News flash! A sale is not the back door of the sales cycle. It’s the door to another sales cycle. Whether it’s an up-sale, cross-sale or down-sale. Every sale should lead the customer into another sales funnel, or at least an “incubator” as they wait for your next product.
This is where and why customer retention comes into play.
Every business needs to put a system in place that ensures that all customers, or most at the least, become recurring customers.
Why Place Value On Customer Retention?
• Cheaper Than Getting New Customers.
Turning a prospect into a customer is hard work. And yet many times that hard work ends up going down the drain. After closing the sale, it becomes about the next sale. The current customer is relegated to yesterday’s news.
What many forget is that by continuing to nurture the current customer, they would be saving their company, and themselves, a lot of time, effort and money. In fact, it’s cheaper and easier to retain a customer than it is to gain a new one.
Depending on which study you believe, and what industry you’re in, acquiring a new customer is anywhere from five to 25 times more expensive than retaining an existing one. Havard Business Review
In other words, there are more sales and profits in your current customer base than in searching out new customers.
• Loyal Customers Equal More Sales.
Once a prospect becomes a customer, it is easier to sell to them the next time. Look at the staggering results from a research conducted by Bain and Company:
The bottom line: increasing customer retention rates by 5% increases profits by 25% to 95%. Bain & Co
This is why every business needs a customer retention program in its strategy. Customer retention results in more sales than customer acquisition.
Whatever product/service you are selling at least 65% of your current customers, if properly handled, will come and buy again.
Why let those burning hot leads slip away?
• Customer Churn Is Expensive
Customer churn costs businesses in the US $83 Billion. Wow! Talk about taking bottom lines.
Every customer you lose will influence others in their circles negatively against your business.
The best way to avoid customer churn is to have a good customer retention system in place.
7 Simple Ways To Retain Customers
1. Sell Products Your Customer Can Swear By
No one likes being sold a lemon. Unless of course, they want to make lemonade.
But when it comes to products and services, selling “lemons” is a sure way to lose customers.
The best-kept secret in customer retention is this: focus on quality, not just profits. Create a product or service your customers will swear by. A product they will happily buy again and again and again and again and, well you get the drift.
You only have one shot at impressing your prospect, make that shot count by producing quality products and services.
Quality retains customers better than anything you may try to entice them with.
57% of Centennials, A.K.A Generation Z [your long-term customers], say quality drives their loyalty to a brand more than any other factor, even more than price (55%). Yes Life Cycle Marketing
Your main focus in customer retention should be a quality guaranteed product.
2. Follow Up With Stellar Customer Service
Closing the sale is not the end of the journey. Rather, it should always be the beginning of a beautiful relationship.
Many think once they have sold a customer, it’s time to find the next victim. This is a toxic mentality.
When a prospect allows you to be part of their life by buying into you, that should be the beginning of sharing a part of their life. A part they entrust you to improve with your product.
This is why it is important to keep communication lines open after the sale. Follow up on how the product is performing. Make sure they are happy with it. If they initiate the conversation by complaining, bend over backwards to redeem your integrity as a brand and the integrity of your product.
86% of consumers are willing to pay up to 25% more for a better customer experience.
This is how much value your customers place on a good experience. If you can provide a satisfactory experience, not only will they be willing to part with more of their money, they will also stick to your business for their needs.
3. Understand Why Customers Are Leaving
Every successful business invests in analyzing customer behavior throughout the customer journey. And one critical component to analyze is where and why they drop out of the cycle (customer churn).
Therefore, when a customer drops out of your cycle, find out:
- Why did they leave?
- What should I do to prevent them from leaving?
- How can I get them back?
Here is a simple 3 step system to plug the hole of customer churn.
Listen to your customers every step of the way.
Adapt to their needs. Business is not about you, it’s about the needs you can meet for your customer.
Do everything in your power to please your customer. I know you can’t please them all but the ones you can are a worthy investment.
Take a look at your customer acquisition and retention systems. Where are they “leaking”? Where do they need “plumbing”? Those areas are a priority in your list of expenditure.
4. Appreciate Your Customers
The biggest asset of any business is not the fat bank account, the massive infrastructure or even its innovative work force – it’s the customer base.
Without customers, every asset becomes meaningless. Once a business realizes this, they will start appreciating this overlooked asset.
According to TD Bank, 77% percent of consumers like it when brands demonstrate their appreciation.
An appreciated customer will always come back to support your business. Human nature always reverts to and recommends what it likes.
Many businesses lose out on recurring customers because they treat customers as profits and not people. Your customer has feelings. They desire to be appreciated.
Meet that need and you would have locked them into your business, for life.
5. Involve Your Customers In Product Development
41% of U.S. consumers are loyal to brands that offer them the opportunity to personalize products to create something that is bespoke to them. Accenture
There is nothing that drives loyalty more than empowerment.
What do I mean?
It’s really simple. People tend to be loyal to those who make them feel empowered. We all want to be part of something meaningful.
This is very important in sales and marketing.
The best way to empower your customers is by involving them in your product development. Let them tell you the product they would love to buy from you.
This is easy in the information market, but easier said than done in manufacturing. But the principle is the same across-the-board.
Customers want to feel empowered. Give them the power they crave and they will forever be loyal to your brand.
6. Engage With Customers On Social Media
Many businesses have misunderstood social media.
The core of social media as a company is not to advertise yourself. Social media for a company should serve the purpose of building relationships with your customers.
Social media is a safe environment for customers to give their feedback to you. As a business, you then use their feedback to improve on your product or sales cycle.
According to a study on customer engagement by Rosetta.com, “the value of these [engaged] customers is clear – they buy 90 percent more frequently, spend 60 percent more per transaction and are five times more likely to indicate it is the only brand they would purchase in the future. All of these factors lead to engaged customers delivering three times the value to the brand over the course of a year.
Use social media to drive customer engagement and watch your bottom line grow.
Why spend thousands of dollars on social media when it’s not doing one of the most important things for your company: customer retention?
Build strong relationships on your social media platforms. Give your customers a voice. Keep them engaged and talking about your brand. You will be surprised at how that will increase your customer retention and ultimately, sales.
7. Make It Easy For Customers To Come Back
Let me let you on a secret. Even if your product is the best on the market, as long as the customer journey is not a pleasant one, you will lose a lot of customers.
To retain your customers, make the customer journey as easy as possible. Your customer has enough stress of their own, getting your product shouldn’t add to the frustration.
One critical element you need to refine is your payment system. Make your payment system as easy to understand and navigate as possible. Most people who abandon a cart because of complicated payment process never come back.
78% of consumers have bailed on a transaction because of a bad service interaction. American Express
78% is a big hole in your profits. It can actually suck your business into the abyss of failure.
Invest in systems and technologies that will make customer experience pleasant, from start to finish. In the long run the investment will pay off handsomely.
Once Off Sale? Or… Recurring Sales? Your Choice.
Every sales person desires a customer who buys on a recurring basis. This is a no brainer. The key is customer retention.
With these tips in your arsenal let’s fight customer churn and increase your retention rate.
Now is your turn!
What do you do to get more recurring sales and improve customer retention?
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