards
Develop a “rewards” program such as points, free product or service or
discounts earned by making. This is the retail rewards program most people
are familiar with, but this type of retention program is often used in
business to business relationships as well. You could develop a program that
will offer cash back or a discount to businesses based on the volume of
purchases annually. This type of program works particularly well if you have
a diversified selection of products or services, and are looking to
encourage your customers to purchase a broader range of your products or
services
Combination
You could develop a Members only club that combines aspects from both the
frequent contact and rewards program.
The best retention programs are those that provide an opportunity for you to
learn more about your clients and their spending habits. This is invaluable
information that can easily give you a leg up on the competition.
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