Customer retention is an integral part of any business strategy and is a very important issue for all small as well as medium-sized business ventures. Businesses are expected not only to innovate, but also to assume a really proactive part in the retention of existing clients. According to some statistics and studies by U.S. Chamber of Commerce and Small Business Administration it has been proved that the cost involved in getting new customers could be five to almost seven times higher than the cost of retaining the already existing clients.
Sometimes entrepreneurs are more dedicated to attracting and getting new customers. They often ignore the importance of retaining customers that are already there. This may prove to be highly counter productive simply because of the fact that often selling to a new customer could be more challenging than convincing an existing client. Inexperienced and fresh into business, often start-up entrepreneurs are more thrilled about achieving new customers and they focus mainly on customer addition. They make the mistake of failing to realize that customer attrition could lead to a failure in a business venture.
Remember Retention Really Rocks
Some statistics reveal that customer retention plays a significant role in boosting the bottom line of a business. As per the statistics put forward by a reputed agency there is a whopping 75 per cent hike in company’s profitability by investing 5 per cent more in customer retention. According to another established agency 20 per cent of hike in customer retention may boost the profitability of the company by almost 80 per cent. Another fact is that retaining old existing clients attract more new customers and would be at least five times more expensive than trying to retain an already existing client.
Chalk Out a Client Retention Program
Entrepreneurs often feel that if they are providing an excellent service or product and offering a brilliant customer experience, customer retention would automatically take place. This is surely not the case. You need to consistently work at it to gain customer loyalty and trust. It is a good idea to craft a customer retention strategy so that you may track, identify and also, custom promote especially those promising clients who stand a chance of becoming not only loyal, but also, long-term revenue sources.
Do Not Misinterpret your Customers
Incapability in understanding consumer psychology and the inefficiency in empathizing with the customer are key factors which lead to decreased retention rates, and this happens both in start-ups as well as established businesses. Keeping in touch with your consumer base is extremely important, because they will be able to provide accurate analyses of your service. Since the entire success of your firm depends on your customers’ satisfaction, their opinion about your products, your service and the offers you provide matters the most. Surveys have revealed that most companies are not able to understand what the customers want, and hence are suffering from low retention. Instead of predicting demographic subjects’ behaviour, collect data on real situations using surveys and web analytics.
Pay Attention to Customer Feedback Surveys
Customer feedback is very important and should not be taken lightly. This gives you a perfect insight into how your business is performing vis-à-vis customer expectations. It is best if you are monitoring customer feedback purely in terms of an individual and over a period of time. Feedbacks should enlighten you regarding which customers are not too happy with your performance. You know exactly which areas are of major concern and need immediate attention and overhauling. The feedback should be helpful in retaining customers. When you are able to understand customer psychology, you would be in a position to a remedial action before things get out of hand. It is best to take vital business decisions based primarily on actual data-based feedback.
Use Social Media to Engage Customers
If you are able to interact with your customers through social media and engage them to the fullest, your retention would go through the roof. Instead of imposing on them like a conglomerate, maybe you could reach out to them by providing a feedback forum or a Facebook page. You could set up an on-line presence via Twitter, Facebook and other networks so that you get alerts when customers have something to say. You could set up analytics to find out which users are the most loyal and send them promotional thank you emails, or do the same for all your customers. This entitlement always makes a customer feel special, and you could really leverage this, as socially active customers can be your most valuable asset, or the largest PR debacle you could imagine.
Promotions are a Great Idea!
Statistics reveal that as much as 80% of your future business revenue comes from 20% of your present customer base. Retention is hence extremely important, and a great way to achieve a high retention is by conducting offers and promotions. By doing the same, you not only increase your customer numbers, but also make your old customers feel rather happy about sticking with your company. They will be more than delighted to do business with you again. Whether you are conducting sales, special discounts or free give away, promotions are a sure shot way of increasing public goodwill towards your business. You could send gifts over to some lucky customers or a Christmas email; the possibilities are endless, and they all end the same way- retention. You must understand that turning a cold shoulder to public relations and customer service will lead to more attrition. The best firms are always in touch with customers, and always bring a smile to their faces.
Author Bio: Charlie Brown is presently working in a debt relief company. Having majoured in finance already, he is now also pursuing a management degree. He has a personal blog on which he posts a variety of articles for professionals.
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