Customer Retention

It is absolutely true that it costs more to find a new customer than it does to retain an existing one, anyone in business knows that, but the big questions is … how can you retain your customers?

I found the following statistics recently and they make for interesting reading:

  • 4 percent of customers leave a business because they have moved location.
  • 5 percent simply change their purchasing habits.
  • 9 percent decide that they like the competition better.
  • 14 percent leave because they become disenchanted with a company's overall service.
  • 68 percent stop doing business with a company because they feel unappreciated.
Customer retention is all about customer satisfaction, if you can satisfy your customers (or even delight them!), then you stand a great chance of retaining them, so how do you provide this customer satisfaction?

There is a simple formula that I always use, and I have found that it works incredibly well in all situations:

Customer Satisfaction = Good Reputation + Good Customer Relationship +Good Service

You build a great relationship with them (above and beyond simply being their supplier), then you never give them a reason to leave you (you surpass their service expectations).

Once you realise and accept this Customer Retention formula is everything starts to fall into place.

Lets look at these factors in a little more detail:

Reputation

Public Relations
  • It’s predominately the responsibility of Public Relations to improve a businesses reputation in the market
  • Customers ask themselves ... do they feel happy buying from a business like yours
  • Is the corporate identity and key corporate messages sending the right signals to the market?

Relationship

Communications

  • Ensuring a great relationship with customers is all about the communications
  • After a major purchase, customers often feel that they have made the wrong choice, that why reassurance messages need to presented often (these can be via face to face meetings, telephone calls, or electronic messages (email, ezines etc))
  • All the customers’ touchpoints inside the organisation need to be well managed to ensure that customers get a consistent message and level of service.
  • Use marketing budgets wisely, and treat your very best customers, never underestimate the power of hospitality
Service

Service is a huge part of customer retention The key service elements are pre-sales, sales and post-sales:
Pre-Sales
  • The reputation and friendliness of the pre-sales team/process
  • Their ability to provide first-class advice and solve customers problems
Sales
  • Win/Win negotiations (ensure the customer gets something from the negotiations)
  • Delivery/Supply (on time)
  • Installation (clean, tidy and working first time)
  • Invoicing (correct)
  • Payment (effective systems)
Post-Sales
  • Good after sales support
  • Plenty of reassurance
  • You listen to new development requests
It’s worth checking your business to see that you have the ability to influence these areas, as they are critical to customer retention.

It’s also worth investing in a Customer Satisfaction Survey. If any of these core retention standards start to slip, the chances are that the first time you know about it is when a customer leaves you.

You need an annual survey so that trends can be captured, and any weakness in a particular area investigated and corrected.

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