Increasing retention increases revenues better than bringing in new clients. Smart business owners know how to retain customers.
According to Harvard Business School, a mere 5% increase in retention will increase profits anywhere from 25% to 95%. Clearly client retention has a bigger impact on the bottom line than acquiring new clients. It saves money in marketing to and following up with prospects. Existing clients also tend to invest more the longer they remain with a company – 67% more in months 31-36 than months 0-6. Taking care of existing clients is a faster path to cash than pursuing new clients. Long-term clients spend more and refer more. Knowing this, smart business owners focus on how to retain customers.
According to the Garner Group, companies that make customer experience a priority have 60% higher profits than their competitors. That same commitment to the customer experience can increase customer retention by 25%. (Gartner Group and “Leading on the Edge of Chaos”, Emmett C. Murphy and Mark A. Murphy) The experience the customer has determines their loyalty and retention. Client retention makes a huge impact on your bottom line, but it also makes your job more fun when you have ongoing relationships with your favorite clients.
Initially, most businesses focus on what they do and how they do it. It is easy to become wrapped up in internal processes and the way things have always been done. If you want to know how to retain customers, you need to step outside your own processes and consider what it is like from the customer’s perspective.
There are certain times in the customer relationship that have the biggest opportunity to make an impact on the client relationship. Those same times are when your company is the most vulnerable to losing your customers’ loyalty and trust.
- Onboarding. At the very beginning of the customer relationship you are setting the stage for what the client can expect. There may be some apprehension and buyer’s remorse surrounding the investment they just made before they are certain of the results they will receive.
- Ongoing. When clients work on an ongoing basis with you, it is easy for your relationship to become routine. While predictability is a good thing, it is also important to look for opportunities to delight clients. Outstanding service and expressions of appreciation show your customers they are important to you.
- Mistakes/Customer Service Issues. When things go wrong, customers want you to make it right. Sometimes it is out of your control – caused by suppliers or outside vendors. If you do what’s right for the customer and communicate where the problem is and how it will be solved, customers are usually very understanding. In fact, dealing with a problem well can actually increase loyalty.
- Contract Renewal. As the time for contract renewal approaches, customers start evaluating how they are benefitting from working with you. The number one reason customers choose to leave a business is because they believe the business does not care about them. If you haven’t been letting them know you appreciate them ongoing, they will be less likely to renew their contract. You can also create incentives and discounts that make renewing their contract more appealing.
How to Retain Customers
Customers want to be listened to, communicated with and appreciated. They want to know that they are important to your business. They want to feel significant. Here are some ways to do that.
- Good Communication. Listen to what clients say. Hear what their expectations are of working with you. What do they hope to get out of it? Acknowledge their complaints and frustrations. Set the stage for your routines and processes. Give them a clear picture of what comes next and what you will do for them. Share when things don’t go right and how you will fix them.
- Appreciate. There are lots of ways to express your appreciation, just make sure your clients get the message. Tell them they are important to you and you value their business. Extend special privileges to those who invest in you. Give a little more than expected from your time, talents or resources. Send notes, cards or gifts in the mail to thank them for being your client.
- Surprise and Delight. The little unexpected things that you do to invest in your clients make them more invested in you.
Does your business have a plan for how to retain customers? What are some things you have implemented that have increased your customer retention? If you don’t have a customer retention plan, contact us. We help small businesses focus on the client experience so they can increase customer retention and increase revenues. Share in the comments below.