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Customer Retention is Today's Sales Strategy
In today's economy, new customers are hard to come by. This is why it makes more sense than ever to retain your current customers. What can you do to ensure that they continue to do business with you?
A sad, but all-too-common, scenario: businesses knock themselves out trying to gain new customers, while practically ignoring their current customers. How short-sighted is this? We all know it costs six to ten times more to bring in new customers than it does to serve existing ones. Yet businesses continually incent their sales teams to bring in the shiny, new customers, while serving the tried and true customers often gets taken for granted.
Prospective new customers need to be convinced. If they initially bought from you on a whim, chances are they will also buy from your competitors on a whim, unless you give them a sound reason for staying with you. Haphazard buying occurs every day in a perfect storm of right place / right time, but you really can’t count on it as a growth strategy.
Your current customer, however, has already made that big decision, which is whether to even buy from you. Assuming that the interaction was positive, and the product or service they received from you was of good quality, and the price you charged was fair, you have already achieved several points in your favor. You have a track record with the customer. You are a known quantity, and your chance for repeat business is greatly increased.
Now you must leverage your advantageous position, but not all at once. Trust is a bond built over time, through consistent behaviors. But the most reliable way to retain customers is to continue to provide value to them. Every interaction with that customer does not need to result in a sale, but it does need to provide value.
What kind of value?
- Money is always nice. Anytime you can offer a discount, specifically because you recognize your best customers and want to do something nice for them, you have provided them with value they may not get elsewhere.
- Knowledge is also good. If you can impart some information, instruction, or breaking news that your customers might be interested in, you have become more than a vendor. You’ve become a resource for them.
- Asking customers for input makes them feel appreciated. You make a great gesture to your customers when you ask them to contribute their ideas and opinions. However, to maximize this value, you need to show the customer what you have done with their input. How has their input improved your business? What is the benefit to them? If customer feedback is met with indifference, they will quickly show that indifference back to you.
- Basic kindness and courtesy never go out of style. At the very least, every time customers interact with your business, it should be a pleasant experience for them. It is amazing what a smile and a greeting can do for a business relationship.
It was not so long ago that establishing relationships with your customers was all you needed to ensure loyalty and long-term business. But this is not necessarily the case anymore. While trusting relationships can still be considered the cornerstone of commerce, the economy has thrown a wrench into this practice. Even the healthiest of relationships can be tested when every business, and every person, is looking to cut costs.
But as every businessperson knows, competing on price is a no-win situation. It’s not good for the business, it’s not good for the competition, it’s not good for the industry, and ultimately, it’s not good for the customer. Because we all know that to cut costs, something else has to be cut, as well. Many companies are good at masking these cuts, but it usually does not take much digging to find them. The customer may now pay less, but rest assured, they will be getting less in return. The real focus should be on the value returned for the dollar, not the actual dollar amount.
Rather than dropping your price, look for ways you can enhance value. Earlier, we suggested asking for customer input as a way of making them feel appreciated. One of the things you can ask them is how they use your product or service. You may uncover aspects that you had not previously considered, that may open up new channels of business for you. A yoga instructor discovered that one of her clients was passing on techniques to her elderly parents who were experiencing balance problems, and were periodically falling. This simple conversation with a client led the instructor to develop an important new stream of income, and a way to bring value to current clients with elderly parents.
The value drivers that initially inspired the launch of your business may not be as pertinent today as they were when the business opened. You must stay current with the times, and the needs of today’s customers. The world has changed, customers’ needs have changed, and your business needs to change along with them.
Try this exercise: make a list of 100 things your customers can do with your product or service. Don’t edit yourself. The silliest, non-plausible ideas may stimulate the next brilliant idea, so give your mind permission to fly. When you’ve reached 100, then you can edit. There will be the existing uses, and there will be the mundane uses. There will be the totally inane uses (now is the time you can delete them). But guaranteed, there will be some uses on that list that can stimulate some new business growth. They may not bring you new customers, but they may provide your current customers with the impetus to buy more from you.
Learn more about the author, Chuck Dennis.
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