How customer retention can boost your profit

You might think that one of the biggest challenges you face as a business owner is getting customers. You are only partly right. One of the even bigger challenges is keeping them.

Creating a loyal customer base is something you can do strategically. Plan your every move. Here’s how.

First things first. Build your customer base

Rome wasn’t built in a day and neither will your business be. Getting people to know you, trust you and repeatedly do business with you is a challenge not to be underestimated.

It is also a process that takes hours of planning. Here are a few guidelines to get you on your way to growing your business: 

  • Research your target market well. You have to know everything there is to know about them. This way you will be able to do your marketing in a way that appeals to them and addresses their needs.
  • The service you offer needs to be perfect in every way. You have to be so mind-blowing that it makes a real impression on your customers.
    Little things like always being friendly, responding to queries fast, being reliable and of course offering a product that can’t compare go a long way.
    Remember that word of mouth is powerful. People will talk about you if you go above and beyond. And if your service is poor, people will talk about that even more.
  • Ensure that your website offers valuable content, and work on having a presence on social media. Your content needs to keep attracting people, and remember to interact with your followers.
  • Offering people something small for free when they sign up is a technique that is often used to introduce them to a business.
Customer retention strategies explained
Many businesses are so focused on lead generation that they forget about customer retention. Did you know that almost 70% of sales come from existing customers?

Customer retention strategies can be defined as processes and initiatives that improve customer loyalty and improve customer lifetime value. 

Simply put, it’s the actions you take as a brand to show your customers the value of doing repeat business with you. 

11 Customer Retention Strategies

Have you ever popped onto HelloPeter before making use of someone’s services? Too many bad reviews and you go elsewhere, as simple as that. The survival of your brand depends on the quality of your service. 

You have to pull out all the stops to keep people coming back and to prevent them from leaving those bad reviews that will come back to haunt you.

Here’s a list of valuable customer retention strategies. Learn it and live it in everything you do.

  1. Once again, few things can beat a positive customer experience. Actually, not just positive, but outstanding. All your competitors know this as well, so you have to find something that sets you apart.
  1. Develop a system by which customers can provide you with honest feedback. You can’t improve your services if you don’t know where you are going wrong.
    Find a way to reward your customers for their feedback, as this takes time and effort from their side.
  1. Send a regular newsletter to keep your brand top of mind. Provide quality content relating to your niche, and keep your customers up to date with any special offers you might be running.
  1. Build trust with your customers. This takes time and will only happen if you consistently offer them exactly what you promise, and more.
  1. Find a way to solve a problem for your customers that your competitors have not thought of. This is not easy, and of course requires that you are extremely knowledgeable in your field.
  1. Do not try to hide your mistakes, rather just face up to them and apologise. You are human and mistakes will creep in.
    Research showed that 96% of survey respondents would continue buying from a company if they apologised and fixed their error. 
  1. Show that you care. In a world where people increasingly battle to make ends meet, there is appreciation for brands who do their bit to make someone’s battle a bit easier.
    Finding a way to give back can help you win customer loyalty, but it will no doubt improve your own mindset.
  1. Not only should your service and product be the best, but find ways to make it convenient for your customer to get it. A good example of this is Starbucks, who built a mobile order and pay feature into their app.
    This lets customers order their coffee before they arrive at the shop.
  1. Everyone loves feeling valued, and this includes your customers. Find ways to show them that you appreciate their business.
    You could, for example, offer them a discount on frequently purchased items.
  1. Get personal. In an appropriate sort of way, of course. Yuppiechef does this well, by sending a handwritten note with your order.
    Knowing that someone took the time to write you a personal note goes a long way in making a customer feel special.
  1. Set customer expectations. Be very careful of over-promising and under-delivering. Rather do it the other way around and deliver something better than you promised.

Your customer retention rate can be measured, as it is merely the percentage of previous customers who remained loyal to your brand over a period of time.

You can calculate it by first selecting the time period in which you want to measure customer retention.

Then, identify the following:

  • The number of customers at the start of this time period (S)
  • The number of customers at the end of the time period (E)
  • Number of new customers added during your chosen time period (N)

Now, use the following formula to calculate your customer retention rate (X):

((E – N) / S) x 100 = X.

Struggling with customer retention usually implies that you have a high churn rate – this is the percentage of customers lost during a specific time period.

Conclusion

Customer lifetime value refers to the total revenue you can expect from a customer during their lifetime. Herein lies your biggest income potential and your success as a brand.

Never stop working on the value you bring into your customers’ lives. Their loyalty, in the end, will determine whether you prosper or fail.

Position your business as an industry leader and expand your market reach.

Take the next steps to grow your company. Learn how advertising can capture leads and grow profits.