Simple But Effective Strategies...
...For Keeping Your Valuable Customers
According to Frederick F. Reichheld and Thomas Teal, authors of The Loyalty Effect: the Hidden Force Behind Growth, Profits and Lasting Value (Harvard Business School Press), it costs five times more to bring in a new customer than to keep an existing one. At most companies, customers defect at the rate of 10% to 30% annually, which means that they lose at least half of their customers within five years. Translation: You can cut your costs by directing your energy and resources into keeping the customers you already have.
Value your customers
It all starts with attitude. If you acknowledge how important your existing customers are, you’ll be in a position to develop programs that ensure customer loyalty.
Know your customers. Where possible (depending on your type of business), find out what each individual customer is all about, including product/service preferences, spending habits and even how he or she heard about you.
- Use a survey form to learn more about customers. Ask for feedback on various points – your service, pricing, etc.
Reward your customers
Recognize that rewards programs, such as discounts or give-aways, may not increase sales in the short run. But these programs go a long way toward retaining customer loyalty, which boosts sales in the long run.
Continue to offer customers something different, such as special breaks on new items, alerts to coming sales, or even discounts for purchases on their birthday.
- Kill two birds with one stone – keep your existing customers and gain new ones – by giving current customers a bonus for making a referral (e.g., a 10% discount on the next purchase or $25 off).
Deal with problems
Clichés are based on reality – and it may help you retain customer loyalty if you adopt the one about the customer always being right. A few dollars lost in the short run making a customer happy can translate into many dollars found through continued business form the customer as well as referrals to new ones.
Of course, to paraphrase a great observation, you won’t be able to please everybody all of the time, but you can try. Despite your efforts, you may lose unhappy customers.
- Make sure there’s always someone on hand – you or someone else – with the authority and ability to handle any customer problem that arises. Follow up to make sure that the problem has been resolved – don’t assume that things are fine because you’ve done what you think you should. Make sure the customer also sees it that way.
Keep in touch
Don’t stay too long out of mind – send notices, reminders, discount coupons and other items to continually keep your name before the customer’s eye. Some unique approaches to consider:
- A handwritten note, thanking a good customer for a large order or referral.
- A card on the customer’s birthday or at holiday time.
- An e-mail or fax about something new at your business.
- Promotional items – pens, calendars, refrigerator magnets – can keep your name in plain sight.
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